William Greider, writing in The Nation, sees a global economy on the brink of a potentially catastrophic trade war. “We have reached the endpoint of globalization as we have known it,” writes Greider. “It cannot continue as before, because the United States is essentially tapped out. Goliath has fallen and cannot get up. Who will lend a hand? Not China, obviously, but also not Japan and the Asian Tigers, or the European nations.”
Because Greider has tailored his article for a far-left publication, it glosses over the fact that America’s standard of living would have to take a huge hit before we could even hope to compete with Asian manufacturers. Union wages in the manufacturing sector in particular would have to fall by perhaps half, with commensurate cuts in health care and pension benefits. Of course, much higher levels of capital investment could make us competitive over time. However, drastic changes in this area are inconceivable, since Americans are 50 years removed from knowing how to save and invest. Had we done so with the zeal of Asians, we’d have state-of-the-art factories today that could overcome Asia’s wage advantage while leveraging the much lower shipping costs associated with serving a domestic market.
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