“On Ninth Avenue in Manhattan, not far from where I live, there’s a small neighborhood hardware store called Chelsea Convenience Hardware, which is distinguished by its unlikely display of dozens of Russian nesting dolls in the storefront window. Inside, tools and supplies are piled to the ceiling, and when you enter, the owner, Naum Feygin, an immigrant from Boris Yeltsin’s Russia, looks up to ask you what you need.
The “convenience” in the store’s name is no misnomer, for the place is extraordinarily efficient. It is cheaper and faster than ordering from Amazon and offers expert advice that reduces the risk of buying the wrong thing. It is all too easy on Amazon, for example, to buy halogen bulbs that don’t fit your lamp base; Mr. Feygin has spared me many such headaches. And the store’s small size is a virtue: Unlike at Home Depot, you can be in and out in 10 minutes.
Nonetheless, Chelsea Convenience is set to close at the end of November, another casualty of rising commercial rents and competition from e-commerce. The closing is of no great economic significance, other than to Mr. Feygin. But it is a microcosm of the forces reshaping the United States economy, often paradoxically and for the worse. Why is a less efficient, less personalized and more wasteful way of buying screws and plungers — ordering online — displacing the local hardware store?”
“Over the last year or so, Mark Zuckerberg of Facebook and other American tech leaders have issued a stark warning to those who want to see more competition in the industry. It goes something like this: “We understand that we’ve made mistakes. But don’t you realize that if you damage us, you’ll just be handing over the future to China? Unlike America, the Chinese government is standing behind its tech firms, because it knows that the competition is global, and it wants to win.”
This — Big Tech’s version of the “too big to fail” argument — has a superficial nationalistic appeal. It’s certainly true that the Chinese technology sector is growing and aggressively competitive, and that many of its companies are embraced and promoted by the Chinese state. By one count, eight of the world’s 20 largest tech firms are Chinese. That would seem to suggest a contest for global dominance, one in which the United States ought not be considering breakups or regulation, but instead be doing everything it can to protect and subsidize the home team.
But to accept this argument would be a mistake, for it betrays and ignores hard-won lessons about the folly of an industrial policy centered on “national champions,” especially in the tech sector. What Facebook is really asking for is to be embraced and protected as America’s very own social media monopolist, bravely doing battle overseas. But both history and basic economics suggest we do much better trusting that fierce competition at home yields stronger industries overall.
That’s the lesson from the history of Japanese-American tech competition. During the 1970s and into the ’80s, it was widely believed that Japan was threatening the United States for supremacy in technology markets. The Japanese giant NEC was a serious challenger to IBM in the mainframe market; Sony was running over consumer electronics, joined by powerful firms like Panasonic and Toshiba. These companies enjoyed the support of the Japanese state, through the Ministry of International Trade and Industry, which pursued a nationalistic industrial policy thought to be infallible.”
Source: Opinion | Don’t Fall for Facebook’s ‘China Argument’ – The New York Times