An upstart nation is the heart of intellectual piracy. One of its top officials urged his countrymen to steal and copy foreign machinery and intellectual property. Across the ocean, a leading industrial power tries in vain to guard its trade secrets from the brash upstart.
This sounds like a description of China. Surprisingly, this describes the United States in the late 1700s and early 1800s. And the official endorsing thievery was none other than Treasury Secretary Alexander Hamilton.
Fast forward to today. The United States is accusing China of engaging in behavior similar to what we embraced some 200 years ago. What was done then helped America jump ahead its European rivals to become an industrial giant.
The Trump administration is trying to force Beijing to abandon what it calls its no-holds-barred scheme to exploit American technology in order to speed its own economic modernization. The administration alleges that Beijing steals trade secrets and coerces U.S. companies to hand them over in order to participate in the huge Chinese market.
Over two centuries ago, the young United States was an agrarian and backward country, lacking both industrial know-how and skilled workers.
So, how to get the nation going so as to break away from its backwater status and compete with other nations? Hamilton was determined to transform the country. He even publicly stated that the United States needs “to procure all such machines as are known in any part of Europe.”
However, that wasn’t going to be easy to accomplish. Great Britain was the leader in technological advances and wanted to keep it that way. One way to do this was to impose heavy fines on anyone who tried to smuggle industrial equipment out of the country. Fines up to 500 pounds ($55,000) were imposed for critically important machines.
Equally important as technology was the need for highly skilled workers. In this era, there were no manuals – knowledge was in the head of workers. Consequently, these workers were highly prized and heavily recruited, especially by America. To counter this, Britain threatened anyone who helped place a worker in the United States with a year in prison.
Despite the risks. people still stole industrial knowledge.
One such “theft” was accomplished by Francis Lowell. While on a tour of Britain, Lowell visited many British textile factories. Rather than writing anything down, he instead memorized various machines’ designs and inner workings. As it turned out, this was very shrewd of Lowell. Based on a tip, his ship was stopped and boarded by British officials. Naturally, they found nothing – all of his stolen knowledge was in his head!
Intellectual pirates were celebrated in the young United States, just as they are now in China. Today’s Chinese industrial spies sometimes earn public recognition. Recently, the Justice Department claimed that a former engineer, accused of stealing trade secrets, did so in part to win the Chinese “Thousand Talent” award.
Early American efforts to gain a technological edge were nowhere near as comprehensive as China’s efforts are today. China has established a goal by 2025 of being the leading country in such fields as robotics, space, and electric cars.
Despite this effort by the Chinese, the United States has one big advantage over China. Skilled foreigners still want to immigrate to this country and not to an authoritarian Communist regime.
A key unanswered question is can a repressive country like China become a mecca for innovation.