Thursday, July 11, 2019

Vijay Prashad - Why Trump Caved to China and Huawei

Big government bad, small government good, say many on the right, and that regulations are said to be bad too as they stop innovation and enterprise. Hmmm!

I remember reading years ago how Silocon Valley had dominated the PC's and software market, but when it came to cell phones (what we call mobile phones in the U.K) Europe had left the US behind. This was because the EC had set up regulations and standards for all cell phones to operate under, but in the U.S they believed in having less regulations and letting the best system win out in the free market. So, in the U.S you had all these competing systems which couldn't work with each other, and so the system was fragmented and a pain for customers, who often needed to have more than one phone to be able to ring friends and clients on different networks.


The erosion of U.S. firms in the telecommunications industry can be directly attributed to the deregulation of industry by the Telecommunications Act of 1996. Many firms fought to gain market share, with different mobile standards and carrier plans with different configurations that made it hard for consumers to switch companies. This fragmented market meant that no firm made the necessary investments toward the next generation. It has meant that U.S. firms are at a grave disadvantage when it comes to the next generation of technology.
The rapid advance of Huawei, and the European firms, threatens both U.S. technology firms in particular and the U.S. economy in general. Over the past few decades, these U.S. technology firms have become the main investors in the U.S. economy and are the engines of its growth. If these firms falter before companies like Huawei, then the U.S. economy will begin to splutter on fumes.
Trump’s war against Huawei is not as irrational as it seems. His administration—like others before it—has used as much political pressure as possible to constrain the growth of technology in China. Accusations of theft of intellectual property and of close ties between the firms and the Chinese military are meant to deter customers for Chinese products. These accusations have certainly dented Huawei’s brand, but they are unlikely to destroy Huawei’s ability to expand around the world.

No comments: