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Globalism vs. high tech

Walking through the village during the Telus World Ski and Snowboard Festival (TWSSF) was an incredibly positive experience, with lots of big name companies stepping up in open defiance of the worst global recession in decades.

Walking through the village during the Telus World Ski and Snowboard Festival (TWSSF) was an incredibly positive experience, with lots of big name companies stepping up in open defiance of the worst global recession in decades. At a time when companies are scaling back, laying off, or otherwise struggling for survival it was an optimistic display.

There were, however, a few troubling reminders that the world order is changing right before our eyes.

For example, Pontiac was a major sponsor and exhibitor even as rumours were circulating about the automaker's demise. Those rumours were confirmed by parent company General Motors on the last day of the festival, with plans to phase out the Pontiac brand by the end of 2010.

That decision is a sad one for many reasons, not least the amount of support that Pontiac GMC has provided to Canada's alpine skiers over the years as a sponsor of the national team, national championships, and the Pontiac GMC Cup national race series.

Another TWSSF sponsor in crisis was Sirius XM satellite radio. Back in February the company was on the verge of filing for bankruptcy protection, the result of carrying too much debt into the recession.

Sirius and XM were separate companies at one point, but merged in mid-2008 when it became obvious that competition was creating a race to the bottom. The cost of launching communications satellites and developing receivers was huge from the outset, and the company is having difficulty financing debt while they build their subscriber base. At the time of the merger the two companies had more than 18 million subscribers across North America.

Still, a lot of people still aren't willing to pay an annual rate ($164.89 in Canada plus a $19.99 hookup fee) for satellite radio services, and some auto manufacturers haven't supported the technology as an option as much as Sirius XM hoped. Now, with rumours of bankruptcy hovering over the company, potential subscribers are no doubt wondering whether it's worth the risk to buy in.

I personally hope this service pulls through. I had a chance to demo a satellite radio for a week a few years ago, and I was blown away by the quality of sound and the amount of content available. If I spent more time driving or commuting I would probably own my own receiver by now.

All of this underlines how the global recession is undercutting high tech. We're not moving backwards exactly, and may actually move forwards in a few areas related to green energy, but I can't help thinking about how the globalization of the economy is making things tougher for innovators.

Go back just 40 years and the U.S. was primarily an industrial power, one of the world's leading providers of goods. It was only fair as Americans invented most of the important technologies of the 20 th century, from cars to planes to televisions to radios to video games to computers to cell phones.

As global markets opened up we saw more manufacturing moved to other countries like Japan and China, depleting the American industrial base by sending high paying jobs overseas. While the Japanese have become experts in advancing technologies, taking American inventions to the next level, China had cheap land to build factories, a massive workforce willing to work for next to nothing, lax environmental laws, a currency that wasn't subject to money market fluctuations, and cheap oil for several decades to keep the cost of plastics and shipping down.

As American industrial power moved off-shore the U.S. economy shifted into a financial power, which set up the current financial crisis.

Canada always benefited from the U.S. as an industrial power. The U.S. was a huge market for our natural resources, and any value-added products that we could supply like auto parts, milled lumber, steel, etc. Global demand has remained high for Canadian resources, but our once massive trade surplus has been shrinking each year and this year we posted our first trade deficit since 1976.

While I'm prepared to admit that globalism has some advantages and has helped less developed nations bridge the gap, there is an issue of fairness to consider. Countries that invent technologies should have a certain amount of lead time to exploit it, creating jobs, wealth and a drive for more innovation. Of course, since most companies are multinationals there is always the risk that they'll move research and development overseas as well, but that's where tariffs and patents can and should be applied.

There should also be a fairness test with trading partners to ensure that the playing field is as level as possible. China, for example, has tilted the field in their favour by allowing levels of pollution and environmental degradation that no other country would tolerate, by paying workers barely enough to survive, by jailing pro-democracy dissidents and by keeping their currency off the world market. For a communist country China is also spectacularly bad at meeting social demands like healthcare and welfare.

For technologies to advance there must be a market for it, and until recently that market was the U.S. By doing away with high-paying American jobs to reap a little extra profit, globalism is also depleting the world of innovators, investors and customers.