Estimated reading time: 5 minutes

It's Only Common Sense: It All Began With the Wall

Editor's Note: To listen to Dan's weekly column, as you've always done in the past, click here. For the written transcript, keep reading...Remember how great we felt November 11, 1989 when we saw the wall go down in Berlin? Man, that was a great day--it marked the end of the Cold War. And then, two years later, the superpower then known as the Soviet Union broke up and just like that the whole world opened up to us. It was a good thing--or so we thought. Don’t get me wrong, for the most part it was a very good thing. The borders were gone and freedom rang throughout the world…for the most part.

On that fateful November day, the world market opened up for the first time, but we thought of things in strictly political terms back then. We sure didn’t think about what that wall coming down would mean for us economically, did we?

If we work our way back in time, we can see that the world market opened up and that, for the first time in years, the United States would now have to compete on a global stage.

As Thomas Friedman and Michael Mandelbaum said in their excellent book, That Use to be Us: How America Fell Behind in the World it Invented and How We Can Come Back: “At the end of the Cold War, America resembled a cross-country runner who had won his national championship year after year, but this time the judge handed him the trophy and said, 'Congratulations. You will never compete in our national championship again. From now on you will have to race in the Olympics, against the best of the world…every day, forever.'"

What we didn’t realize was that we would have to go up against the rest of the world--and what a world it was. India and China had been gearing up to enter the market for the previous 10 years. All that was holding them back was the freedom to move globally. Meanwhile, Japan had been kicking our butt for a decade at this point.

Japan could only compete in two areas: Cars and consumer electronics. China, on the other hand, could compete against us in all areas, all products, and all markets. And for the first time--as with Japan and, later, China--we faced cheap, skilled labor opposed to cheap, unskilled labor. The rise of China since 1989 is nothing short of remarkable.

Meanwhile, back here in the U.S., we were jumping around like the munchkins singing "Ding, Dong! The Witch is Dead." But what we did not realize was that it was a good thing having an enemy--it was good to have someone to worry about, someone to compete with, someone to measure ourselves against--especially since that enemy was the perennial loser, the Wile E. Coyote to our Road Runner; the Washington Generals to our Harlem Globetrotters. Over the years since that scary Sputnik wake-up call we had come to our senses and learned how to kick the USSR’s butt year after year. Whether it was business, lifestyle, or hockey, we had their number.

It made us feel great, it made us feel like winners. But now they were gone and we relaxed, we took it easy, we had no idea that now we had beaten our biggest geopolitical enemy we would have to face our largest and most dangerous economic foe: China.

In fact, we were so comfortable with China we became enamored of all of that cheap labor and friendly business climate. Our big companies, led by Motorola and IBM, were soon flying over to China on the fastest jets available. They became great friends with the Chinese and showed them how to compete against us. They turned over our technology as fast as they could write purchase orders. Our industry went from almost 2,000 board shops to approximately 250. The furniture industry was all but wiped out, as was the consumer electronics industry, and many others--all of this leading up to 2008 when we were hit with the worst economic times since the Great Depression.

But there's hope--things are getting better in this country and China is stabilizing. China is crossing the line into prosperity, a time when their people are making good money, enough to increase their standard of living. The Chinese want to live like us; they like our products and, most importantly, they want our way of life.

Forty years ago, Lee Iacocca complained that he could not sell cars to Japan and that all we could sell to Japan were blue jeans and hamburgers. Well, he was right about that, but what he didn’t realize is that blue jeans and hamburgers changed Japan forever. They can’t live without them anymore. In fact, Japan has become Americanized to the point they are losing their own culture. That's what we sell in America: A culture of optimism and hope. No matter the odds, we find a way to win and that's what we will see happen in the next few years.

Thomas Freidman once said there had never been a war between two countries with a McDonald’s. We are seeing that theory being threatened right now as Putin and his Russian thugs try to take over Ukraine. There are 400 McDonald's in those two countries. One of Putin’s ministers said recently that he wants to rid the country of American culture and that once McDonald’s is gone they'll start on Pepsi Cola.

Really? Does he think he's going to be able to do that? Does he really think he can build a few new walls and close borders? I don’t think so. The people who tore down the Berlin Wall while sympathetic soldiers stood by and watched will not allow themselves to be re-enchained by a megalomaniacal despot. The world is wide open, people have tasted freedom, and, just like here in America, they aren't going to give it up without a fight…that’s another influential cultural thing that we sell.

How are you going to keep them down on the farm after they’ve had a Big Mac? It’s only common sense.