Question/Comment: I just saw your story on the Nov. 29 NewsHour and was curious about the short supply chain advantage in terms of services vs. manufacturing. With so many consultants and service providers who essentially fly for a living, what is the trade off between efficiency and superior talent pool sourcing?
Thanks and I wanted to thank you for your excellent work and for some career advice you gave me back in 1996 (everything is going fine, BTW).
Paul Solman: So happy to hear things are going well, John. Did my advice have anything to do with it?
Meanwhile, I’m pretty sure I don’t understand your question. “Services,” which make up more than 80 percent of the U.S. economy at this point, comprise a huge range of businesses. A small portion of them use consultants and folks who fly around the world. Most provide what they do at home: the dry cleaners, retailers, cable guys and so on. And that’s true throughout the world.
The whole reason these businesses are immune to foreign competition, you might argue, is because of short supply chains: it just doesn’t pay to source your dry cleaning to China.
But if you’re talking about “tradable” services which the U.S. (or other countries) can export, I suppose the short supply chain advantage works against the U.S. at the moment. The local consultant would have an advantage over the overseas competitor, all else equal.
Maybe that will change, however, when virtual reality teleconferencing comes in. Holography, for example. (Remember that message from Princess Leia in one of the early “Star Wars” movies? Suppose she had appeared live in the spaceship.)
So maybe consultants will soon be able to leverage their skills – without leaving home. That should eliminate the short supply chain advantage.