America’s third world economy

It’s often said that America’s an uncompetitive economy—unable to produce stuff that satisfies global demand. Hence, a yawning current account deficit.

I’d say the reality’s harsher. America’s caught in a toxic, self-destructive relationship with the globe’s second most significant economy. In short, it’s making the worst trade in the world.

The worst trade in the world is this: America doesn’t export the stuff you might think a bellwether of the 21st century would—cutting edge assets, that power the global growth of emerging markets. Mostly, it exports industrial age raw materials and machines: literally plain old commodities. China finishes them up and “processes” them—and exports “consumer goods” right back to America. They’re the trinkets and toys that are piled high on the bleak exurban shelves in super sizes—and America’s pawned it’s future for them.

Consider America’s top exports to China. Leaving aside aircraft and soybeans (neither a sustainable basis for national advantage), America’s sole export of note is semiconductors. The rest? Plastics, steel, pulp, chemicals, copper, aluminum, engines, cotton—literally commodities. It’s hypercommoditized raw materials, of the lowest of value—literally just stuff, far from higher value goods or services. It’s not the picture of an economy humming with innovation, meaning, purpose—it’s the picture of a junkyard.

Consider, conversely, America’s top imports from China. Here (apart from one trade of enduring worth—America exports semiconductors, and imports back computers, creating and capturing the lion’s share of returns from a single high-value industry), the picture’s even bleaker. “Other—household goods”, toys, computer peripherals, apparel, footwear, TV’s. America put itself in hock for disposable, rapidly commoditizing, self-destructive, depreciating stuff, discount-rack junk—literally the lowest of low-grade “consumer goods”. Not assets that yield multiplying, long-run returns—the foundation of enduring, resilient, smart growth. It’s not the picture of an economy that’s investing in tomorrow: it’s the picture of Black Friday in a big-box store.

via AZ Spot
from Bubble Generation

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: