By allowing China to export into us and peg our currency - we financed China's path into the world economy. China did not become big economic player because we were idiots. We allowed it so that they had a stake in western economy. I think the concept was a good one but the spigot should have be turned of sooner.
To a certain extent, there is an advantage to not having a manufacturing economy. Not only is it cleaner, but you don't have the obsolecence that comes in after only a few years. Perhaps it will be easier to re-industrialize than we think. Of course, we will probably need help at that point because if we don't get it, its going to be hard to re-learn all those tricks of the trade we have so willingly given up for a service economy.
There are certain, extreme high-value added goods, that few nations used to be able to make. Some of these things included commercial aircraft, advanced optics, highly advanced medical/scientific equipment, microprocessors, advanced medications (of the nano class), etc. As globalization has taken root, technology transfers have increased at the speed of fiber optic cable. When Intel or Boeing builds an advanced plant in Taiwan or China, they've just unlocked the keys to decades of R&D, that the Chinese won't have to pay for and duplicate. Intel is trading cheap fabrication and governmental tax breaks in exchange for what they know will be a loss of technological and manufacturing secrets. China will not reciprocate, because they care more about long term national security, and this is woven more so into their official doctrine and actions, than it is in the United States. That is a short term strategy to profitable quarters, and a long term strategy to decade-ish ruin, IMO.
Protectionism does not work, even though it sounds so logical, patriotic and intuitive. A good example is the Italian auto industry in the 80s, now an infamous graduate school case study. You can not close down the borders, penalize trade and expect to prosper. Within 20 years of 'protectionism' all your 'protected' industries will be uncompetitive in the global marketplace and close to bankruptcy. When in history has this ever worked?
I agree that protectionism is destructive. The problem that we face is how do you balance completely free trade in an era when you have both an intertwinement of commerce and national security (means of production, technology) and whereby some countries view a strong economy as a necessity of national defense, and other countries view it separately from national defense. Maybe I'm a radical, but I don't think you can separate the two - in other words, if you can't maintain a high level of technology, the ability to fabricate highly technical and advanced goods, and your economic infrastructure is weak (lower government revenues and low infrastructure and R&D spending), you can't maintain a strong national defense.
Volker also witnessed the panic of 1837 and says that the current financial crisis is worse than that, too.
Protectionism is coming in time. Once civil unrest and unemployment hits double digit numbers pressure on Washington to implement Buy American.
volker parents and him lived through the great depression and knows what wall street is and what is is not . when everybody was making money in the bull market from 1988-2000 nobody wanted gov't regulation as to retrict speculation or more money entering the market for derivatives. now that the house of cards is over. eveybody wants regulations. the amount of deregulation from 1982-1997 basically removed all the regulations in 1929 so 80 years of no major crash or lock up(fuck -up) of the financial markets. the markets are locked up fucked up now. this is global so it's not about trade or protectionist b.s. my last post.
Definitely. This was clearly planned since the time of at least Nixon. Didn't mean to imply anything different...
WSJ has an article today that a bill will probably come soon to put a limit on outsourcing. Infosys and others are actually looking to hire Americans stateside in anticipation of such an event...