Friday, April 21, 2017

trump's cluster-fuck

When I switched from engineering to learning in graduate school the kind of issues that have always interested me, the benefits of agglomeration was one of the many ideas that impressed the crap out of me.  With graduate school in Los Angeles, why seemingly everybody who wanted to be in the film and television business wanted to be in Southern California started making sense.  Computer science and engineering classmates heading to the San Francisco Bay Area--the Silicon Valley--was then easy to explain through one impressive piece of jargon: Localization Economies.

Or, we can use a simpler one-word term: Clusters.

Not only in the US, of course.  There are advantages in such clustering.  Which shows up in China too:
Many Chinese towns have grown fat off of single industries. Much of the world’s hosiery, for example, comes from the village of Datang, also known as “Sock City.” Songxia is dedicated to umbrellas. Jinjiang is all about zippers.
But, this post is not about China.  Instead, it is about the US.  About clustering in the US.  About how trump's illogical economic thinking can fuck up the productive clustering.  Yep, it is almost like every post is about the shitty trump and the shitty people who voted for the idiot.

The New Yorker has a one-pager on clustering related to one particular product: Deodorants.  They are clustered near the "International Flavors & Fragrances research-and-development center, in Dayton, New Jersey."
Ten miles up the road from I.F.F. is the factory that produces Power Stick, a low-cost deodorant sold in bargain stores like Dollar General and Family Dollar. Fred Horowitz, the C.E.O., showed me around the plant, where dozens of workers combine ingredients—silicon, scent, aluminum sesquichlorohydrate—and operate a machine that squirts the mixture into plastic containers. I wondered why this plant, where a cheap, lightweight commodity is produced by workers who require no advanced education, was in the U.S.; this is the kind of manufacturing more often done in China or Mexico. If retailers are selling Power Stick for a dollar, Horowitz can’t be making much more than a penny or so per stick. I asked if he thought he could increase profits by moving to a country where wages are lower.
A good question, right?  Deodorants are so darn inexpensive.  We have come to assume that anything inexpensive is manufactured in China.  Yet, here in New Jersey?  What gives?  Why hasn't that manufacturing moved out yet?
“No,” he answered. “I’m in the center of all the innovation. It’s all happening here in New Jersey.”
Major scent companies, as well as logistics managers, branding consultants, and firms developing new packaging and production techniques, pitch their innovations to Horowitz and the many other cosmetic manufacturers nearby.
Yep, localization economies.  Or, clustering, if you prefer that word.

So, where how does the trump clusterfuck happen?
Innovation has become an overused word, but, for businesspeople like Fred Horowitz, it has a real monetary value.
Pontus Braunerhjelm, an economist at Sweden’s Royal Institute of Technology, studies clusters and told me that it is all but impossible for government to create a cluster. But it can hasten a cluster’s death. The surest way is to cut off the flow of ideas from around the world. President Trump’s economic instincts—seeking to retain individual companies, not entire economic ecosystems; denouncing the arrival of people and products from elsewhere; cutting support for basic research and education—will only chase clusters away. A few hours on the stink highway would teach him that our highest economic hope is to be the place where the best from all over can come together.
trump's voters will soon realize how much they stink, just like their fuhrer!

2 comments:

Ramesh said...

The power of clustering is strong, but is morphing in different ways. In China, the clustering is all supply chain led - not ideas or people led. All the bra manufacturers are in Gurao because they have built a supply chain ecosystem around it. In fact, all of China can be considered to be having this effect. Labour rates in China are now two or three times that of South East Asia. And yet most manufacturing is still in China because of the supply chain clustering. No other country can match that and hence even with the disadvantage in labour rates they are the leaders.

When it comes to ideas, that is fraying. Because of connectivity, both electronic and physical, that is reducing its importance. Its still strong, as man is a social animal and will congregate around like minded people. But its no longer an absolute necessity for success.

Sriram Khé said...

Yes, "the supply chain clustering" is not something that the fucked up trump and his party want to even acknowledge, leave alone understand and respect.
I cannot understand this surreal situation where logic and evidence have been kicked out of GOP's collective thinking! And 63 million voted for this huckster?