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There is always somewhere else to move to, unless US labour becomes cheap compared to ALL other countries. The solution is not to make all other countries expen

There is always somewhere else to move to, unless US labour becomes cheap compared to ALL other countries. The solution is not to make all other countries expensive, or make US labour cheap (through currency depreciation or what not). I believe the best way out is through technological innovation, increase export in high-end products to reduce trade deficit. Although that would require patience and long-term thinking, which is going to be very difficult in current political climate.

Shengster 15y ago
I agree that forcing Beijing to raise the value of the Yuan is not going to end all our financial woes (as suggested by some politicians) and turn America back into a manufacturing powerhouse. Many companies (recently Nokia) have been moving their factories to Vietnam as wages there are lower than even China. In a recent interview between Marc Benioff (salesforce.com's CEO) and Eric Schmidt (former CEO of Google), Eric said that oftentimes outsourcing is not just because of cheap labor, but rather because America doesn't have the infrastructure or skills necessary to perform the kind of manufacturing necessary in high tech industries (think printed circuit boards, which are done exclusively in Asia nowadays). Given America's emphasis on education (or lack thereof), I don't see this changing anytime in the near future. Troubling news indeed.
truthout 15y ago
The issue is that if any one country becomes a manufacturing powerhouse, with the economics of a trade surplus, it is almost a given that the trade balance will correct itself. You don't get the point of this leglislatiob. Trade normally corrects itself through currency strength. The Chinese artificially supress their currency. This causes a the continuation of a trade deficit which will eventually destroy the economy of the country running the deficit. It's not as simple as manifacturing will go somewhere else, what problem does it solve. No, not that simple. Sorry.
gamble 15y ago
That does depend on other countries buying those high-end products, instead of simply reverse-engineering them or stealing the designs and manufacturing them at lower cost within protected domestic industries. China's highly protectionist industrial policy only allows foreign products into the country so that they can coerce their producers into transferring the technology to Chinese competitors.

Shengster 15y ago

I agree that forcing Beijing to raise the value of the Yuan is not going to end all our financial woes (as suggested by some politicians) and turn America back into a manufacturing powerhouse. Many companies (recently Nokia) have been moving their factories to Vietnam as wages there are lower than even China. In a recent interview between Marc Benioff (salesforce.com's CEO) and Eric Schmidt (former CEO of Google), Eric said that oftentimes outsourcing is not just because of cheap labor, but rather because America doesn't have the infrastructure or skills necessary to perform the kind of manufacturing necessary in high tech industries (think printed circuit boards, which are done exclusively in Asia nowadays). Given America's emphasis on education (or lack thereof), I don't see this changing anytime in the near future. Troubling news indeed.

truthout 15y ago

The issue is that if any one country becomes a manufacturing powerhouse, with the economics of a trade surplus, it is almost a given that the trade balance will correct itself. You don't get the point of this leglislatiob. Trade normally corrects itself through currency strength. The Chinese artificially supress their currency. This causes a the continuation of a trade deficit which will eventually destroy the economy of the country running the deficit. It's not as simple as manifacturing will go somewhere else, what problem does it solve. No, not that simple. Sorry.

gamble 15y ago

That does depend on other countries buying those high-end products, instead of simply reverse-engineering them or stealing the designs and manufacturing them at lower cost within protected domestic industries. China's highly protectionist industrial policy only allows foreign products into the country so that they can coerce their producers into transferring the technology to Chinese competitors.