Good NYT article by Roger Cohen making the point that firms moving operations abroad isn't necessarily a bad thing.

“A General Electric or a Goldman or a Twitter tries to work in each country in culturally appropriate ways, but at their base these companies hold an American set of values. And that is what influence is,” Xenia Dormandy, a senior fellow at Chatham House, told me. “Power viewed in state terms alone, or even primarily, is a false premise these days.”

In Londonstani's experience, that last sentence is key, and has been true for British influence abroad for quite a few years already. Wherever Londonstani has worked in Africa, Asia and the Middle East, job seekers want to work for foreign (ie Western) companies not solely because of the money on offer, but because they think their employers will operate a fairer set of standards. British organisations, in particular, retain a powerful association with values such as meritocracy, fairness, honesty. Londonstani isn't saying these are true (sadly in his experience, they often aren't) but the connotation is a powerful asset.

Speaking in a US-specific context, Cohen goes on:

"The conspicuous failure of American hard power — in Iraq and Afghanistan — has tended to obscure the way American soft power has flourished over the past decade. For a while soft power was undercut because the U.S. reputation was tarnished, but the Arab awakening has demonstrated how powerful American-driven social media are in opening up closed societies. Facebook and Twitter have been conspicuous. But when I.B.M. invests massively in Africa — which it has identified as the next major emerging growth market — it is also investing in an openness that advances U.S. interests."

Trade and communicate - It's the way forward

UPDATE: There's saying drummed into you if you do journalism training that seems to apply equally well to public diplomacy and strategic communications; "Show don't tell". This seems to be the crux of Cohen's point here.

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Interesting article by Clyde Prestowitz over at Foreign Policy continuing with the "economics of defence" and the rise of China theme by drawing attention to a little-noticed strategy that came out at about the same time as the defence guidance.

The commerce department's report on US competiveness, says Prestowitz, misses significant hindarances to US trade with emerging countries:

"At the moment, four great incentives are continuing to pull the production and provision of tradable goods and services out of the United States. These are foreign currency manipulation that overvalues the dollar, subsidization by many foreign governments of the offshoring of U.S. production capacity, the "buy national" policies and attitudes of many governments that force U.S. companies (and the corporations of other countries) to produce in a particular country if they want to sell there, and the subsidization of and risk reduction for capital investment by state-owned or indigenous private companies in designated "strategic" or "pillar" industries by a number of foreign governments. As long as the report doesn't even mention these elements, let alone address them, there is no hope for a shift in the downward arching American economic, industrial, and technological trajectory."

For the UK, trading with the rest of the world is even more important to the country's well being (the UK doesn't have the US's huge internal market). MP Kwasi Kwarteng, who has a Cambridge doctorate in economic history, offered this take a while ago on government's role in promoting manufacturing and trade. Acknowledging that it's a little surprising to hear a Conservative MP take positively about government support for the private sector, Kwarteng ends with this.

"Of course, we can’t mention the P-word, Protection, in polite company, but everyone is doing it. They always have. Once we recognise this, we realise that it makes sense to harness our excellent universities and scientists and our manufacturing traditions to preserve and grow our industrial base. Nothing could be more conservative than that." - Flashman would be proud!

As ever, Londonstani finds it difficult to resist a little econ geekery

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