Amar Bhide on Outsourcing, Uncertainty, and the Venturesome Economy

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4.7 • 4.4K Ratings

🗓️ 16 February 2009

⏱️ 67 minutes

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Summary

Amar Bhide, of Columbia University and author of The Venturesome Economy, talks with EconTalk host Russ Roberts about the role of entrepreneurship and innovation in a global economy. Bhide argues that the worries about outsourcing and America's alleged declining leadership in technology are misplaced. He argues that the source of prosperity is not technology per se but the application of technology to actual products that improve our lives and that the American venture system and labor market are very effective at the application of technology. The end of the conversation turns to the role of uncertainty in both venture capital and entrepreneurship but also to the role of financial institutions and financial innovation.

Transcript

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0:00.0	Welcome to Econ Talk, part of the Library of Economics and Liberty. I'm your host Russ Roberts
0:13.9	of George Mason University and Stanford University's Hoover Institution. Our website is econtalk.org
0:21.2	where you can subscribe, find other episodes, comment on this podcast, and find links
0:26.4	another information related to today's conversation. Our email address is mailadicontalk.org. We'd
0:33.6	love to hear from you. My guest today is Hommar B. Day, Lawrence D. Glaubinger, Professor of
0:42.2	Business at Columbia University, and author of the Venture Sum Economy. Hommar, welcome to Econ Talk.
0:48.1	How many people are worried about the rise of China and India and the potential impact
0:56.2	on American prosperity? They're worried about our losing our technological edge that we don't
1:02.8	have enough engineers, that there's a race that we are risking falling behind in. And your book
1:10.3	and your general view is very different from that mainstream view, and your reasons for your
1:15.4	view are also very different. So I'd like you to talk about that, and that's going to be our
1:19.6	major subject. Why aren't you worried about the so-called gains and rise of China and India?
1:28.1	The initial worry about China and India was we're going to lose low-end jobs. And that turned out
1:41.6	not to have awful consequences. Then people said, oh my god, they're going to get into high-end
1:46.5	research and high-end technology and design, and that's really going to nail us because our
1:52.1	comparative advantage, or usually in fact people use the word competitive advantage, I think,
1:56.8	misleadingly rather than comparative advantage. Our competitive advantage is in producing
2:04.0	high-end knowledge and design, and we can give up on manufacturing as long as we keep that.
2:10.0	And this is wrong on a variety of levels. One is, as Kroegman, who I usually don't agree with,
2:22.7	pointed out, nations really aren't in a competitive race. I mean, businesses may compete, individuals
2:29.4	may compete. Nations, in theory, might compete. You could construct an economic model which
2:34.7	had them competing. But as a matter of fact, they don't compete. So we aren't, this isn't the
	...

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