I see trade with China as an enormous positive. If you study free trade, you will see that in nearly every situation it is a win-win for both countries. Free trade on the individual level is almost always a win-win situation, some exceptions being fraud. The reason for this is that trade is voluntary. Both parties would not complete the deal unless it makes sense for both of them. It is the same way with trade between countries, regardless of it is manufactured goods, or services such as software development. I like how so many people try to use the trade deficit as a way to scapegoat other countries to avoid blaming ourselves. One of the major root causes in this case is the majority of US citizens are now spending almost as much, if not more, than they earn. THAT is the root cause. But it always has been, and always will be easier for people to blame others than themselves. That goes for individuals, and that goes for countries. A very common myth is that exports are good and imports are bad. That doesn't make any sense. One economist over 100 years ago said if that was true, then the best trade policy would be to take all your goods, put them on a ship, and then sink the ship. That way you would have huge exports with no imports, and you would have a massive trade surplus. -Taric
I would add a low savings rate is just one of several issues in the US. Another, as was mentioned, is education. Personally I think we should switch to a fully private, or voucher system. Either that, or pay France or another country with excellent schools to run our schools for us. Either choice would be a massive improvement. Our other major problem is our medical system. We are in the middle of a slow train-wreck, and by that I don't mean something that will hit us one day, I mean something that has hit us for 10 years, is hitting us this very second, will hit us tomorrow, and will continue to hit us for decades if nothing is done. The problem lies in the whole 3rd payer system, eg insurance, (actually it is more like a "5th" payer system since the government + the companies are involved too). People have huge incentives to overuse and overpay for health services.. since why not? Other people pay most of the tab. A solution here is to make people have economic incentives to keep costs low, in a free-market environment. A pure free-market approach here would be to end all government regulations and spending in the health care sector. People won't go for that, of course, so the next best thing is to switch people over to the HSAs (Health Savings Accounts), which are at least a big improvement, and transition Medicare/Medicaid to a sort of government-sponsored HSA account. In these cases, the government is still involved, but you are at least getting the incentives correct for over half the costs. While wages haven't been rising quickly, total employee compensation has been. It is just that corporate medical insurance premium increases are eating up roughly 80% of the new wage increases. If we fix the health care sector, inflation-adjusted cash wages would grow much faster. -Taric
I think the objection tends to be a bit more sophisticated than just being against trade. The end all and be all of public policy is not economic efficiency. We have laws against child labor, minimum wage laws and pollution rules. It is not totally crazy to want to prevent end runs around those policies through outsourcing. There are security implications as well. We should be concerned about companies being coerced to transfer intellectual property or provide political support for chinese policies. The other side of the debate is that a protected economy tends to become fat and uncompetitive. You can only delay the day of reckoning for so long.
maybe this is forcing americans to think about education. education that is inspired by people, and not the government.
And it has been like this for centuries, not just with US but any "1st world" nation vs a "3rd world" nation. All these academics & intellectuals and they have yet to figure out how simple the basics of this game is.
WTF are you talking about? Free trade equals a few rich pigs and masses of exploited poor that have been run off their land into sweatshops. Free trade equals everything goes, it's basically another term for pure capitalism on a global scale. Zero concern for the environment, zero concern for fair competition and ethics/morality whatsoever. I know books and theories teach us otherwise, but in real life things aren't so dandy.
Me too, too bad we don't trade with China. You can call it "trade" all you want, but trade is a business of buying AND selling. We're certainly buying from China but they are not buying from us (hence huge trade deficit). It's not trade, its employment - american multinationals hiring cheap chinese labor.
Check out the unbelievable number of home schooled children in the US. That stuff is just off the radar, so you don't hear much about it. But it is there. Unfortunately, I don't think that there is much science education going on with those types of schooling.
Spoken like a true economist. If you live in the US, you do know that ultimately any budget crisis will be "fixed" with higher taxes?