CHAPTER 1

International Connectedness

• “The International Dream”

As the largest importer in the world, the United States obtains about 13 percent of global goods and services from other countries—diverse as China, Canada, and Mexico. The United States tends to buy more than it sells. Americans have access to worldwide products and none has to go overseas to get it. But does this mean they have access to everything? And if not, what new inventions and innovations is the United States missing out on?

While everyone talks about exports, we focus on the so often maligned imports. Exports make imports possible, which enhances selection, competition, and competitiveness. With already a shining city on the hill, how can things get even better?

Our team of hands-on experts were exposed to products from around the globe. They are a group of seniors at the McDonough School of Business at Georgetown University. We asked them to give us a closer look into what the United States should import more of. Students explore new motivations for U.S. imports to include goods and services from a wide array of industries ranging from fine foods to health and technology.

Technology has effectively become the center of our lives. Students believe that the United States should dedicate its import efforts on innovative products that will enhance tech performance and connectivity. The United States currently can only support 4G services to telephones. Korea, on the other hand, has been using 5G recently, which has provided them the opportunity to grow faster and be more flexible than the United States. There now is a lucrative market for portable chargers. As they are cheaper to import than to produce, the United States is more likely better off importing battery pack rentals from China.

The need for tech innovation is not limited to mobile phones, but includes automobiles and health. With rising auto tariffs, the United States will have decreasing access to advanced automotive engineering technologies. Specifically, foreign markets sell sleek pickup trucks, which are not available in the United States and penetrate Asia and Sub-Saharan Africa. Access to such advanced forms of auto engineering will benefit U.S. consumers.

Innovation will also support health sector advances. There was demand for robotic goods. Japan was credited with very advanced medical robotics. The Kibo Experiment Module allowed fixing problems on the International Space Station without having to send a human into space. Similarly, robots are used in Japan right now in order to have a more precise and efficient way of significantly treating cancer patients. There are also bionic arms for upper-limb amputees, customizable for each wearer. Children can update their arms as their bodies grow. Such technologies should be brought to the United States, where many individuals have received damage to their limbs.

There also is demand for simple technologies and ideas that effectively improve the wellness and well-being of individuals. Asian face-masks mitigate pollution-related health risks. The Water-Leech—a tank that absorbs and retains water runoff from a shower, bath or sink—was found to be a product worth importing from Australia. This tank allows consumers to save water instead of wasting it down the drain.

Other ideas included public spaces where communities can be given the chance to exercise and socialize in order to become more active and engage with others. Colombia’s Ciclovia, where some of the main roads in Bogota are closed off for cars and open to pedestrians who want to bike, walk, or simply chill, inspired such leisure spaces well worth importing.

Discussed was leisure time at work: 2–3 hours for a mid-day nap, otherwise known as siestas. The Spanish’s rendition of the traditional American lunch break could potentially attract more millennials into the workplace, and add massive value for employees, particularly those who work in innovative, creative industries.

Cultural innovation was not limited to the workplace. In this increasingly globalized world, it was important to understand different cultures. How do different backgrounds and upbringings result in contrasting approaches to the same situation? Students observed a need for educational exchange programs that remove students from their comfort zones in order to truly experience a variety of different cultures. New exchange programs will completely immerse students into the culture. Most relevant is the opportunity to explore underdeveloped and remote areas of the world, which will eventually be part of everyone’s underbelly.

While the United States has access to a range of premium goods and services, imports can be crucial in providing the finer things in life. Students called on the need for luxury, fine foods to task Americans’ taste buds. There was strong appeal of wines from France, Italy, and Spain, particularly when paired with refined, imported cheese. Australian marinated goat cheese for $12 per 11oz jar will perhaps be the next luxurious brand of food.

Perceptions of luxury was not limited to goods, but extended also to services. Specifically, in Switzerland, the world-renowned Paracelsus Clinic offers unparalleled medical services that, in a perfect world, would be available in the United States as well. Paracelsus Recovery, founded in 2012, offers a unique “luxury treatment program” for clients struggling with addiction, including substance abuse and mental disorders. Patients live in a luxury residence with a team of international doctors that specialize in their condition. Attention of approximately 15 doctors is solely focused on the patient and their needs. Yet, the cost structure is expensive. At present, the recovery group charges 80,000 Swiss Francs a week, or the equivalent of $81,300.80 USD.

Imports are good, but need to be fair. Our students understand and support such restraints, yet know that selection and diverseness is a strong pivot enriching lives.

• “Let Us Organize World Trade”

There is broad historic agreement that the World Trade Organization (WTO) has been one of the most successful international institutions; its membership accounts for more than 98 percent of world trade. However, today’s global economic landscape is changing rapidly, coupled with retrenchment and distancing from multilateral agreements. Combined, these factors impact the discernible value and role of the WTO going forward.

Changed Patterns of Trade and Investment

The expansion and development of IT infrastructure, telecommunications, and computing made the global revolution of the last few decades possible. New technologies, nonexistent when the WTO was established in 1995, have become crucial for growth and development in this decade. The outsourcing revolution has affected the developing world in a major way: global manufacturing and new services have dramatically changed supply chains; corporate espionage and intellectual property infringements supported many corporate changes in developing countries; and WTO negotiations and augmented enforcement procedures have not been able to slow that trend.

Moreover, one of the most critical issues in global trade is the aspect of unprecedented imbalances. Today, China is the new top global merchandise exporter with a total of $2.263 trillion, or 16.25 percent of world exports, according to WTO reports. It is the largest global exporter of goods, 17 percent of world exports, and the third largest importer, 12 percent of global imports.

The United States is the main goods importer with 13.4 percent of the global imports, totaling $2.4 trillion. In 1994, the United States was running an annual merchandise trade deficit of about $120 billion; by 2017, the U.S. annual trade deficit with China alone has ballooned to over $375 billion.

Stalemate at the WTO: Too Big to Be Effective?

The last successful WTO negotiation—the Uruguay Round—was a result of a strengthened, single market in Europe, the creation of the North American Free Trade Agreement (NAFTA), and several plurilateral agreements, such as the Information Technology Agreement (ITA).

The Doha Round of negotiations, beginning in November 2001, aimed to achieve major reforms in the international trading system, with an explicit focus on developing nations. Nevertheless, this premise failed; disagreements concerning the agricultural sector, free trade of services, and intellectual property rights have stalled negotiations.

Twenty years ago, the principal WTO concerns were pollution, global warming, disease, and structural unemployment—none of these agenda items, arguably, have been addressed effectively, much less solved.

Size is also an issue. The WTO is comprised of 164 members, with widely diverse perspectives, levels of development, linkages, and ambitions. The WTO system has become unwieldy because of the unanimity requirement of its voting process. The result: progress with new agreements is at a standstill. Case in point is the reduction of trade tariffs, which, at a global 3 percent of Most Favored Nations status, is at the same level as in 2000.

China: A “Rule Shaker” or a “Rule Maker?”

The West’s open invitation for China to join the WTO in 2001 paved the way for its rise to a global economic power. Since then, the balance of power at the WTO has changed dramatically. Chinese outward investment in the global economy has increased thirtyfold, from $7 billion (making up only one percent of the global foreign direct investment (FDI)) to almost $200 billion (13 percent of the global FDI).

China entered the WTO as a “rule taker,” evolved into a “rule shaker,” and now aims to become a “rule maker.”

In fact, economic relations between China, the United States, and the European Union define many of the agreements and disputes at the WTO. Xi Jinping’s “China Dream” of national rejuvenation could be seen as a way to reshape the international economic system, putting China at the center.

China has not been an easy partner for the West. Initial optimism that China would turn toward a free market economy has yet to come to fruition. Moreover, with its “capitalism with Chinese characteristics,” the country has taken the main benefits of the open trade system by creating major distortions and causing disputes that the WTO lacked the capacity to handle. Controversial issues include intellectual property rights (IPR), free market revisions through government subsidies and state-owned enterprises (SOEs), unequal conditions for market access with major restrictions to market entry in China, and unfair technology transfer. Foreign firms operating in China struggle against restrictive regulations—the government often requires them to hand over their intellectual property as a condition of market access. Asymmetrical market access and lack of reciprocity are magnified further at political levels.

With the existing WTO rule book, it is difficult to hold China accountable. Implications of Chinese “market distortion” and “unfair competitive conditions” consume global trade relations rhetoric; these opinions, voiced loudly by the current U.S. administration, are also shared broadly by other players, such as the European Union and Japan. Owing to high trade deficits, the United States is pushing for WTO reforms, increasing tariffs, and blocking the nominations of seats on the WTO’s appellate body (where the United States is a major player in the dispute resolution process) as leverage. Desired reforms aim to regulate market distortions caused by government interventions, simplifying the process of gathering information on unfair trade and investment practices, broadening the scope of banned subsidies, and setting boundaries to proportionate retaliations. But, at the end of the day, why would China agree on reforms that jeopardize its state-run economic model?

The WTO as a Reflection of a “New World”

The WTO does not operate in isolation from changes and new developments impacting trade. In the last two decades, the world’s macroeconomic environment was shaken by at least two significant events: the spread of terrorism and the financial crisis of 2008. Terrorism has enhanced the inward focus of the political and economic aspects of national security; the global recession has caused an inward retraction of production and services. International economic issues were largely ignored as attention shifted to domestic job creation, the security and protection of domestic credit markets, and enhancing liquidity. Further, financial and political conflicts seem to foster greater polarization among legislators in many countries around the world.

As a result of continued stalemates and disagreements at the WTO, external actors are adopting a new “do-it-yourself” approach defined by preferential plurilateral trade negotiations—handmade for and benefitting only a limited number of players.

In addition, there is the issue of China’s growth in influence. In September 2018, the United States together with the European Union and Japan signed a brief statement voicing shared concerns regarding the future of the WTO, questioning its validity as a primary platform for multilateral trade. As an immediate result of difficult trade relations between the United States and China, and tremendous pressure applied by the current U.S. administration, China afforded European companies access to some sectors, while pledging to co-operate with the European Union on WTO reforms—a decision taken in July 2018 during the EU–China Summit.

Since the appearance of President Xi Jinping at the World Economic Forum two years ago, Beijing has been signaling that it is willing and prepared to assume the role of a new custodian of globalization. However, it seems obvious that China would not accept any reforms at the WTO, or any level, that would jeopardize its own economic model and welfare. At the same time, China wants to preserve the existing global trade order, as the outside world is more crucial than ever for its economic development.

Today’s global economic realities are not only introducing a new set of concerns and means of doing business, they are also challenging the very effectiveness of the WTO’s historical role as an arbiter of world trade.

• “International Managers Have Choices”

In many areas, politics and law are not immutable. Viewpoints can be modified or even reversed, and new laws can supersede old ones. To achieve change, however, some impetus for it—such as the clamors of a constituency—must occur.

The international manager has various options if rules are disliked.

One high-risk option is to simply ignore prevailing rules and expect to get away with doing so. A second option is to provide input to trade negotiators and expect any problem areas to be resolved in multilateral negotiations. Drawbacks are that this is a time-consuming process, and issues remain outside the control of the firm.

A third option involves the development of coalitions and constituencies that can motivate legislators and politicians to implement change. Even simple changes, such as the way key terms are defined, can positively influence the business environment. Consider, for example, the change in terminology used in the United States to describe trade relations between two nations. For years, attempts to normalize relations with China by granting “most favored nation” (MFN) status drew the ire of objectors who questioned why China deserved to be treated in a “most favored” way. Lost in the debate was the fact that the term “most favored nation” was taken from WTO terminology and indicated only that China would be treated like any other nation for the purpose of trade. When the term was changed to “normal trade relations,” tension eased.

Beyond the recasting of definitions, firms can effect change in other ways. A manager may, for example, explain the employment and economic effects of certain laws and regulations and demonstrate the benefits of change. The firm might also enlist the supporting help of local suppliers, customers, and distributors to influence decision makers. The public at large can even be involved through public statements or advertisements calling for action. Developing coalitions is no easy task. Companies often turn to lobbyists for help, particularly when addressing narrow economic objective or single-issue campaigns. Lobbyists are usually well-connected individuals and firms who can provide access to policy makers and legislators in order to communicate new and pertinent information. Brazilian citrus exporters and computer manufacturers, for example, use U.S. legal and public relations firms to provide them with information about relevant U.S. legislative activity. The Banco do Brasil has used lobbyists to successfully restructure Brazilian debt and establish U.S. banking regulations favorable to Brazil.

Although representation of the firm’s interests to government decision makers and legislators is entirely appropriate, the international manager must also consider any potential side effects. Major questions can be raised if such representation becomes very impactful and overt. Short-term gains may be far outweighed by longer-term negative repercussions if the international firm is perceived as bullying or exerting too much political influence.

Based on Fundamentals of International Business, 3rd. ed., by Michael R. Czinkota, Ilkka A. Ronkainen, and Michael H. Moffett.

• “The Unspoken Truth about International Business”

Language has been described as the mirror of culture. Language itself is multidimensional. This is true not only of the spoken word but also of the nonverbal language of international business.

Messages are conveyed not just by the words used but also by how those words are spoken and through such nonverbal means as gestures, body position, and eye contact. These nonverbal actions and behaviors reveal hidden clues to culture.

Five key topics—time, space, body language, friendship patterns, and business agreements—offer a starting point from which managers can begin to acquire the understanding necessary to do business in foreign countries.

Understanding national and cultural differences in the concept of time is critical for an international business manager. In many parts of the world, time is flexible and is not seen as a limited commodity; people come late to appointments or may not come at all.

In Mexico for instance, it is not unusual to show up at 1:45 p.m. for a 1:00 p.m. appointment. Although a late afternoon siesta cuts apart the business day, businesspeople will often be at their desks until 10 o’clock at night.

In Hong Kong, too, it is futile to set exact meeting times because getting from one place to another may take minutes or hours, depending on traffic.

Showing indignation or impatience at such behavior would astonish an Arab, Latin American, or Asian.

Perception of time also affects business negotiations. Asians and Europeans tend to be more interested in long-term partnerships, while Americans are eager for deals that will be profitable in the short term, meaning less than a year.

Individuals vary in their preferences for personal space. Arabs and Latin Americans like to stand close to people when they talk. If an American who may not be comfortable at such close range, backs away from an Arab, this might incorrectly be perceived as a negative reaction.

An interesting exercise is to compare and contrast the conversation styles of different nationalities. Northern Europeans are quite reserved in using their hands and maintain a good amount of personal space, whereas Southern Europeans involved their bodies to a far greater degree in making a point.

International body language, too, can befuddle international business relations.

For example, an American manager may after successful completion of negotiations, impulsively give a finger-and-thumb “okay” sign. In southern France, this would signify the deal was worthless, and in Japan, it would mean that a little bribe had been requested. The gesture would be grossly insulting to Brazilians.

Misunderstanding nonverbal cues can undermine international negotiations. While Eastern and Chinese negotiators usually lean back and make frequent eye contact while projecting negativity, Western negotiators usually avert their gaze for the same purpose.

In some countries, extended social acquaintance and the establishment of appropriate personal rapport are essential to conducting business. The feeling is that one should know one’s business partner on a personal level before transactions can occur.

Therefore, rushing straight to business will not be rewarded because deals are made on the basis of not only the best product or price but also the entity or person deemed most trustworthy. Contract may be bound on handshakes, not lengthy and complex agreements—a fact that makes some, especially Western, businesspeople uneasy.

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Excerpt from Fundamentals of International Business, 3rd ed., by Michael R. Czinkota, Ilkka A. Ronkainen, and Michael H. Moffett

• “Global Medical Tourism”

Medical tourism can be traced to 4000 BC—when Greek pilgrims would sail abroad to seek the healing power of hot springs and baths. Over the past two decades, the industry encountered dramatic shifts.

Once wealthy patients from emerging economies sought treatments not available in their home countries. Since the new millennium, however, the flow of patients goes in the other direction. Rising health care costs prompt travelers from advanced economies to seek international destinations offering lower-cost or timelier alternatives to domestic care.

For instance, a spinal fusion in the United States costs an average of $110,000 in 2016. The same procedure was $6,150 in Vietnam. Heart bypass surgery, which costs $123,000 in the United States in 2016, is $12,100 in Malaysia. For many patients from high-priced countries, the solution is clear—it pays to seek medical care abroad!

The size of such tourism has ballooned since the late 1990s. Its value ranges between US$45.5 billion and $72 billion in 2017, with approximately 14 to 16 million patients seeking medical care beyond their countries’ borders.

Modern medical tourism is a global phenomenon. Traditional models emphasized internationalization as an incremental procedure. But the industry surged after the Asian financial crisis of 1997, which drove hospitals in Malaysia, Singapore, and Thailand to seek patients from abroad. They had already undergone substantial modernization, catering to a domestic middle class that demanded medical services commensurate with their newly acquired wealth. With the economic downturn, however, a shrinking middle class could no longer afford these superior facilities. International clients provided a ready solution to an excess supply of private medical facilities.

The success of hospitals in Southeast Asia inspired other countries toward medical tourism. Regional hubs emerged due to advantages of geographical proximity and specialization. Malaysia and Singapore, for instance, received an influx of patients from Indonesia, while many patients in India came from Africa and the Middle East. Brazil, Costa Rica, and Mexico all benefited from their proximity to the United States.

A clear pattern has emerged in the lifecycle of medical industries. First, countries in the developing world begin to offer services similar to those found in advanced economies. As new segments of international health care populations emerge, just like sun flowers, new medical tourism destinations grow toward the new opportunity. Close proximity to wealthy consumers constitute a competitive edge. To retain their market share, leading destinations formulate new strategies and options.

In order to survive growing competition, hospitals in emerging nations tend to implement two strategies. Since technologies stem from post-industrialized countries, most can only imitate. Their novelty comes from specialization in specific medical procedures. Doing few tasks very often improves capability, capacity, and efficiency, and thus improves reputational success.

However, this tactic may be ineffective as other hospitals develop similar capabilities. Consumer preferences will hinge on how closely services comply with their own cultural preferences and norms. Hospitals attract patients based on familiarity with local approaches and usages. Such an approach gives room for the increasingly recognized component of holistic healing.

It is important to understand how the lifecycle of hospitals continues to evolve. Different stakeholders—from governments to accreditation services to health care providers to patients themselves—will be affected by the expansion of the industry. For example, to date, there is still much unfounded reluctance to accept health care services offered by international sources. Once the industry manages to break out of restrictive domestic silos, a fundamental reconfiguration of service and cost will be the consequence. Let’s look forward to that!

• “A World without international marketing?”

Sometimes we only know what we lost when it has left us. I put this thought to the test in my class of Georgetown University students. In our course “Marketing Across Borders,” we worked on the question: “What would life look like without international marketing?” The answers offered various perspectives reflecting their interest and training in international affairs. The range was broad, addressing the impact of international marketing in the context of diversity, choices, cultural exchange, and international quality standards.

On a personal level, students saw substantial impact of international marketing on their lives. Some mentioned that international marketing and its activities creates thousands of jobs around the world. This was seen as highly relevant to themselves, but they included their parents as well since such a change clearly involved today and the future. Some students said that without international marketing a life would be simpler but not necessarily in a good way. International marketing was seen to bring to life a variety of products that enrich consumers and make them more productive.

Some respondents highlighted the exposure to new thoughts and ideas that international marketing brings to people around the world. Such exposure motivates the competition between companies to supply better quality combined with better value. This competition leads to innovation in products across different markets around the world. Without international marketing, the high-quality standards we have today would diminish due to decreasing competition.

Companies would also feel the absence of international marketing. Expansion across borders will be harder and would have to rely without marketing heavily on word-of-mouth communication. Exports and imports will be far less than today’s value since international activities will be less profitable. Selling products to other cultures in which they are not interested will be difficult. Companies will have fewer opportunities to learn and develop from others as well. Problems will be caused by a lack of willingness to adjust or a lack of motivation to develop and compete. In consequence, the world won’t be as efficient as today.

There was the hypothesis that international marketing is likely to reduce poverty and increase international cooperation. These benefits would disappear when FDI decreases. Sales in foreign markets would diminish without the lubricating effect of international marketing. Less cultural awareness of others would be the consequence of a decline in intercultural communication. Companies would be less socially responsible and transparent as they won’t be inspired by other international companies that serve international communities. This would newly insert more psychic distance between cultures and countries, and reduce the attention paid to common problems and actions taken for the public good.

Finally, we explored what students would miss most, where does the pain threshold begin: We know about the wide variety of products that are moved and brought to market, thanks to marketing. So how about the loss of video games, cars, music tourism, or even commercials. These items were touched on, but the core of items one would miss the most was Food, Food, and Food again. Students were quite varied in their thinking as long as the items whose loss was deplored dealt with sustenance or alimentation. Leading among products held dear were chocolate, snacks, noodles, candies, and anything else which could be eaten by chopstick. Quite a broad base from students whose parents were only introduced to new eating utensils. Food and its variety tend to give staying power to globalization and also encourage cross fertilization. Let it give new opportunity to a life with spice.

• “Offsets: One answer to International Trade Imbalances”

When foreign governments shop for defense supplies, they are not solely motivated by price and quality. In light of the trade balance effects of major acquisitions such as aircraft or defense products, international customers often require U.S. vendors to purchase goods from them in order to “offset” the trade balance effects large purchases have on their trade flows. In light of enormous U.S. trade deficits, it is time for the United States to reciprocate with offset demands of our trading partners. Frequently, we find ourselves in conditions where foreign sales to us are major and our sales to importers and their nations are minor. This leads to trade relations that are out of kilter. U.S. firms have accommodated foreign offset demands for decades. Now is the time when some give-back by our trading partners is the right medicine to improve world trade imbalances.

Offsets are industrial compensation arrangements demanded (so far only) by foreign governments as a condition for making major purchases, such as military hardware. Sometimes, these arrangements are directly related to the goods being traded. For instance, the Spanish air force’s planes—American-made McDonnell Douglas F/A-18 Hornets—use rudders, fuselage components, and speed brakes made by Spanish companies. U.S. sellers of the planes have provided the relevant technology information so that Spanish firms are now successful new producers in the industry. Under offset conditions, U.S. companies also often help export a client country’s goods go international, or even support the performance of tourism services. For example, the “Cleopatra Scheme” allowed foreign suppliers to Egypt to meet their agreed-upon offset obligations through package tours for international tourists.

In 2015, U.S. firms entered into 38 new offset agreements where they agreed to cause purchases with 15 countries valued at $3.1 billion. In 2017, the total U.S. trade deficit was $566 billion after it imported $2.895 trillion of goods and services while exporting $2.329 trillion. No country has a bigger trade surplus with the United States than China. In 2017, the U.S. deficit with China climbed to its highest level on record, amounting to a gap of $375 billion.

Eliminating imbalances is a core component of the Trump administration’s international economic policy. One policy approach has been the threat of tariffs against China. One effective supplemental strategy could be the instigation of offset agreements with major trade surplus nations.

For instance, many American imports that contribute to the trade deficit are capital goods, such as computers and telecom equipment. An offset agreement between China and the United States could require China to use American-made components, perhaps even from Chinese-owned plants. An example could be the export of Smithfield ham from the United States to be served in company cafeterias in China. Then there are excellent opportunities for Chinese tourists, particularly if equipped with high-spend budgets.

The American trade deficit is not easily resolved. Government would be well served to explore nontraditional options in order to develop more than one fulcrum for leverage. New use of offset agreements—which have provided our trading partners with past success at our expense—could help revitalize American industries and bring a new sense of balance to trade relationships. Our government should encourage offset commitments by foreign firms and countries who sell a lot to us. America deserves to reap the benefits!

• “The Secret to Trade Policy Success”

University teaching is again in session. As in past summer and fall semesters, I teach international business at both Georgetown University in Washington, DC and at Kent University in Canterbury, UK.

With students I note three different categories of sentiments, quite telling of voting tendencies. Two virtually equal blocs boast firmly established perspectives with little room for flexibility. Between them are the persons most crucial for policy and politics: hedonists. They seek to enjoy life, adopt views of happiness and comfort, and, in all likelihood, determine the key prize: election victory!

At Kent, discussions will oftentimes center around the political disputes surrounding the British exit from the European Union and the outcomes of new steps taken by Prime Minister Boris Johnson.

Students and faculty are highly aware that the value of the pound is declining against the dollar and that some beach houses near Kent are for sale. However, this is only relevant to those who need dollars or want to sell a beach house. Some seem to value education less, which leads to a drop in student enrollment and translates into less public support for universities. Overall, dislocations are mainly seen as temporary phenomena—so no major changes by voters and businesses are implemented or expected. Even if there are shifts, primary attention rests with the British Isles, not with the rest of the world.

At Georgetown, there is great interest in international business as illustrated in my seminar on “International Trade: ‘The Insiders’.” Students were given the following prompt, “In case of a trade war, which international products would you be willing to give up and which ones would you stress to keep?”

Students generally agreed they could not do without their foreign-made consumer electronics and technology. “I am extremely reliant on Chinese made Apple products in my everyday life,” was a typical statement.

Low-tech was important too. Examples were an unwillingness to sacrifice foreign pencils and pens, because of other countries’ comparative advantage in quality and price.

There was a split and much disagreement regarding clothing. Some believed it would be a necessary industry to bring back to the United States. Others felt the increase in prices would hurt low-income and middle-class families, an issue of personal responsibility or promulgated by those who enjoy the good life.

Respondents also disagreed on automobiles. Some felt U.S. consumers should have access to foreign automobiles, because they “tend to be of higher quality in luxury, performance, and fuel economy.” Those who believe that the United States should stop importing cars also extol the value of public transportation and environmentally friendly options. Economic resurgence of domestic manufacturers was seen as a side benefit. Stop importing products known for exploiting child labor or using harmful labor practices was a strong sentiment.

Food issues drew mixed opinions. Some felt that the United States should feed its residents with domestically produced goods only, while others believed that autarky with domestic agriculture would erode quality of life and hurt the environment. Values were important. Tobacco and other socially harmful products should be abandoned.

Proponents for giving up foreign steel cited America’s heart-warming history. With its production, the United States used to have a steel industry that was respected, widespread, moderately effective, and an important employer.

Personal experiences influence what one is willing to give up. “I would sacrifice olives from Greece because I have them right now and I don’t eat them,” said one. “I have a surplus of nylon clothing that is definitely [not] necessary considering how little I actually go to the gym,” admitted another. “I don’t want to sacrifice my eating preferences under any circumstances,” a Nutella lover wrote.

Differences in reasoning by students who are the upcoming “young tigers” reflect diverse perspectives, priorities, and preferences. There was little room or willingness to change one’s views. Consequently, any new trade policy will require room for implementation and will face strong variance of support.

Americans have large and acceptable self-interest, which must be understood by policy makers. I perceive personal self-oriented desires to account for approximately one-fourth of the tipping power leading to decisions. These special needs and expectations must be recognized, affirmed, appealed to, and rewarded with clear commitments to make and fulfill promises. Ignoring the smiles, the pleasures, and the extent to which life is affected by policy and its collateral effects is done at one’s own peril. It’s not all economics!

• “Socialism Slows Progress”

My annual assessment of the intellectual and economic proximity between both the United States and Europe indicates ongoing disenchantment and a growing psychic distance from each other. Conditions have changed not all for the better, perhaps because of the thriving growth of socialist thinking. The public preference given to the group over the individual is dangerous to the quality of life in both regions.

England used to stand out for the views and perspectives by its educated experts on money and markets. Now they don’t know and don’t care. New announcements and shifts are just shrugged off or, worse yet, ignored. Refusing to think or getting involved is the equivalent of Socrates’ poisoned hemlock cup—because conditions will not improve by themselves.

British institutions, which label themselves as European, need to rethink their position as to its meaning in times of Brexit. Prime Minister Johnson may not defuse conflicts and polarization. How to help ship captains make a choice between the drowning migrants and personal jail time for their rescue? Are we all in the same boat? Even in theater performances the audience and troupe performances have lost their traditional bite.

Germany has a whole set of growing problems. I am not referring to the physical tremors of Chancellor Merkel. When standing is a problem she can sit. In the United States, President Roosevelt served the country despite difficult illnesses, for more than three terms.

But I am concerned about the diminution of German ability to rely on its traditional strengths. When German intellectuals talk about U.S. policies there is very little well-formed reasoning, or even desire for input and learning. Rather, flash judgments and condemnations are made, remindful of the checking of boxes.

When the official airplanes of both the chancellor and the president repeatedly either can’t fly or must return to land right after take-off, then the motto of “advancement through technology” does not fare very well. Misleading public information on air contamination by car diesel engines is a shameful event. Failed technology to measure societal impact of government action is wasteful and inefficient. Expropriation of rental property owners will do little to increase the housing stock.

Increasingly, a sense of proportion and morality is missing. Take the case of Gustl Mollath who was wrongfully placed in a psychiatric ward for more than seven years, after complaining about banking irregularities. Now, the government offers him a paltry compensation of less than $200,000. At the same time, the Deutsche Bank provides publicly more than $10 million for ineffective managers to depart, and we don’t yet know about any additional hidden support.

The Nordic countries have lots of goods available but few of them are thrilling. The food offered, for example, was surely healthy, but not appetizing. Drinks were hard to get, even at events where conviviality was the objective, not a by-product. Big praise to the person who found and handed in my disappeared wallet. Thank you, Gary, from the West Coast!

European country governments regulate many things, issues, and interactions, a form of localized socialism I suppose. But it means fewer and quite expensive taxis, no Ubers, little adjustment to changing conditions. New government thinking stresses more taxes. France, for example, tries to impose a new 3 percent tax on large digital companies.

Italy still has very good wines and beautiful bridges from Roman days, but roads are decaying, and modern bridges are crumbling. Speed and parsimony cannot be the only criterion for quality public projects. Modes of transport appear to be routinely under strike during times of heavy use. Austrian government leaders are caught on tape offering the wholesale transfer of government contracts.

People seem content, but not driven or forward oriented. Many tasks are either left unfulfilled or waiting for foreign hands, which both the public and the private sector appear to encourage.

Overarching governing by the European Union seems to be often haphazard, contradicting the desires of the citizens affected. Leadership selection often brings on candidates who govern in spite, not because of themselves. Will the new team of Ursula von der Leyen make its mark with a reduction of regulation? All in all, it’s great to be exposed to history, and remember the British Pound as world currency, Greek and Roma palazzi, Marie Antoinette’s cakes, and the Viking battles. But for now, innovation, change, and a forward-looking perspective give good future odds to America.

• “Action and Imagery in the Middle East May Be Worth It”

President Donald Trump ordered the termination of Major General Qassim Soleimani of Iran in retribution for his terrorist plans and activities. Iran retaliated with a missile strike on Iraqi bases hosting U.S. troops. As the result, the president announced new economic sanctions against Tehran. Many now wonder whether this United States’s involvement is worth it.

But these exchanges are mostly imagery. Our policy planners need to have a vision of how our relationship with the world should be 20 years from now. Future generations should know that our policies, activities, efforts, and investments were worth the effort.

At issue is the long-term outcome of these policy measures. Today, if you ask the State Department for travel advice, you will be referred to the “Travel Warnings” website. On it, you will find many admonitions of where not to go and what not to do. For example, the State Department issued a global security alert on January 8, 2020, to warn U.S. citizens of heightened tension in the Middle East. Americans are advised to “keep a low profile, avoid demonstrations or large gatherings, be aware of surroundings and stay alert in locations frequented by tourists.”

The travel advisory puts Iran on a Level 4: Do Not Travel, which indicates growing risk of kidnapping, arrest, and detention of U.S. citizens. Iraq and Syria are also ranked Level 4 due to terrorism, kidnapping, and armed conflict. U.S. citizens who decide to travel to Iraq or Syria are advised to “draft a will and designate appropriate insurance beneficiaries and/or power of attorney” and to “discuss a plan with loved ones regarding care/custody of children, pets, funeral wishes, etc.”

All these measures are helpful, but what is needed is continued long-term thinking as to how we will achieve globally a rating of Level 1 as we have for Canada and Hungary, which encourages travel with normal precautions. Being American should eventually be a sign of safety and security, as it was for the biblical St. Paul. A brief review of the life of St. Paul, also called the 13th apostle, may provide guidance and inspiration. His birth name was Saul. He was a Jew and converted to Christianity. He was born in Tarsus of the Roman Empire, which made him a Roman citizen. He was an indefatigable traveler, an early globalist who wrote lots of letters, many of which significantly challenged the status quo, and therefore were written missives equivalent to many missiles. He established churches in Asia Minor. He evangelized in Macedonia, Thessalonica, Athens, Corinth, and Malta. During his life and travels, he was often met with great hostility and persecution. The Roman emperor himself was none too pleased with Paul’s preaching and traveling. In an era of multideities, Christianity was not exactly popular in the reigning circles of the day.

What are the lessons here? St. Paul reached out to the world. His message was controversial, but it has survived quite well until today. He was not popular for his message—but he got the word out. He did not hesitate to go to the far corners of the world of his day. In spite of all the controversy and hatred that he faced, the people he encountered abroad did not harm him. Even when he was a captive in the provinces, he was untouchable and treated with respect and hospitality because he was protected by his citizenship of Rome.

St. Paul’s circumstances can be our guide for a vision of the future. We are proud to be Americans and the world should know it. There are special conditions associated with American citizenship—and our exposure and policies should enhance rather than hide that fact.

Some of that “specialness” is reflected in our international policies. In a statement addressing the nation the day after the strike against Major General Soleimani, President Trump stated that “under my leadership, America’s policy is unambiguous to terrorists who harm or intend to harm any American. We will find you. We will eliminate you. We will always protect our diplomats, service members, all Americans, and our allies.”

In order to find out whether the effort was worth it, we should see where we are in the next generation. By then, when requesting a travel advisory from the State Department, here is what I’d like to see: “As a traveler, you are advised to carry identification of being a U.S. citizen with you at all times. Wear an American flag pin to let everyone know that you are an American. This way, you will carry an umbrella of respect, safety and security. Remember, you represent your country. We wish you success in your travels.”

Some might think of such a vision as perhaps lacking in humility. I see it as a worthwhile goal to strive for, as a translation of a national effort onto individual well-being, and as an outcome that will truly help bring peace to the world. After all, if Americans are secure, others will be as well.

A National Export Assistance Policy for New and Growing Businesses

Exporting is one of many market expansion activities of the firm. As such, exporting is similar to looking for new customers in the next town, the next state, or on the other coast; it differs only in that national borders are crossed, and international accounts and currencies are involved. Yet, these differences make exports special from a policy perspective. From a macro perspective, exports are special because they can affect currency values and the fiscal and monetary policies of governments, shape public perception of competitiveness, and determine the level of imports a country can afford. Abroad, exports augment the availability and choice of goods and services for individuals, and improve the standard of living and quality of life. On the level of the firm, exports offer the opportunity for economies of scale. By broadening its market reach and serving customers abroad, a firm can produce more and do so more efficiently, which is particularly important if domestic sales are below breakeven levels. As a result, the firm may achieve lower costs and higher profits both at home and abroad. Through exporting the firm benefits from market diversification, taking advantage of different growth rates in different markets, and gaining stability by not being overly dependent on any particular market. Exporting also lets the firm learn from the competition, makes it sensitive to different demand structures and cultural dimensions, and proves its ability to survive in a less familiar environment in spite of higher transaction costs. All these lessons can make the firm a stronger competitor at home. Finally, since exporting is only one possible international marketing strategy, it may well lead to the employment of additional strategies such as direct foreign investment, joint ventures, franchising, or licensing—all of which contribute to the growth and economic strength of the firm, and, on an aggregate level, to the economic security of a nation.

Many see the global market as the exclusive realm of large, multinational corporations. It is commonly explained that almost half of U.S. exports are made by the 100 largest corporations, and that 80 percent of U.S. exports are carried out by only 2,500 firms. Overlooked is the fact that thousands of smaller sized firms have been fueling an U.S. export boom, which has supported the economy in times of limited domestic growth. A large portion of export shipments from the United States are for less than $10,000 and there are more than 100,000 U.S. firms that export at least occasionally. The reason for this export success of smaller firms lies in the new determinants of competitiveness, as framed by the wishes and needs of the foreign buyers. Other than in the distant past, where price alone was at the forefront, buyers today also expect an excellent product fit, high levels of corporate responsiveness, a substantial service orientation, and high corporate commitment. New and growing firms stack up well on all these dimensions compared to their larger brethren, and may even have a competitive advantage. Take the issue of product fit. In today’s era of niche marketing, where specialization rather than mass production is prized, the customization of operations is often crucial. In a large corporate system, changes are often subject to delays as various layers of management are consulted, costs recalculated, and multiple communication levels exercised. In a smaller operation, procedures can more easily be adopted to the special needs of the customer or to local requirements. Smaller firms can offer clearer lines of accountability since the decision maker can be more visible and responsive to the customer. During negotiations, or later on, if something does not go according to plan, the customer knows whom to contact to fix the problem. Smaller firms are better equipped to handle exceptions. Since international sales situations have high variability, either in terms of the timing or the nature of the sale, a smaller firm can provide a more flexible framework for the decision process. Exceptions can be handled when they occur rather than after waiting for concurrence from other levels of the organization. Smaller firms offer their customers better inward and outward communication linkages, which are direct between the provider of a service or product and its user. The result is a short response time. If a special situation should arise, response can be immediate, direct, and predictable to the customer, providing precisely those competitive ingredients that reduce risk and costs.

Smaller firms also have the most to gain from the experience curve effects of exporting. Research by the Boston Consulting Group has shown that each time cumulative output of a firm doubles, the costs on value added decrease between 20 and 30 percent. Owing to the small original base, it is much easier for a new or growing business to double cumulative output and reap the resulting benefits than it is for a large established firm. Most importantly, once a small firm goes international, it usually does so with the full commitment of the owner and top management. The foreign customer therefore knows that this is an activity, which has the management’s heart and soul behind it. In today’s times where we are moving, on a global level, away from transaction marketing and toward relationship marketing, such a perception is crucial in providing the winning edge.