China doesn't compete with America, it competes with other states at similar levels of development who operate in un-skilled and semi-skilled manufactoring markets.
first, there are industries of strategic importance that america should remain active in -- like steel production, machine tool parts, computer micro-chips, airplanes -- all of which china does, save for the last
second, chinese industry is more sophisticated than you suggest, and many innovations will likely now occur in china, not the west, as china is now the site of production -- i.e., innovation is more likely to occur where something is being made than elsewhere
moreover, china now has so much wealth held in savings that its state companies could simply hire the best and brightest engineers and scientists to come to china and work for them
WHY is it a good thing for so much financial power to be concentrated in the hands of the chinese government? WHY is it good that the Chinese are in position to take-over any number of american companies, if permitted (and they might well demand increased access to american companies under threat that, if not allowed increased access, they will divest themselves of their dollar holdings, i.e., cause the $ to lose all value)
Why do you want America to move back into low profit low yield industries, which would reduce wealth in China and in America?
because America cannot afford to consume foreign goods at current rates in perpetuity!!! at what point does the trade deficit become so large, and dependency on another country so great, that people start to question the sanity of free trade policies???
america should produce in the main what it consumes -- and should have BALANCED trade with the rest of the world (as it does with europe)
Saying that you want American workers to go back to low-productivity, low-pay jobs in sectors where you have no comparative advantage is a bit silly, IMO.
please define low and high productivity. i'm not sure how "productive" lawyers and waiters and customer service agents are, so maybe you can enlighten me . . . .
and as for comparative advantage, considering that China and America are both large continental countries with large populations (albeit China's much larger), i don't see how it is relevant. Manufacturing has shifted to China not because it has a comparative advantage in all kinds of sectors, but because in China WAGES are LOW and environmental regulations lax. And the average American has not moved on to higher opportunity jobs in the meantime, but to low-wage service jobs. (Wages in America have been stagnant for the last 30 years.) Cheap goods from China simply give Americans more opportunity to consume more -- and, as it happens, fall ever further into national debt.
what does America make that China consumes??? ask yourself that question
1. US politicians may pay lip service to free trade but they clearly do not buy into it. Politicians want to do what their constituents (i.e. winning coalition) want, so that they remain in power. For that reason politicians everywhere have been terrible on trade (Bush has been awful; the next president will be worse) -- because people don't trust free trade. They haven't been completely useless, because they experts are fairly consistent in telling them that free trade is a good, and because if the politicians were to enact some form of autarky (i.e. giving the people what they think they want), then everyone would become poor and miserable (except a lucky few croneys), and the politician would be out of office. Thus, these agreements are a compromise between what the people (winning coalition) want and what they can stand, and so we have things like NAFTA, which are not nearly free trade, but are a kind of least-worst option.
People don't trust free trade because they see how ruinous it is for the country!!! Again, at what point does trade become so unbalanced, and the trade deficit so wide, that you question the wisdom of free trade economists? At what point do you become concerned?
3. Why are people who spend their entire lives studying these systems and examining the evidence so unable to see what is apparently self-evident: that free trade is bad? And why is China so much better placed to see the truth?
free trade may be good in theory, and if conducted in a balanced fashion. but it is foolhardy to pursue free trade with a ruthlessly mercantilist geopolitical rival
i wonder how much of the apparent consensus on free trade among economists has to do with getting tenure at universities or lucrative jobs at banks? and how do you, vimothy, account for economists like
ravi batra,
emmanuel todd, brad setser,
nouriel roubini,
thomas palley and others -- or have these people not spent enough of their lives thinking about economic issues?
It's not a national security issue. And in any case, it gives foreign governments and nationals a stake in the US economy and so should give less incentive for foreign actors to do things against American "national interest" (whatever that is).
again, China and the CIC can only buy limited stakes in American companies, and all such acquisitions are subject to government review. however, it is likely that China will demand increased access to ownership of American companies if it continues to accumlate $ at current or greater rates. and so what we'll end up with is a massive sharecropper society, where americans work for the chinese and other foreigner investors, with profits going back to those countries. the capitalists will not simply be the ruling class, but rulers from other countries -- a crueler tomorrow
Why are you concerned about sovereign wealth funds?
actually, i initially mentioned the funds in the context of your argument upthread on the wisdom of the state versus the wisdom of the market -- as a kind of ironic comment
however, the funds concern me, politically, because they represent huge concentrations of financial power in the hands of states that are rivals of or culturally hostile to america (china, russia, the gulf states) -- financial power is no longer in the hands of western banks -- rather, financial power has followed manufacturing power to the far east
Why do you support national socialism when it is impossible to find a successful socialist economy anywhere in the world, either now or historically?
first, i think that demand-led economic growth is the only sustainable and reasonably just model for growth, and that the best way to ensure demand is to pay workers higher wages (which means limiting the size of the labor market, and limiting the freedom of corporations to shift production outside the bounds of that market)
second, i think that the global capitalist economy that you champion is precariously unbalanced and will soon come to a very hard landing
Why are you worried about the US balance of trade? Do you also worry about the California - Ohio balance of trade? Do you worry about the you - your local shop balance of trade?
the California-Ohio balance of trade doesn't worry me b/c such trade is fair, businesses in both states are subject to the same general regulations, workers make roughly the same wages, and so forth. moreover, both states are part of the same country, and both states use the same currency
as for me and my local shop, i would be worried if i had consumer debt
Why do you think that economists disagree with you on these points?
have you ever heard of paradigm changes??? free trade may have been the post-1945 consensus, but will it be the post-2025 economic consensus? again, i provide examples upthread of economists who dissent from free trade orthodoxy, though they might well support free trade in the abstract -- i.e., by orthodoxy i mean zealous belief in abstract propositions -- the real question here is trade POLICY
also, people say that global trade is not a zero-sum game, as the chinese build wealth, so too will americans -- their economy may eventually eclipse ours, but ours will have in the meantime grown larger in absolute terms
HOWEVER, political power as between states IS a zero-sum proposition
