I will begin my comments on President Obama’s State of the Union address with his reference to my forte, international trade and investment.

The president promised to double US exports in five years and thereby create 2 million new jobs. A great sound bite but you don’t just wave a wand to make this happen. First of all you need to better understand what the US exports. The president was apparently thinking in terms of manufacturing products that we will sell in Bongo Bongo and Pango Pango. But as I have stated in the past, America’s export strength lies in the export of services, rather than products.

We still rule the roost in certain areas of product exports. Our aircraft, military and commercial, are still the world’s standards. Our oil drilling equipment is still the most widely used. We have stiff competition in building nuclear power facilities but can do well here. Our medical machines are also very competitive. But by and large our export strength lies in services.

My favorite example of US exports in today’s world are films. Hollywood , not Bollywood, still rules the international market for films. In fact we even make films to specifially sell abroad instead of in the USA. We also dominate the market for television programs with our only serious competition here coming from our neighbors in Mexico.

And as much as we are beating up on our banks, our financial services industry is a major exporter. How else do you think a “credit bubble” in the USA spread around the globe? Other US business services also do well abroad, think FedEx and UPS. And of course our retailers make big bucks in foreign lands, think WalMart.

What one has to remember in the export of services is that we do not box products here to send abroad. Instead we send ideas that are used in other countries. The films we make are sent as “masters” that are reproduced and distributed in other countries, usually by local firms. The income comes back to the USA in the form of royalties. WalMart builds stores in other countries that are built by local firms and staffed by locals. The return to the USA comes in certain royalty payments and profits for the firm. Likewise UPS builds shipping centers, buys local trucks and hires local employees in other countries to deliver the goods there.

What all this means is that any increase in our exports will be dominated by exports of services, which do not translate into many more jobs in the USA. Yes, the home office will need additional staff to back stop the foreign operation, but most new employees will be in other countries, not the USA. And yes, the films will use American actors, at least in part.