As another poster already mentioned elsewhere and despite Obama’s recent optimism, make no mistake, the US is in dire straits, such as previously pushed other countries over the edge.
US GDP may seem impressive at 14 trillion odd, but 43 percent or so represents government spending (the only years when it was higher was during the war years 1943 to 1945 when it hovered around 50 percent), with health care and the financial sector another 25 percent. Even as America’s manufacturing base steadily shrinks, not only in the more traditional sectors but also in advanced tech-industries, increased automation having taken its own toll on the number of unemployed.
As demonstrated by the latest monthly trade deficit figures, a rise in consumer spending or restocking of inventories now automatically translates into higher imports from China and more one-way debt. If China’s growth stalls, the resulting glut in goods will inevitably mean another export drive, disrupting US industry even more (as similarly in the past with Japan).
In a global setting whoever produces goods the best, the cheapest and fastest way wins the race, and US competitiveness is simply no longer what it once was. Whereas in contrast to the not-in-my-backyard attitudes in the US and most other western countries, China, India and the like invite new industry with open arms, valuing those employed therein.
China continually betters its manufacturing prowess and benefiting from major cost advantages, constantly boosts its worldwide market share in myriad consumer products, with companies like Wal-mart giving a direct link to western consumers.
There’s a dramatic economic shift under way, with a multi surge in high-quality Chinese exports below US manufacturing costs changing the whole landscape: cut prices by 30 percent or more, or risk losing your customers – even as the US trade deficit with China soars to new records. If the US is to regain historical competitiveness it basically needs a whole new business model!
Now for the first time we see a huge country like China compete not only through low wages but also high tech, with innovation given top priority, a combination leaving the US with well nigh insurmountable problems.
On the one hand US multinationals reap rich profits by operating in the Chinese consumer market (the middle class alone is expected to double by 2010), and by outsourcing labour, components and hardware.
On the other, as US consumers binge on cheap Chinese goods, domestic employment is being lost, increasing trade deficits coupled to budget deficits drives the dollar ever downwards (with China exacerbating the problem through its undervalued currency), and US companies no longer seek to invest in new productive capacity (hence chronically low interest rates), while busy losing its engineers.
You can’t have free trade unless it’s fair, with both parties in a win-win situation, a thing that’s simply not happening. And in that China now holds over two trillion dollars of US government bonds, in effect financing latter’s trade and budget deficits, the Obama administration can’t even come down hard on some of China’s nastier trade practices (‘forced technology transfer’ as with GM and other US corporations but the least), a state of affairs which can only worsen!
Speak of greater income equality, tinker with the tax system all you like, or see congress and the Fed throw all the money in the world at the problem, but in the end it comes back to making real things locally. Not only do manufacturing jobs on average pay more, but they also create a multiplier effect: each one creates more jobs down the line, far more so than any in the service sector. A vibrant longer-term economy demands manufacturing at its core, not only generating the necessary income so that people are able to consume but as an enabler or springboard of future economic growth.
Putting the US back on a viable fiscal footing requires measures no current US politician would countenance (in fact, the IMF imposed some of them in the past on developing nations as a matter of course) – neither would they play well in this forum I daresay!
The following seemed worth a mention.
http://www.epi.org/economic_snapshots/e ... u.s._jobs/“Free Trade Agreement with Korea will cost U.S. jobs, Robert E. Scott, July, 2010.
The Obama administration has announced that it intends to finalize a new free trade agreement with South Korea (KORUS FTA) in time for the next G-20 summit in November. Although the U.S. International Trade Commission projects this will have a small positive impact on the U.S. trade balance, and ‘minimal or negligible ‘ impact on U.S. employment, history shows that such trade deals lead to rapidly growing trade deficits and job loss in the United States.
The Charts below compare USITC’s estimates of the impact of the forthcoming free trade agreement with Korea to EPI’s own calculation. Unlike USITC’s forecast of a small positive impact, EPI’s research shows it will increase the U.S. trade deficit with Korea by about $16.7 billion, and displace about 159,000 American jobs within the first seven years after it takes effect.”
by 
) Americans may just have to steel up and scrap this shitty thing we call an economy and get on with the job of inventing a truly modern system, one that's sustainable and which has the capacity to deliver a high standardd of living to all concerned, an 
