In fact, in a globally mobile and competitive labor market where the US is at the top of the cost curve, wage rates on the margin are set by the India Price for back office services and the China Price for goods. That's why IBM raised its job count in India from zero in 1993 to 130,000 at present, while cutting its domestic employment count from 150,000 to less than 90,000.[1]Say what you want about the economic realities of cheap labor, there's still the amazing passivity of American corporations and politicians in dealing with foreign competition. If the answer is "Move thousands of U.S. factories to China and import millions of foreigners to drive down wages and steal jobs from Americans," could someone please tell me WTF the question was? Was the most creative response to our declining economic fortunes passive surrender? Did we have no other choice but to enrich and empower a communist dictatorship in Asia?
If American voters have come to think we're cursed with sellout corporations and politicians, where is the proof that they're wrong? Trumpism is about this. Unease and dismay. Is there someone out there with the gall to ascribe this to "mismanagement"?
Notes
[1] "Stockman Exposes "The Black Swan In Plain Sight" - Debt Out The Wazoo." By David Stockman, Zero Hedge, 11/7/17.
4 comments:
Amazing statistic. Disgusting traitors in politics and big business.
Amen. Tens of thousands of factories are gone to greener pastures in China. None of the geniuses in Congress, the Commerce Department, or the Chamber of Commerce noticed that the "economic" advantage enjoyed by China involved manipulated currency exchange rates.
What?! Impossible! China must be strengthened.
It's unlikely that dollars sent overseas won't come back eventually.
OTOH, if the dollars stay away forever that will help keep the money supply under control. Any defense of protectionism is a defense of inflationism.
Joseph, the dollars may come home eventually but for now they're decidedly on the lam. Charles Hugh Smith writes that if we are going to have the world's reserve currency its necessary to SEND lots of dollars overseas to make that work. Send or allowed to drift.
I'm not an economist but my uninformed view is that money won't stay away from assets that are good deals, i.e., underpriced v-a-v assets in other countries. I'm thinking there's an equilibrium at any point. What would make holders of dollars stay away? Not every dollar overseas is a dollar that would be in the form of repatriatable earnings. Not my thing, as I say.
I wasn't necessarily advocating protectionism. Just not handing advantages to people who are not playing straight, such as manipulating currency.
Protectionism in the absence of the other country's manipulation is said by many free traders to be a bad, bad thing. At this point, the U.S. looks more to me like everybody's bitch and so a little hard ball is in order. We've got a large internal market and I doubt losing some trade accounts with other nations would be that devastating. But I don't want to be cavalier about it and will defer to more knowledgeable people.
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