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I think the US has proven that numbers on a spreadsheet mean literally nothing if you've got a strong enough military and control enough of the economic power o

by tw04 10y ago

I think the US has proven that numbers on a spreadsheet mean literally nothing if you've got a strong enough military and control enough of the economic power of the globe. What are we going to do if they decide they're done being the US's manufacturing state? Like, if they literally halted all shipments to the US overnight. It would take us YEARS to rebuild in the US, and in the meantime people would be screaming bloody murder over here (I'm sure Walmart and Target would be thrilled to have bare shelves). It would collapse our economy as well.

witty_username 10y ago
But it would collapse China's economy too if it were done overnight.
- coldtea 10y ago
  The US is 4% of the world. With other countries developing rich consuming middle classes, that might not be that certain, especially in the future.
  - davidmr 10y ago
    4% by population of course, which is what you meant, but I think 40% of the world by wealth. While I understand what you mean by saying there are new middle classes being created from the other 96%, it seems like, absent another even more catastrophic economic screwup than we put ourselves through 8 years ago, American domination of the world market isn't going anywhere any time soon.
    - coldtea 10y ago
      Well, let's hope it does. Other people need to get rich too.
    - eva1984 10y ago
      In terms of GDP, US is about 20-25% of the globe. It is pretty significant, but I won't go too far to say it has domination.
      - davidmr 10y ago
        Well said. Domination isn't the right word; perhaps "importance to" rather than "domination of".
- bilbo0s 10y ago
  The number is 18%. That's how much of China's GDP is dependent on exports to the US. A significant paycut as it were, but hardly fatal. (If they were to stop exporting to us, it would hardly be a fatal blow to us either. There is just not as much there in terms of percentage of GDP as everyone seems to think.)
  - seanmcdirmid 10y ago
    They would have to cut off trade to much of the west as well, otherwise exports would simply be redirected. They could do USA did with Iran, and refuse to trade with anyone hat trades with the USA, but that is a losing proposition for them. Basically, china cuti off trade with the USA would be a North Korea style action.
  - harigov 10y ago
    Does that include all the value created locally in order to be able to make those exports? Like food that people eat, vehicles that they have to drive, etc., That much drop in economic activity will surely trigger much worse outlook than you are alluding to.
  - witty_username 10y ago
    No, not directly, but indirectly people would be afraid of further radical policy changes by China. Investors would move their money out of China. Or at least, that's what I'd do.
kirse 10y ago
if they decide they're done being the US's manufacturing state? What you're suggesting is essentially reverse-sanctions, and that would be a foolish move. The economic "essentials" based on innate human needs are water, food, shelter (housing and clothes), and - in today's world - energy. The US has plenty of resources, space, and people to produce all four of those at home. If China decided to shut down all manufacturing such that we would stop receiving all of our consumptive goods, electronics, etc... The US would take a hard look at what it really needs as a people and then decide to load balance its needs across both itself and other countries. What would need rebuilt is all the infrastructure for automating supply chains, and such an aggressive economic move would be highly likely to unite the American people in a singular cause against their new economic foe.
- throwaway729 10y ago
  The US has plenty of resources, space, and people to produce all three of those at home. Eventually. Not immediately. Factories and supply chains and aren't built over night. The US would take a hard look at what it really needs as a people Or, much more likely, its people would flood the streets in anger and demand a return to normalcy. In the mean time, black markets and therefore crime would explode. Huge swaths of the economy, depending on Chinese imports in their supply chain, would cease to function. Unemployment would surge, throwing even more angry bodies onto the streets and even more desperate bellies into the Jail cells. Fringe political movements would capitalize and the US would face an existential threat to its democratic heritage. Skilled workers and those with large amounts of capital would quietly leave for greener pastures in the EU and stable parts of South America and Asia, making recovery that much more difficult. At least, that's what typically happens when trade wars create extreme shortages of key goods and services (we have a lot of data points on this). Perhaps the USA is exceptional, but I wouldn't count on it...
  - _audakel 10y ago
    This all is potential, but also seems to be based purely on your own opinion. Are you referencing a scenario that already happened in a different country?
maxerickson 10y ago
US debt to GDP is not really different than other developed economies: http://www.tradingeconomics.com/country-list/government-debt-to-gdp http://www.tradingeconomics.com/country-list/government-debt... The question of which country loses more if the US and China stop trading probably doesn't need to be answered; both countries would lose so much that it won't happen abruptly.
- tw04 10y ago
  Right, which is why everyone let the US slip by when the economy collapsed. If it were some African nation that had their entire housing market collapse, you really think the rest of the world would've just let it slide? It's no different with China. The world can't afford to let their economy collapse, and so they won't. This isn't Russia we're talking about here, who for all intents and purposes is completely isolated outside of providing arms to the world, space launching (although that reliance is quickly going away), and cheap natural gas to Europe. If/when their economy collapses again, it will have almost no effect on the western world. If China collapses, we're all in trouble.
  - maxerickson 10y ago
    What are some concrete examples of Right, which is why everyone let the US slip by when the economy collapsed. happening? My memory is that other parts of the world had their own economic problems at the same time as the US housing crisis and were paying the US government for the privilege of owning US treasury bonds (rates were 0 ish for quite a while). On the other side of it, shrugging does seem to have been the standard external response to the currency crisis in Zimbabwe.
    - tw04 10y ago
      I dunno, the fact we literally manufactured a trillion dollars out of thin air and the dollar wasn't devalued? Can you cite any other nation doing similar with similar results? The mere SUGGESTION of financial instability as a result of Brexit has ruined the British pound. *ruined is a bit strong, but it had a serious impact
crdoconnor 10y ago
>What are we going to do if they decide they're done being the US's manufacturing state? If China is done being the world's manufacturing state then inflation is going to go crazy and we'll experience something a bit like what we did with the 1973 oil crisis, except with manufactured goods. It would be a good time to set up a repairs shop. If China is just done being "America's manufacturing state" then we'll see inflation but probably not as extreme - goods could still be shipped to "neutral" states and then shipped on. In all likelihood if such a breakdown does occur it will form part of a tit-for-tat including shipping blockades, sanctions and proxy wars.

by tw04 10y ago

witty_username 10y ago

But it would collapse China's economy too if it were done overnight.

coldtea 10y ago
The US is 4% of the world. With other countries developing rich consuming middle classes, that might not be that certain, especially in the future.
- davidmr 10y ago
  4% by population of course, which is what you meant, but I think 40% of the world by wealth. While I understand what you mean by saying there are new middle classes being created from the other 96%, it seems like, absent another even more catastrophic economic screwup than we put ourselves through 8 years ago, American domination of the world market isn't going anywhere any time soon.
  - coldtea 10y ago
    Well, let's hope it does. Other people need to get rich too.
  - eva1984 10y ago
    In terms of GDP, US is about 20-25% of the globe. It is pretty significant, but I won't go too far to say it has domination.
    - davidmr 10y ago
      Well said. Domination isn't the right word; perhaps "importance to" rather than "domination of".
bilbo0s 10y ago
The number is 18%. That's how much of China's GDP is dependent on exports to the US. A significant paycut as it were, but hardly fatal. (If they were to stop exporting to us, it would hardly be a fatal blow to us either. There is just not as much there in terms of percentage of GDP as everyone seems to think.)
- seanmcdirmid 10y ago
  They would have to cut off trade to much of the west as well, otherwise exports would simply be redirected. They could do USA did with Iran, and refuse to trade with anyone hat trades with the USA, but that is a losing proposition for them. Basically, china cuti off trade with the USA would be a North Korea style action.
- harigov 10y ago
  Does that include all the value created locally in order to be able to make those exports? Like food that people eat, vehicles that they have to drive, etc., That much drop in economic activity will surely trigger much worse outlook than you are alluding to.
- witty_username 10y ago
  No, not directly, but indirectly people would be afraid of further radical policy changes by China. Investors would move their money out of China. Or at least, that's what I'd do.

kirse 10y ago

if they decide they're done being the US's manufacturing state? What you're suggesting is essentially reverse-sanctions, and that would be a foolish move. The economic "essentials" based on innate human needs are water, food, shelter (housing and clothes), and - in today's world - energy. The US has plenty of resources, space, and people to produce all four of those at home. If China decided to shut down all manufacturing such that we would stop receiving all of our consumptive goods, electronics, etc... The US would take a hard look at what it really needs as a people and then decide to load balance its needs across both itself and other countries. What would need rebuilt is all the infrastructure for automating supply chains, and such an aggressive economic move would be highly likely to unite the American people in a singular cause against their new economic foe.

throwaway729 10y ago
The US has plenty of resources, space, and people to produce all three of those at home. Eventually. Not immediately. Factories and supply chains and aren't built over night. The US would take a hard look at what it really needs as a people Or, much more likely, its people would flood the streets in anger and demand a return to normalcy. In the mean time, black markets and therefore crime would explode. Huge swaths of the economy, depending on Chinese imports in their supply chain, would cease to function. Unemployment would surge, throwing even more angry bodies onto the streets and even more desperate bellies into the Jail cells. Fringe political movements would capitalize and the US would face an existential threat to its democratic heritage. Skilled workers and those with large amounts of capital would quietly leave for greener pastures in the EU and stable parts of South America and Asia, making recovery that much more difficult. At least, that's what typically happens when trade wars create extreme shortages of key goods and services (we have a lot of data points on this). Perhaps the USA is exceptional, but I wouldn't count on it...
- _audakel 10y ago
  This all is potential, but also seems to be based purely on your own opinion. Are you referencing a scenario that already happened in a different country?

maxerickson 10y ago

US debt to GDP is not really different than other developed economies: http://www.tradingeconomics.com/country-list/government-debt-to-gdp http://www.tradingeconomics.com/country-list/government-debt... The question of which country loses more if the US and China stop trading probably doesn't need to be answered; both countries would lose so much that it won't happen abruptly.

tw04 10y ago
Right, which is why everyone let the US slip by when the economy collapsed. If it were some African nation that had their entire housing market collapse, you really think the rest of the world would've just let it slide? It's no different with China. The world can't afford to let their economy collapse, and so they won't. This isn't Russia we're talking about here, who for all intents and purposes is completely isolated outside of providing arms to the world, space launching (although that reliance is quickly going away), and cheap natural gas to Europe. If/when their economy collapses again, it will have almost no effect on the western world. If China collapses, we're all in trouble.
- maxerickson 10y ago
  What are some concrete examples of Right, which is why everyone let the US slip by when the economy collapsed. happening? My memory is that other parts of the world had their own economic problems at the same time as the US housing crisis and were paying the US government for the privilege of owning US treasury bonds (rates were 0 ish for quite a while). On the other side of it, shrugging does seem to have been the standard external response to the currency crisis in Zimbabwe.
  - tw04 10y ago
    I dunno, the fact we literally manufactured a trillion dollars out of thin air and the dollar wasn't devalued? Can you cite any other nation doing similar with similar results? The mere SUGGESTION of financial instability as a result of Brexit has ruined the British pound. *ruined is a bit strong, but it had a serious impact

crdoconnor 10y ago

>What are we going to do if they decide they're done being the US's manufacturing state? If China is done being the world's manufacturing state then inflation is going to go crazy and we'll experience something a bit like what we did with the 1973 oil crisis, except with manufactured goods. It would be a good time to set up a repairs shop. If China is just done being "America's manufacturing state" then we'll see inflation but probably not as extreme - goods could still be shipped to "neutral" states and then shipped on. In all likelihood if such a breakdown does occur it will form part of a tit-for-tat including shipping blockades, sanctions and proxy wars.