The China Affect

[Janice]

Well, we decided years ago to buy cheap products from China so we could afford more things. Now, we don't buy our products and they don't buy ours either.

What do you see happening next as we sit by and watch China and other countries on the move?

I saw a tv special the other day where China is putting fastband on all their computers so they can be a step ahead.

[kevin]

I see the world shifting from unipolarity (one major nation state) to multipolarity (many important nation states). The way a unipolar world works is very different from that of multipolar worlds. Pretty dry theoretical stuff, but the gist is this : America won't be powerless, but America won't be able to run around doing anything which it almost could now. And our economy is tied interdependently with others, meaning that we must adjust and instead of doing basic industry (which is what I would like because it is safer in times of chaos and war) we'll have to produce high-skilled manufactured goods, R&D, and service sector jobs (aka. a monkey could do it, press buttons).

[gtalum]

Well, we decided years ago to buy cheap products from China so we could afford more things. Now, we don't buy our products and they don't buy ours either.

What do you see happening next as we sit by and watch China and other countries on the move?

We aren't exactly sitting by and watching other countries pass us up. Many are catching up with us, so that's what it might feel like.

That said, this is why scientific advancement in every possible field is absolutely crucial to us. We have the means to stay ahead technologically, as long as we don't stifle scientific growth with silly things like attempts to teach Creationism in science class, government disinvolvement in stem-cell and genetic research, etc.

One side effect of rising fuel prices is that it is more expensive for CHina to ship their goods here than it used to be. It's slightly lessening the price gap. Also, as their workers' wages rise, the gap will narrow more quickly. Change can be scary, but we are not at the end.

In the end it makes good economic sense for us to "outsource" cheap unskilled dirty jobs, and use our power to create more lucrative, clean jobs.

[kevin]

I'd have to agree with that. Free trade poses individual drawbacks but is generally good for a state in a strong-power position like the United States.

[Janice]

My husband does consulting for BASF, the worlds largest chemical company. He used to go to the Pennsylvania site, but now he is going to their site in China for a week in September.

I see more companies moving out of the US and I don't see them returning. And these sites are huge industries. I heard Microsoft has plants overseas too.

This worries me.

[gtalum]

My husband does consulting for BASF, the worlds largest chemical company. He used to go to the Pennsylvania site, but now he is going to their site in China for a week in September.

I see more companies moving out of the US and I don't see them returning. And these sites are huge industries. I heard Microsoft has plants overseas too.

All of the US multinationals have plants overseas, and have for decades.

Anyway, the companies moving overseas are the polluters, and the jobs they eliminate here are low-paying dangerous jobs. What we need to do in response is build an environment that attracts high-tech, high-wage clean industries to replace those jobs, which as you noted will probably never come back. Protectionism doesn't work, and ultimately leads to economies like India's. What does work is scientific advancement and innovation.

It also wouldn't hurt to modify US tax law. We are the only nation in the western world (possibly anywhere) that taxes corporations for the income they make overseas. Eliminating this handicap would help US corporations compete in the world marketplace tremendously.

[Janice]

Are there any other countries who are suffering from outsourcing like the US is? Seems like Canada, Australia, etc. are doing ok.

[gtalum]

Are there any other countries who are suffering from outsourcing like the US is? Seems like Canada, Australia, etc. are doing ok.

No one is "suffering" from outsourcing. Our economy is growing at a healthy clip. Mexico is suffering pretty badly, because all fo the industry that left here to go there has now left for China, and they have not the means to replace it. Wer, however, do have the means to replace those jobs. Note our historically low unemployment numbers.