We have seen the future, and it’s . . . going back to work again?
By D.J. McGuire | Wednesday, May 18th, 2011 | InternationalIf there has been one constant in the global economy over these last few turbulent years, it’s been the roaring export sector of Communist China. Nearly every economist in the United States has seen jobs flow across the Pacific (strangely enough, the far greater damage to other East Asian exporters is not as well noted), and projected more of the same.
Well, nothing mocks “the future” quite like, well, the future (Boston Capital Group, emphasis added):
Within the next five years, the United States is expected to experience a manufacturing renaissance as the wage gap with China shrinks and certain U.S. states become some of the cheapest locations for manufacturing in the developed world, according to a new analysis by The Boston Consulting Group (BCG).
With Chinese wages rising at about 17 percent per year and the value of the yuan continuing to increase, the gap between U.S. and Chinese wages is narrowing rapidly. Meanwhile, flexible work rules and a host of government incentives are making many states—including Mississippi, South Carolina, and Alabama—increasingly competitive as low-cost bases for supplying the U.S. market.
Oops.
Now, please note “the value of the yuan continuing to increase”. The ChiComs are actually letting their currency rise in value by buying fewer U.S. Treasury notes than they have in the past. If they decide they’d rather not lose jobs to the Old South, they’ll have to crank up the bond buying again – which would end up pushing back against the long expected lender strike against American debt and actually give us some breathing room on our budgets. It could also spark hyperinflation on the mainland, though.
I must confess: I thought India would be the most likely candidate for an economy outbidding ChiCom-land. This may be yet another example of Bismark’s truism on God and the United States.
Cross-posted to the right-wing liberal
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Former candidate for Board of Supervisors in Spotsylvania, current blogger, economics teacher, and long-rumored windbag. There are two causes closest to the heart: steering the country away from the social democratic nonsense that is sinking Europe, and convincing the rest of the "rightosphere" that the NBA really is a joy to watch.
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3 Responses to "We have seen the future, and it’s . . . going back to work again?"
For those (like me) who were/are not familiar with Bismark’s truism I will provide it:
“God has a special providence for fools, drunks, and the United States of America.”
I think the situation is much more complex than what is stated above. China while Communist at the top allows an almost laissez faire capitalism in certain favored (export) sectors. China has an almost unlimited labor force as does India (unlike Japan). If one person doesn’t want the job there are 5 more who will take it. Only a few manufacturing jobs require long-term training and experience to perform. The US is moving more towards a European system of numerous and minute regulations which drive up costs no matter the wage rate and a South American system of governmental cronyism.
People should review what happened to infrastructure repair in LA compared to SF after earthquakes in both places in the 1980s. LA removed many nitnoid regs and came in ahead of schedule and under budget. Pelosi et al’s SF created a lingering mess of delays and cost overruns. Furthermore do you think that the Dems and their judges are going to permit states to circumvent their beloved labor and regulatory interest groups? One more vote on the Supreme Court and they have a free ride to invalidate any state law they don’t like on some specious grounds. Look at what they are trying with Boeing.
For your scenario to play out there would really have to be a thorough going political change here at all levels of government and in the judiciary. I’m not holding my breath. I do hope Bismarck is right.
I agree with Valentinus above that the US would have to get out of its own way for a much needed shift of manufacturing jobs back into the US to happen.
On an industrial level China is more competetive and laissez fair than the US. This extends to its government enterprises as well. I was part of a delegation that met with Chinese on postal matters about ten years back — they were hoping to learn how to liberalize their Post by looking at our model but left appalled at all the constraints, dictates and political burdens we placed on our operation. They wanted to make $$$$s.
At some level we are perhaps a bit too fearful of China’s economic power just as we were excessively fearful of Japan back in the 1980′s.
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