Re: Big surprise, eh?....Re: Adobe to expand operations in India(Hire 300 Indians)



On Sat, 17 Dec 2005, Russell.Martin@xxxxxxx wrote:

zach wrote:
Russell.Martin@xxxxxxx wrote:
zach wrote: 


So
what if China overtakes us? As long as we still increase, and we are
selling more tech to China (and I don't deny there are problems, like
with IP theft), then we are doing better than we were the previous
year.

I have four words for you: balance of payments deficit. 

My best shot at this problem is the following:

----
The following quote is from Business Week, December 6, 2004
and from the article "Shaking up Trade Theory" by Aaron Bernstein
on pages 116 to 120. (The subtitle of the article is: "For decades economists have insisted that the U.S. wins from globalization. Now they are not so sure")

They quoted Paul Samuelson (MIT) as saying "Comparative advantage
cannot be counted on to create...net gains greater than the net
losses from trade"
--------------

And, I agree with that one, self-explanatory sentence.

It seems to me that the key is in the exchange rate. When 3rd world countries will do so much work for so little (of our) money, as derived from a strong or overly strong dollar, then we're going to see:

i) our society's manufacturing industry gutted
(this has already happened)
ii) our high and medium paid service jobs replaced by low paid crap jobs
(this is in the process of happening, but not all medium to high
paying jobs will go but for those that do, the prior holders will
not find different or new medium to high paying jobs because
society is not creating them as fast as low paid jobs) iii) net decrease in standard of living, particularly for those who are
not rich (according to published information, that will mean the
about the lower 50-97% of all the socio-economic brackets [most
of those people who bought SUVs, etc., did it with financing, so
its debt financing]). Where did I pull the 50-97% figure from? 50%
of people reaching retirement age cannot afford to retire, so that
is the floor. The 97% figure is from stats showing that you have
to have a "net worth" of about a million dollars to be within the
upper 3% of the socio-economic bracket and I'm taking that figure
as what you need to retire on (assuming a nominal ROI on that
$ million to maintain your standard of living in retirement.
That's all ball park figuring. Y'alls welcome to throw rotten
tomatoes at me, but otherwise I'm guessing a lot of people are
going to be cutting back a fair bit in the future to make ends
meet.

....at least until some new equilibrium is established.

Which country "owns" more of other countries is not, so far, obvious to my readings so far: US owners (private and corporate) owns a lot of foreign
lands and companies, and also a lot of foreign entities own a lot of US
assets (land, corporations, and our debt). Only the rich don't have to worry.

Actually, what I'm reading is that the "debt crisis" is a theme that a number of economists say is a real problem. Of course, this is still an oversimplification of the situation. Yet, there are other economists that say "not to worry" but I don't follow that line of thinking.


.

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