What should he do? Prosperity has always shifted from nation to nation and continent to continent. At one point in time Italy was the capital of the world, then it moved to Spain, or to Amsterdam or to the UK, who lost their position of reserve currency to the US etc etc etc. Visit Egypt today and try to grasp the notion they were once the absolute centre of the world for centuries... I'm not saying nothing can be done to counter loss of wealth, industry or atractiveness to investors but I do believe a considerable part of it can not be captured in laws or policies.
You have no idea what you're talking about. Ricardo's theory of comparative advantage is terribly flawed because in reality, low-cost producers dominate the full spectrum of industrial production, including high-tech manufacturing - computers, aerospace, and autos. Exactly what China is doing now. The quaint academic notion that free trade benefits both low-cost and high-cost production centers based on their respective disparities in technology is complete horseshit. US Fortune 100 bring our technology over to China, teach them how to use it, build the factories to make it, and we're done. Our goose is cooked. Airbus is opening plants in China to build commercial aircraft for their market. Boeing has plans to do the same. Where do you think those jobs are coming from? Our EXPORT MARKET. Ford is building plants in South America to export cars to the US. The Big 3 make and assemble most their vehicles in Mexico for export to the American market! There is no "comparative advantage" here, bud. This is a wholesale export of American technology and jobs, gifted to 3rd world shitholes, only to resell it back to us on credit. In doing so, national incomes are destroyed and with it, our export market. Those backward nations of 30 years ago now make everything we can because we taught them. Seriously. You think that's a brilliant "strategy"?
What I need to know is this: What makes China different from the USSR, Nazi Germany or present day Germany, which is pound for pound probably the most efficient export machine on the planet, Japan before or after WWII also, or the Arabs? The USSR no longer exists. No one thinks the Arabs are taking over, although for a moment in the Seventies that was the great fear. No one anymore thinks Japan is taking over. Regardless of how well Germany does as an export machine, no one fears that Germany will take over and rule the world. So, what makes China different from the rest of these pretenders to the throne? They have the problem that their one-child policy has given them a horrible demographic, compounded by the Chinese preference (probably a universal preference, really) for male children, so that they face a future of a massive elderly population supported by an overly male population extremely vulnerable to any sort of leader who can make an active minority of them oppose the present regime and channel their excess, um, energy towards that goal. China is no more a threat, long term, than any of the other pretenders were. You can always gain superiority for a moment by means of organizing the entire society around a single goal, something dictatorships are very good at. The long term kills them every time, though.
You're joking, right? USSR was a centrally planned economy. Nazi Germany destroyed itself through war. Present-day Germany is an economic juggernaut only limited by it's population. You think if Germany had 1.2 Billion people you'd be singing the same tune? Japan, again, same story. Not enough people. Present day China has everything the previous four don't. A free-market economy, a non-interventionist foreign policy, and a gigantic population. China needs to mass educate, implement massive legal reform, juice it up with some consumer financing, and they'll eclipse America in 20 years. They have the technology to make everything. We gave it them. Now, all they must do is define the risks and protect the rewards of entrepreneurship, give everyone a fair shake in the courts, and it's done. They win. We lose.
Remind me, please: I need to know the last time a dictatorship rewarded entrepreneurship. Remembering, by definition, all property belongs to the state by default.
Is something wrong with your eyes? You can't see what's happening in-front of you??? The Communist Party of China gave tacit protection to private property rights... 30 YEARS AGO!!!! Wake up, buddy. This is 2010. Nobody in their right mind would invest trillions in China if it weren't so. Yet here we are. Where are the sweeping CPC expropriations we'd expect if that were true?! Never happened. China is on a crash-course with Superpower-hood. They know that's achieved economically. And it's bedrock is a free market economy and private property rights. They are not going to fuck with that.
Rillie? You keep right on believing that. Sergey Brin and Hemlock would disagree with you on that, but that's OK. You're obviously the expert on all things Chinese and how they treat their entrepreneurial class and property and all that.
Agreee 100%, Its like we want better schools and safer neighborhoods but we don't want to pay the taxes that will make it possible. You have to give a little to get a little.