Detroit Lions Coach Matt Patricia Might Cure the Right of Its China Obsession

Before being named head coach of the Detroit Lions, Matt Patricia spent fourteen seasons as an assistant coach for Bill Belichick’s New England Patriots, including six as defensive coordinator.  Think about that for a minute. Patricia spent fourteen seasons learning football from the greatest football mind the sport has ever produced.

And while the Lions on-the-field fortunes could certainly change for the better (they beat Belichick's Patriots on Sunday night), it’s apparent at least so far that the Patricia head coaching apple fell far from the Belichick tree.  When the lowly New York Jets are tying scoring records against your team, it’s usually a sign of something amiss.  That the Lions went 9-7 last year under Patricia’s predecessor is also worth mentioning as a way of alerting readers to the fact that the new head coach hardly inherited a cellar dweller. 

Notable about all this is that assuming Patricia flames out in Detroit, his failure will hardly be a surprise. At least so far, none of Belichick’s disciples (Romeo Crennel, Eric Mangini, Josh McDaniels, and Bill O’Brien) have set the world on fire away from the Patriots coach.  Come to think of it, neither have Duke basketball legend Mike Kryzewski’s former assistants.  Looked at on the player level, Bret Hundley spent a year learning from quarterback Aaron Rodgers, but once asked to replace an injured Rodgers last season his on-the-field exploits in no way resembled those of the future of Hall of Famer. Outside of sports and into business, how did Jack Welch lieutenants Bob Nardelli and Geoff Immelt do once on their own….? Stating the obvious, the gap between learning the processes of the vital few and actually executing on them is Grand Canyon sized. 

Which brings us to a recent Wall Street Journal editorial (“The Missing China Trade Strategy”) about China and its trade policies.  While the newspaper’s editorial board has routinely criticized President Trump’s protectionist bluster that is rooted in confused obsession with what is an accounting abstraction (trade deficits), the same editorial board increasingly gives voice to the Trumpian view that China “threatens the global trading system” for the once communist country having gone “rogue” amid its emergence from staggering poverty. In addition to its criticism of China’s alleged failure to “protect intellectual property,” the Journal’s editorial board voiced other complaints last week.  What’s odd is that the complaints don’t sound like the Wall Street Journal’s editorial page. At all. 

The previously mentioned editorial lamented how “Beijing responded to the global financial crisis by directing credit to state-owned enterprises,” but then it was the federal government’s decision right here in the U.S. to direct credit to banks and carmakers (that private-sector investors had already rejected) that arguably caused the financial crisis to begin with.  The editorial added that Beijing hasn’t kept its promise to “let foreign companies compete” in China, but Chinese buyers now account for 1/5th of iPhone purchases, 1/4th of Boeing purchases, 3,400 Starbucks stores (with another 3,400 on the way), not to mention that China is the 2nd largest market for American brands like McDonald’s and Nike.  So while Beijing would benefit Chinese consumers and businesses by scrapping all tariffs, it’s somewhat of an overstatement for the Journal to suggest the country hasn't opened itself to the world’s plenty. 

Bringing it back to intellectual property, the Journal’s suggestion that Beijing has gone “rogue” in “requiring foreign companies to turn over intellectual property” amounts to another overstatement. We know this simply because Nike ($133B) and Apple ($1.05T) are two of the most valuable companies in the world despite China being the main country for the manufacture of their world leading products.  If China were really a haven of corporation-weakening IP thievery, it’s not unrealistic to assume that this would reveal itself through a plummeting market capitalization for both corporations. Looked at another way, if Beijing’s presumed thievery doesn’t much concern Phil Knight and Tim Cook, should what concerns Trump and Peter Navarro concern the Journal’s editorial board?  More realistically, so-called IP theft doesn’t much matter.

Indeed, if we ignore how very much Bill Gates and the late Steve Jobs capitalized on good ideas lifted (Jobs bluntly described it as “stealing) from elsewhere, we can’t ignore that Microsoft and Apple have numerous failures over the decades that each can point to, and that cost each company billions. If the top businesses don’t consistently know what’s valuable and what isn’t, can government and/or corporate thieves in China? 

To believe that IP theft is actually effective for governments is to believe what we know isn’t true: that governments can successfully direct capital to its highest uses in the form of investment. Not only can governments not reasonably pick winners or market-share winning production processes, neither can the great minds at the world’s most valuable companies roll strikes with any kind of consistency. Stating the obvious, it’s hard to see into the future, and that’s why so much of Amazon’s ($934B market cap) experimentation has led to losses that can be now measured in the billions. 

At the same time, it’s at least worth contemplating the end result of Chinese IP theft that might actually improve production processes within the country. If so, good.  Not only is it not the federal government’s job to protect U.S. businesses from freely-arrived-at decisions to locate production in one of the world’s biggest markets, assuming the Chinese lift ideas from American businesses in an imitation of Gates and Jobs, Americans will be the winners twice.  They will be because they’ll have the inhabitants of a once desperately poor country increasingly meeting their needs on the way to daily raises, but they’ll also be safer.  The Journal fears China’s establishment of military “hegemony,” but if so, it should cheer as much trade as possible between U.S. and Chinese producers.  The more we trade, the more we learn from and enrich one another, the more expensive that war between the two nations becomes.

For those still concerned, stop and think about Jack Welch, coaches Belichick (last Saturday's edition of the Journal ironically had a blurb about the poor record of Belichick's former assistants) and Kryzewski, and the various business, football and basketball minds who learned at the knees of the excellent.  That none of the savants mentioned has a brilliant “family tree” is very telling. Brilliance can't easily be stolen despite what we're being told on the way to the excusal of the Trump administration's mindless trade rhetoric. It’s quite simply hard to reproduce genius, and to presume otherwise is to frequently insult the genius. That’s arguably what the Wall Street Journal’s editorial board is doing as it bemoans so-called IP theft all the while calling for “new rules of the trading road" to fix what markets have long indicated isn't a problem.