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Sunday, October 16, 2005

Comments

rc

Here's some thoughts...

China and India are widely thought to be the emerging economic superpowers. The US and Europe, the developed countries, to be on the decline. Let's accept this for the sake of argument. Therefore, China and India must posess favorable qualities vis a vis the US/EU.

Consider a comparison of China vs. the US. Both are of similar geography, latitude, size and abundance of natural resources. They differ significantly in population density, affluence, technical advancement, infrastructure, and political systems. So, which of these latter qualities favor the Chinese?

Is corrupt one-party dictatorial government an advantage? Being less technically advanced? Having fewer highways, a more primitive health care system etc.? Or is it having a large impoverished population? The first don't make sense; the last is why manufacturing and jobs are moving to China -- cheap wages, disciplined, hard-working people eager to better their lives, and the potential for a huge new consumer market.

So, what is the US to do? How do we compete or regain our youthful vigor -- to maintain or even increase our economic status? If we emulate the qualities favoring the Chinese, we'll massively increase our population so we too can become a hard-working, hungry, overpopulated, impoverished country... that'll soak up manufacturing and jobs from... who? Will countries compete to "become poor to become rich" in some Orwellian logic?

No. It makes no sense (if someone can point out a flaw in the above reasoning, I'd be very interested). The advantages enjoyed by the Chinese are due to a zealous belief in so-called free trade. This has resulted in unfair and unbalanced trade (the trade deficit is proof of the last).

A simple example illustrates unfair trade. Say there are two widget companies, A and B. A purchases expensive CAD/CAM software, provides fair benefits to its workers, follows good environmental practices; B engages in intellectual property theft (uses warez copies of software), treats its workers poorly, and dumps waste. All else being equal, A will go belly-up and B succeed since it has less overhead and can outprice A. There are costs to environmental damage not reflected in the cheap price of B's widgets. And those whose software is stolen lose money and need to charge their honest customers more.

Isn't this a bad dynamic? Of course. And the way to change that is to have a level playing field. In the US, the federal government creates and enforces environmental and copyright laws applicable to all companies. In the world at large, trade agreements between countries need to take these overhead costs -- the differing playing fields -- into consideration. To make it plain, if a country has weak environmental standards and this (as it no doubt does) translates into lower overhead, then slap a tarriff on their products to nullify any such advantage. Otherwise, bad practices will increase. Free trade without a leveling of the playing field leads to the unwinding of civilization. For example, why have enlightened environmental regulation in the US and then allow industry to simply escape such regulation by moving overseas?

Aside from negotiating fair and balanced trade agreements, the US should seek to take advantage of its strengths. We ought not try to become an overpopulated impoverished country (through unrestricted immigration and the destruction of the middle class). We should seek to have stable, optimal population demographics and focus on quality (not numbers). Counter low-wage labor intensive tasks with robotics. Clean our own toilets and become self-sufficient. Pay more for vegetables and fruits by picking them ourselves or finding technological ways to increase efficiency. End reliance upon a never-ending, and immoral, stream of cheap (but actually costly since the true costs -- education, healthcare etc. are typically ignored) immigrant labor.

We, the US, have no wise leadership. No big picture thinking. No plan for the future. We're aboard a status quo runaway train that is heading to no good destination. And no one is willing to question where we're headed and why because discussion is encompassed within a single institutionalized party, the dem-repubs, along with its media sycophants, with pro-business, quasi-religious right (and center), and politically correct, populist (mob pandering) left wings.

thebizofknowledge.com

We are indeed seeing a revolutionary change in industry and economic power worldwide. As you noted, China and India have shifted their places in the global economy and are poised to take over the role of superpower; it remains to be seen what this will mean to the U.S.

Naresh Bhagat

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