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Someone asks political blogger Matthew Yglesias what the U.S. economy will start making if the stimulus works and it returns to full productive capacity, and Yglesias answers: "the answer is that we’ll be making stuff for Chinese people".
That's pretty clearly wrong. Why? Well, the U.S.'s relationship to Vietnam's economy is more or less a smaller scale model of its relationship to China's economy — last year, we imported $12 billion of goods from Vietnam and exported about $2 billion to Vietnam. Now, here is the house of a Vietnamese friend of mine, whom I've blurred out because there's no reason for her to appear on some blog:
Guess what items in this picture can be profitably manufactured in the U.S. for export to Vietnam? None of them. This friend of mine earns more than the median income for Hanoi — in fact her income is about the median for China, which is double Vietnam's. But there's nothing America can sell to her except perhaps licensing fees for a little bit of the technology she uses and a few cents worth of royalties for the DVDs she watches (assuming something can be done about Vietnam's 90 percent-plus piracy rate, which is itself an unreasonable assumption). And, for peculiar local reasons, some agricultural products, because Vietnam's non-rice, non-coffee agricultural sector is unbelievably inefficient.
The world economy is not going to be rejiggered such that the U.S. can export to China, India and Vietnam anywhere near as much as it imports from them. The developed countries are going to continue to run trade deficits with the developing countries, for much the same reason that Bill Gates runs a trade deficit with his gardener: Gates has money, and his gardener has cheap labor. The world economy might however be rejiggered such that the U.S. could export a lot more to Japan, Taiwan, South Korea and Europe.