Re:In related news... (Score 1)

So free trade should remain something that remains in the first world. Besides throughout the cold war China has long been an major player exporting goods, as has much of south east asia.

Yes, that is a less-than-perfect-but-attainable solution. James Goldsmith proposed a system consisting of three free trade zones depending on the state of advancement of the economy of the participant countries. The idea is that free trade is good for the involved nations if and only if they are close to equilibrium. Anything else spurs unhealthy competition. Laissez faire was rendered obsolete in 1929, and I don't know why we should revive it in the XXI century.

True, but that's where we should have the goverment step in and crackdown. Of course, because of public apathy the goverment isn't held accountable for borderline corrupt practices, so in turn they don't hold the corporations accountable.

Good point. Actually, there's more to it. Quite a few congressmen are already millionaires, both Democrats and Republicans, hence you can guess what interests they represent.

The average US worker would be considered "rich" compared to many foreign workers. Do you feel that they should not have a better standard of living, if it possibly erodes yours?

If there is a way, and I think there must be, to pick them up without annihilate my way of life, that should be the road to take. Much of the pain in the third world countries comes from their own elites, although we selfish inhabitants of the first world inflict our not precisely modest share upon them. Erradicate corruption and we can start to talk of further improvements.

Ah, but that increases the price for a company to do business. Now they don't just have to account for wages, they must also spend money sponsoring schools. Also as the economy grows the value of the currency increases, and makes business more costly.

It depends. The typical CEO will grab the calculator, add the costs up, and if the total sum of hiring domestic workers exceeds the university funding plus wages plus other perks in a foreign country, he or she is not going to look back. Besides, the subsidization of education can be shared by corporations with common interests. Of course, a foreign government should be smart enough to plant the seed in the first place without the need of megacorps to intervene. But the point still holds. It is absurd to insist on rising domestic educational standards when it is only going to result in an overeducated waiter.

Eventually an equilibrium will be reached.

Yes, we agree on that. But how long until we reach the balance? 20, 30 years? As Keynes stated, "in the long run we are all dead".

I am not American, by the way. I live in one of those Western European countries with double digits in unemployment and laughable birth rates, that Malthus would say reflect poor confidence in the years to come. In fact, I will tell you a little secret. I earn a modest living as a computer programmer for an American corporation, and if I told you my salary, you might stone me too :-)

Yes, and the trade deficit is included in the GDP, which continues to grow. The trade deficit, which has existed for decades, has not drained the US of resources. The reason is because we apply those cheap goods towards more value added activities.

It has not taken its toll yet. But to paraphrase your words, eventually it will. The one thing that is holding back the depreciation of the dollar, which would automatically convert your cheap goods in not so cheap, is that your currency has managed to substitute the gold standard in the international market. This has the effect that it is difficult for it to lose value because so many foreigners are eager to hold dollars in reserve (China and Japan, most notably). Depreciation is the fast road to equilibrium, but it also spells depression.

Than you for an interesting discussion and sharing your insights with me. I am pretty much enjoying this private talk over a public forum.