Today's Pithy, Cautionary Note on Economic Trends


Just now at the Aspen Ideas Festival, Bharat Balasubramanian -- generally addressed as "Dr. Bharat," left -- an engineering executive from Daimler AG in Germany, made an off-hand observation of what globalization and tech innovation will mean for the US economy:

"I will state that there will be a polarization of society here in the United States. People who are using their brains are moving up. Then you have another part of society that is doing services. These services will not be paid well. But you would need services. You would need restaurants, you would need cooks, you would need drivers et cetera. You will be losing your middle class.

"This I would not see in the same fashion in Europe, because the manufacturing base there today can compete anywhere, anytime with China or India. Because their productivity and skill sets more than offset their higher costs. You don't see this everywhere, but it's Germany, it's France, it's Sweden, it's Austria, it's Switzerland.... So I feel Europe still will have a middle level of people. They also have people who are very rich, they also have people doing services. But there is a balance. I don't see the balance here in the US."

Dr. Bharat was here mainly to talk about engineering developments at Mercedes, notably a car designed to respond to collisions just before they occur (via radar and other sensors to detect imminent crashes) and apply a variety of pre-protective, hunkering-down measures. Details on the "Pre-Safe" system here. But his matter-of-fact observation of why companies in the United States might match any firms anywhere in raw innovativeness and profitability, while American society as a whole becomes more polarized and caste-like, was sobering to put it mildly. Not a new theme, obviously, but presented quite starkly. Andy Grove of Intel to the same effect here;  background from the Atlantic here and here.
Bonus "it's a big world" note: Dr. Bharat is originally from Madras/Chennai and is an alum of the storied Indian Institute of Technology/Bombay. But he went to work for Daimler as a very young man and (as he jokingly pointed out himself) now speaks English with a rich Jawohl!-style German accent rather than Indian English. This is a more charming combination than you might think.

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James Fallows is a national correspondent for The Atlantic and has written for the magazine since the late 1970s. He has reported extensively from outside the United States and once worked as President Carter's chief speechwriter. His latest book is China Airborne. More

James Fallows is based in Washington as a national correspondent for The Atlantic. He has worked for the magazine for nearly 30 years and in that time has also lived in Seattle, Berkeley, Austin, Tokyo, Kuala Lumpur, Shanghai, and Beijing. He was raised in Redlands, California, received his undergraduate degree in American history and literature from Harvard, and received a graduate degree in economics from Oxford as a Rhodes scholar. In addition to working for The Atlantic, he has spent two years as chief White House speechwriter for Jimmy Carter, two years as the editor of US News & World Report, and six months as a program designer at Microsoft. He is an instrument-rated private pilot. He is also now the chair in U.S. media at the U.S. Studies Centre at the University of Sydney, in Australia.

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