Of course this is completely true. And most of the ones who move manufacturing to places like China may survive, and the ones which don't move to China, keep mfg in the U.S. will fail. I know for a fact this is happening to the furniture mfg industry right now in the U.S. So, what are <b>you gonna do</b>? Boycott furniture made in China (almost all furniture you see in any department store)? Will you choose instead to buy furniture hand-crafted in some Vermont shop, at 3X the price. Let us know which chairs you buy (BTW, <b>all the furniture</b> in my house is made in U.S., quite a lot of it is handmade, but that is just because I know people in the business)
Summer is just saying one thing. Earn foreign cash to pay our debt down. That is what its boil down to and there is nothing wrong with that. In fact, that is just bare bone fact.
Fine, and I'm sure that Summers truly hopes that the economy turn up, and exports boom. Problem is, Summers is not supposed to be in the "hope" business. He is supposed to be in the "economic plan" business. Just doesn't look like he has a workable economic plan right now.
True, not everything has a high labor cost component. America, Japan, Germany and others still produce certain things... but after considering labor, materials, transportation of materials and finished goods, regulations, protection legislation, and everything else... if there is still a significant competitive cost advantage to having it made overseas, it will likely be. And what about "services"? Low labor cost is the major reason US companies' customer service and tech support are done by someone in India or Philippines. Even some hospitals are digitizing x-rays and having them read by radiologists in Asia.
He also said that exports are very important in recoveries of financial crisis, will it be the Dollar index the next focus for their 'stimulus packages'?
in manufacturing, labor is only a minor cost now. Most of the work is highly automated with expensive robots/welders/whatever, in huge buildings cranking out large volume. Add in the long shipping times, and the huge distance to China is a disadvantage for a number of reasons. The fact is, a number of American companies now find doing it domestically or in Mexico, where company leaders can also travel to the site is making a lot more sense -depending on the product. China's more formidable weapon is not cheap labor - Vietnam is cheaper. But China has almost unmatchable beginning-to-end supply chains.
To resuscitate the middle class, simply keep the govt. out of republican clutches for the next 2 decades. You only have to look at the predominantly republican states to see that these trailer imbeciles are in a quick race to the bottom.
Nothing like waiting 40 or 50 years before noticing that you cant borrow and spend your way to prosperity. Its hopelessly too little, and decades too late. The US is a dinosaur, dead but still stumbling along. You would need to devalue the dollar or reduce wages by 90% for American companys to be able to compete with China. We couldnt even bring ourselves to TRY to reduce our oil consumption by 70% last year. We dont have another 20 years.
If he really means this, then he should proudly say F-U to China and devalue the currency promptly to 2.00/euro. We'd see price inflation near term, but the long term effects would be very job beneficial.