5 ms·

Having a trade deficit to a developing country is like giving them a loan. (My economics teacher) The Relation the US had with China in the last years, reminds

by emanuer 17y ago

Having a trade deficit to a developing country is like giving them a loan. (My economics teacher) The Relation the US had with China in the last years, reminds me a lot of the Japanese-Korean situation in the 1980s. Japan outsourced labor intensive work to South-Korea because it was cheaper there. Over time South-Korea became very wealthy and the labor costs were to high to continue to outsource. But this was great news, because the South-Korean now had demand for Japanese products. The same story happens to US/China, once Chinese reach a certain wealth, they will be able to afford US products. The other reason why I do believe this will happen rather quickly is this chart:http://www.businessinsider.com/scariest-jobs-chart-ever-february-2010 http://www.businessinsider.com/scariest-jobs-chart-ever-febr... If this chart is true, all the laid off consumers will drive the domestic demand down. So clearly the only possible growth is in other countries.

Goronmon 17y ago
The same story happens to US/China, once Chinese reach a certain wealth, they will be able to afford US products. And which products would those be?
- emanuer 17y ago
  Sorry, the word "product" was missleading. Well, obviously the US is not specialized in producing physical goods, but it is the world-leader in the service industry. The best Software is developed in the US, the most knowledge created in the past 100 years came from the US. The service market is much bigger than the product market already.
  - jeromec 17y ago
    Yes, but you can't export [many services]. So, I'm guessing we should prepare to welcome our new overlords here? Edited: to clarify "service" since people seem intent on downvoting. I wish people would make a counter comment rather than issue a downvote, as that would seem to be more beneficial for everyone involved.
    - eevo 17y ago
      Try telling India that.
      - jeromec 17y ago
        That's a good point. I suppose we could man some phone banks, and provide digital services as well (although this poses a challenge of learning the host customer's language, instead of expecting everything to be English). However, I still think the majority of services would be in the hospitality industry.
    - yummyfajitas 17y ago
      I accidentally upvoted you. So now I feel obligated to make the obvious point that, um, ever heard of consultants? Outsourcing? That whole Information Superhighway thing wasn't just a fad, you know.
    - iamelgringo 17y ago
      I think that you are thinking of 'service' very narrowly. Every time someone in .Germany searches google or reads HN, the US has exported a very tiny service.
      - jeromec 17y ago
        It's true that I tend to take a narrow economic view of exported 'service', but that's because the kinds of people displaced by this recession, and the ones likely left out of finding work in a transformed economy would not be the ones that are highly skilled/technically inclined.
        fauigerzigerk 17y ago
        That may be true and it's why a GDP recovery is not necessarily a jobs recovery. It could very well be that the US manages to export more, import less oil, turn the current account deficit around, and still suffer from high unemployment.
- JeffJenkins 17y ago
  Ask and wikipedia answers: http://en.wikipedia.org/wiki/Economy_of_the_United_States#Manufacturing http://en.wikipedia.org/wiki/Economy_of_the_United_States#Ma... And that's not counting agriculture or services. Here's a full breakdown of the economy (not all of which is applicable to exporting): http://en.wikipedia.org/wiki/Economy_of_the_United_States_by_sector http://en.wikipedia.org/wiki/Economy_of_the_United_States_by...
  - jeromec 17y ago
    As that first link notes under Manufacturing: A total of 3.2 million -- one in six U.S. factory jobs -- have disappeared since the start of 2000. So, I think this trend would need to reverse. This recession alone has displaced 8 million.
    - potatolicious 17y ago
      If Chinese income rises to the point where its middle class can afford to buy American products, I fully expect a lot of manufacturing to be coming back onto this side of the ocean.
      - jeromec 17y ago
        I could see that happening, namely with cars, which is why I think it's important to have a strong car manufacturing industry (and another reason to save GM). However, one caveat I think is we need to place higher importance on quality, not just with cars but American products in general. If China has gotten good at the role of producer after these years, and the U.S. as consumer, and that suddenly flips... I'm not sure how smoothly that would play out. A lot of people could potentially eat our lunch.
    - steveplace 17y ago
      Not true. Factory jobs have gone down, but production goes up. That's due to efficiency gains. http://www.fivethirtyeight.com/2010/02/us-manufacturing-is-not-dead.html http://www.fivethirtyeight.com/2010/02/us-manufacturing-is-n...
- dockd 17y ago
  One of the products they specifically listed was software. <Insert irony here.>
known 17y ago
And US will have to go through http://en.wikipedia.org/wiki/Easter_Island http://en.wikipedia.org/wiki/Easter_Island phase

by emanuer 17y ago

Goronmon 17y ago

The same story happens to US/China, once Chinese reach a certain wealth, they will be able to afford US products. And which products would those be?

emanuer 17y ago
Sorry, the word "product" was missleading. Well, obviously the US is not specialized in producing physical goods, but it is the world-leader in the service industry. The best Software is developed in the US, the most knowledge created in the past 100 years came from the US. The service market is much bigger than the product market already.
- jeromec 17y ago
  Yes, but you can't export [many services]. So, I'm guessing we should prepare to welcome our new overlords here? Edited: to clarify "service" since people seem intent on downvoting. I wish people would make a counter comment rather than issue a downvote, as that would seem to be more beneficial for everyone involved.
  - eevo 17y ago
    Try telling India that.
    - jeromec 17y ago
      That's a good point. I suppose we could man some phone banks, and provide digital services as well (although this poses a challenge of learning the host customer's language, instead of expecting everything to be English). However, I still think the majority of services would be in the hospitality industry.
  - yummyfajitas 17y ago
    I accidentally upvoted you. So now I feel obligated to make the obvious point that, um, ever heard of consultants? Outsourcing? That whole Information Superhighway thing wasn't just a fad, you know.
  - iamelgringo 17y ago
    I think that you are thinking of 'service' very narrowly. Every time someone in .Germany searches google or reads HN, the US has exported a very tiny service.
    - jeromec 17y ago
      It's true that I tend to take a narrow economic view of exported 'service', but that's because the kinds of people displaced by this recession, and the ones likely left out of finding work in a transformed economy would not be the ones that are highly skilled/technically inclined.
      - fauigerzigerk 17y ago
        That may be true and it's why a GDP recovery is not necessarily a jobs recovery. It could very well be that the US manages to export more, import less oil, turn the current account deficit around, and still suffer from high unemployment.
JeffJenkins 17y ago
Ask and wikipedia answers: http://en.wikipedia.org/wiki/Economy_of_the_United_States#Manufacturing http://en.wikipedia.org/wiki/Economy_of_the_United_States#Ma... And that's not counting agriculture or services. Here's a full breakdown of the economy (not all of which is applicable to exporting): http://en.wikipedia.org/wiki/Economy_of_the_United_States_by_sector http://en.wikipedia.org/wiki/Economy_of_the_United_States_by...
- jeromec 17y ago
  As that first link notes under Manufacturing: A total of 3.2 million -- one in six U.S. factory jobs -- have disappeared since the start of 2000. So, I think this trend would need to reverse. This recession alone has displaced 8 million.
  - potatolicious 17y ago
    If Chinese income rises to the point where its middle class can afford to buy American products, I fully expect a lot of manufacturing to be coming back onto this side of the ocean.
    - jeromec 17y ago
      I could see that happening, namely with cars, which is why I think it's important to have a strong car manufacturing industry (and another reason to save GM). However, one caveat I think is we need to place higher importance on quality, not just with cars but American products in general. If China has gotten good at the role of producer after these years, and the U.S. as consumer, and that suddenly flips... I'm not sure how smoothly that would play out. A lot of people could potentially eat our lunch.
  - steveplace 17y ago
    Not true. Factory jobs have gone down, but production goes up. That's due to efficiency gains. http://www.fivethirtyeight.com/2010/02/us-manufacturing-is-not-dead.html http://www.fivethirtyeight.com/2010/02/us-manufacturing-is-n...
dockd 17y ago
One of the products they specifically listed was software. <Insert irony here.>

known 17y ago

And US will have to go through http://en.wikipedia.org/wiki/Easter_Island http://en.wikipedia.org/wiki/Easter_Island phase