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10 Lessons From Entrepreneurial Nation: Why Manufacturing Is The Key To America's Future?

No matter in what aspect America excels, it is still losing the competitive edge as an economic leader. Believe it or not, you might be thinking that what I stated above is an utter balderdash, but believe me, the doomsday is near. On the other hand, some might concord to my stated speculation. During the 2012 Presidential election campaign, when the wave of unemployment was sweeping across the country, the crux of all the policies stated how to put people back to work.Author Ro Khanna will provide you an insight via his phenomenal book –Entrepreneurial Nation: Why Manufacturing Is Still Key To America’s Future, where he dredges into the current milieu of the US manufacturing. The reader is taken to places like Wichita, Kansas, the Air Capital of the World, to create an instance in the reader’s mind of a haywire clump of manufacturing. But, on a positive note, and being an optimist, it is apparent that the current backdrop of the US manufacturing can still be protected and maintained.Here I’ve compiled what I learned from Khanna’s magnum opus:

1. According to Khanna, 65% of all US trade comprises of manufactured goods. 

As I mentioned above, that America is losing its competitive edge, but even today, the country is the major leader in complex advanced manufacturing. They need about 80% of their own steel, and they are one of the major manufacturers of planes. But, the nation may lose that luster soon, if the burgeoning of American manufacturing is not prioritized.Obviously, the fixation shouldn’t be prioritized on a single product, but the entire manufacturing sector itself.

2. Khanna believes that America is neck-and-neck with manufacturing in China. In the book discussion at Politics and Prose Bookstore in Washington, D.C., he stated:

“We make 20% of the world's goods with about 10% of our economy. And China makes about  20% of the world's goods with 40% of its economy. So, we are neck-and-neck as a manufacturer, and it is the sixth time productivity advantage that we enjoy over China when it comes to manufacturing and we have a productivity advantage over the countries like Japan and Germany, countries which are thought of as manufacturing leaders. So, I want -- wonder what gives us this productivity advantage, what gives American manufacturers this ability to compete in? And I wanted to go and talk to real manufacturers, because one of the things when you are in Washington and in these bureaucracies you have a lot of people pontificating about the state of American manufacturing and what we need to without actually engaging and talking to the manufacturers, and particularly not talking to the small and medium-sized manufacturers. The large manufacturers, the CEOs are often represented on the policy think tanks, but the reality is that almost half of our manufacturing jobs are with small and medium-sized businesses. So, I decided that I wanted to talk to some of these small and medium-sized businesses and figure out what it was the was giving them a comparative advantage.”

3. Khanna dealt with the small and medium –sized business proprietors and observed one subtle difference between the ones who perform well, and the ones who don’t.

The productivity advantage of a successful organization lies where the leaders actually consider the opinions of their subordinates and motivate them to do evoke with greater efficiency and proper planning, directing, and monitoring a way to assemble the inventory in a judicious mode, or encouraging them for innovative outputs. Khanna believes that this is the only traditional critique where manufacturing sector misses the mark.

4. Khanna introduces two remarkable economists – Robert Riech and Jagdish Bhagwati, who believe that the US should focus more on the service sector rather than manufacturing, which has become obsolescent. 

Khanna contradicted the statement and frames his notions in favor of manufacturing through some premises, which I will mention later.

5. Reich presented an argument that the nation can only prosper if there is knowledge work. Professions like law, medicine, banking are knowledge work. Khanna contradicted Reich's argument and stated:

“He completely missed the idea of modern manufacturing. Modern manufacturing requires a lot of knowledge. These are people who are thinkers, who are innovative. And lawyers, I can tell you require a lot of competitive work. Some lawyer would say we draft documents of the standard template and then it is repetitive, so there is a distinction that is artificial, and the best on the factors that I met were really listening to the ideas.”

6. Another notable observation mentioned in Khanna’s book was why people prefer to have their favorite coffee made in specialty coffee shops. 

Firstly, all these specialty coffee shops have their own set of requirements, and secondly, blenders of the specialty coffee shops don’t make noise. If the blenders create nuisance in the presence of the customers, they won’t prefer to buy their coffee from the same place. And, this is where countries like China and Brazil grab the competitive advantage. They’ll invent similar design and technology with no noise from the blenders and would aim to excel in the race. Again, there’s a lot to learn from what China and Brazil did to maintain its competitive edge.

7. Khanna also quoted one of the most eye-opening quotes in the book discussion:

“America's problem is not that it does not work like China. America's problem is that it no longer works like America. And I think what he means by that is we don't need to copy a system of government in China or Brazil that has the excess of state intervention. But we do need to remember what policies helped make us an industrial power, and those policies hopefully can be adopted on a bipartisan basis like they were until our most recent history and most recent turn to what I would say is free-market absolutist. I think there is a practical middle ground.”

8. He also analyzed one of the appalling facts that there was one country who lost the lead in manufacturing, and it was the Great Britain.

He also mentioned the figures where China’s growth rate is about 6-7%, whereas, the USA’s growth rate is only 1%. The message Khanna wants to send to the nation was to unite as the National Security basis and maintain the title of one of the leads of economic competitiveness to help small and medium-sized manufacturing businesses to burgeon.

9. Another reason he mentioned why manufacturing sector is a must for a nation’s overall progress.

Manufacturing is the secondary stage, whereas agriculture is the primary. If you break the plank, it would clearly make no sense. A famous article written by John Maynard Keynes stated that:"Technology is progressing at such a great rate that in 20 years we are to be working 15 hour work weeks" True, technology has been evolved in all the stages of humankind. But, imagine if every activity was executed by machines, of course, they’ll take up your jobs. But, what if you need an iPhone? To that Khanna stated, "Weigel Automation reduced the need for workers on particular goods, the output had raised so much that we are able to have more of a need for the workers. With that said, I think what technology enables when we have things like the additive printing and robotics is the ability to continue to have a productive to the advantage and efficiency advantage over our other competitors.”

10. To conclude, let’s end up with the premises Khanna made to contradict with Robert Reich:

1. Manufacturing is vital to relieve the US large trade deficit. The key is to export more, and import less.2. Manufacturing elicits a demand for good paying jobs that requires skilled workers and the US cannot surrender these positions to other countries. 3. Manufacturing is a fundamental part of enhancing the US national security. A strong military with progressive technology can only be attained with a strong industrial base.Recommended for you: Book Review: Entrepreneurial Nation: Why Manufacturing Is Still Key To America's Future