How To Stop the Asian Challenge

Michael Mandel thinks the key is to become more paranoid. It worked to defeat the Soviets in the space race, and counter Japan's engineering prowess.

Now it's time for another round of paranoia, with India and China playing the villains. China is running massive manufacturing trade surpluses with the U.S. Meanwhile, India seems to be absorbing big chunks of the U.S. info-tech job market, as politicians and corporate leaders warn darkly of endless supplies of inexpensive Indian engineers taking help-desk and programming jobs once held by U.S. workers. What's more, as U.S. companies open research centers in India, there are fears of a "giant sucking sound" — to use a phrase H. Ross Perot once applied to Mexico — as even high-end IT jobs leave the U.S.

Before abandoning ourselves to Perot's nightmare, let's do a reality check. First, any upgrade of the Indian and Chinese economies is an unalloyed good for the over 2 billion people living in those countries. These are poor nations finally climbing the ladder of economic development.

Second, there's no evidence of a major flight of educated jobs from the U.S. The Bureau of Labor Statistics reports that employment of college-educated workers has increased by 3.6% in the past year, despite a stagnant overall job market. And info-tech hiring has finally turned up, with employment in computer and mathematical occupations growing by 152,000 since June.

Still, the U.S. can't be complacent. As India and China ascend the economic ladder, the U.S. must do all it can to bolster its strength in innovation. That's how the country can create well-paying new jobs. Even if some research is done in India, Russia, or Japan, U.S. scientific and financial leadership will ensure the strength of the domestic economy.

Maybe that is what we need to innovate our way into new industries and more jobs – a dose of paranoia that would make Andy Grove proud.