Sounds to me like the blame should not be with China, but for the short-sighted businesses who export their operations out of the US in pursuit of a quick buck.
Exactly. A higher educated workforce will make it easier to transition to and from different jobs. A workforce that isn’t burdened by capital intensive machinery is more diverse than say a guy with a pressed mold injector, or a machinist with a boring tool.
I see the exact opposite.
A highly educated worker is pretty useless on his own.
Try this equation :-
[Raw Materials] + [Labour] + [Machinery] => [Consumer Goods] + [Machinery]
At present the Chinese are trading a lot of consumer goods for raw materials and Machinery
In time they will become self sufficient in machinery, so they will only be interested in obtaining raw materials. Unlike the Japanese, they have no need to ‘export’ their surplus, they have a vast domestic population.
By establishing sources of raw materials now, they can build up the bi-lateral trade links - eventually I suspect that they’ll lose interest in multi-lateral trade links.
I am a no expert on China or economics. But a guy I know who is says that China is a financial power in the world becuase it goes its own way and does not listen to any advice that the IMF or World bank try to give.
Apparently following what the IMF says has worsened the economies of Brazil, Argentina, Malawi, Ethiopia, Kenya and Niger.
I am no expert…
Especially if the government decides that more factory workers are needed, and has soldiers burn down the farm, so options 2 and three become the same. I’ve heard of that happening in some countries; not sure if China does it, but I wouldn’t be surprised.
If there comes a time when it would be less expensive to produce things domestically, the domestic companies would suddenly appear.
No, they wouldn’t. It takes time to acquire the hardware to manufacture things, and to train people to use that hardware. Easily long enough for major economic problems to occur. You can’t build a whole manufacturing industry “suddenly”, especially without government aid, which is how it would happen in America.
If it’s not sustainable, is it really “the invisible hand”?
I’m not trying to be snarky or anything, but I thought that th einvisible hand just “was” and it wasn’t a matter of it being sustainable or not.
Yes, you can close a factory in a day
Break it up within a month
Disperse the workers within a year
- but it takes a long time to build and assemble a production unit.
What strikes me as interesting is that as far as I am aware, Chinese production is not that sensitive to consumption elsewhere. We could live for a couple of years without importing anything from China.
Well, I kind of doubt this-try to buy plumbing supplies-like copper pipe, couplings, valves, etc.-they are (almost) all made in China! As I said, you can buy high-end stuff (made in the USA, Germany, or Italy), but the low-end stuff is ALL Chinese!
Fair enough, but if that stuff gets hard to get hold of, will you suffer ?
My point is that China is currently supplying us with cheap inessentials
- should they supply essentials, then we would need to worry
Umm, what else would you use to build a house or any other building you want plumbing in? I would consider those fairly essential items. The Chinese market has already driven up the price of cement and concrete, which played havoc with the construction industry for a while. Road construction is feeling it too.
All said, China is playing us the same way we’ve played others. Tit for tat and all that.
And as much as business failed us by outsourcing, government failed us more by allowing it to happen and then not doing much to help retrain workers and create a higher educated workforce (who can then get jobs at Starbucks with the other grad students.)
Well, we had our chance to elect Tom Harkin president in 1992. (I campaigned for him.) “Retraining” was a core policy of his campaign.
Yes, it is. The invisible hand is just market forces/pressures which cause a rational person to act in a certain way.
If all they are doing is producing manufactured goods, then I’ll gladly take the US as the higher educated work force. A higher educated work force can always sell services which don’t require capital intensive machinery that depreciates, takes up resources, and can become obsolete. A service economy is more flexible than a manufacturer economy. If I’m making chairs, I can then make engine parts? Not in my company. A service economy is to a manufaturer economy, as a manufacturer economy is to an agrarian economy. Can a machinist also tell a business owner what his operational expenses are, what his average return on investment is, how to profit maximize or innovate his products? The US didn’t get to its place economically by remaining a manufacturing economy.
The underlying assumption here is that the US manufacturing sector has undergone a significant contraction in output since China started expaniding hers. I’ve never seen any hard figures to indicate that this is so, and in the book China Inc., it is claimed that exactly the opposite has happened: Every year in recent memory has seen US manufacturing output INCREASE. I don’t have the book handy right now to give a proper cite, but it seems pretty believable. The US is, after all, the innovation and technology center of the world.
The hard figures that I HAVE seen from the protectionists all go on and on about one thing: EMPLOYMENT in the manufacturing sector has dropped. Not output or total deliveries, just employment.
…which begs the question: Has anyone seen any figures to indicate otherwise?
Huh?
The Chinese government is not a rational actor in the market. This statement is a platitude with no relevance.
If the Chinese government was, in fact, a rational actor, it would not have piled up a trillion dollars worth of reserves. The point of doing so is not so much to bankrupt the USA, which might work for an ephemeral moment, but which as a policy goal is utterly irrational, the point instead is to dominate its area, east Asia.
If you have any doubt about that, take a look at the current situation in Thailand:
In a normal world, given an even tangentially rational Chinese government, the Chinese currency would have appreciated far more than it has, the Chinese people would, as a result, not have found a trillion dollars of their wealth tied up in American debt securities and been far richer, and Thailand’s only worry would be how “hot” the money pouring into its stocks and bonds was, not whether the consequent rise in the baht would make their currency uncompetitive.
A long time ago I was talking to an American guy from Ford.
He said: ‘People talk about the future is going to be in the service economy, what are people going to do ? Shine each others shoes ?’
I could see his point.