http://www.bubblegeneration.com/2010/11/worst-trade-in-world.html
Tuesday, November 30, 2010 The Worst Trade in the World Umair Haque It's often said that America's an uncompetitive economy--unable to produce stuff that satisfies global demand. Hence, a yawning current account deficit. I'd say the reality's harsher. America's caught in a toxic, self-destructive relationship with the globe's second most significant economy. In short, it's making the worst trade in the world. The worst trade in the world is this: America doesn't export the stuff you might think a bellwether of the 21st century would--cutting edge assets, that power the global growth of emerging markets. Mostly, it exports industrial age raw materials and machines: literally plain old commodities. China finishes them up and "processes" them--and exports "consumer goods" right back to America. They're the trinkets and toys that are piled high on the bleak exurban shelves in super sizes--and America's pawned it's future for them. Consider America's top exports to China. Leaving aside aircraft and soybeans (neither a sustainable basis for national advantage), America's sole export of note is semiconductors. The rest? Plastics, steel, pulp, chemicals, copper, aluminum, engines, cotton--literally commodities. It's hypercommoditized raw materials, of the lowest of value--literally just stuff, far from higher value goods or services. It's not the picture of an economy humming with innovation, meaning, purpose--it's the picture of a junkyard. Consider, conversely, America's top imports from China. Here (apart from one trade of enduring worth--America exports semiconductors, and imports back computers, creating and capturing the lion's share of returns from a single high-value industry), the picture's even bleaker. "Other--household goods", toys, computer peripherals, apparel, footwear, TV's. America put itself in hock for disposable, rapidly commoditizing, self-destructive, depreciating stuff, discount-rack junk--literally the lowest of low-grade "consumer goods". Not assets that yield multiplying, long-run returns--the foundation of enduring, resilient, smart growth. It's not the picture of an economy that's investing in tomorrow: it's the picture of Black Friday in a big-box store. Together, here's what I suggest these two pictures show. It's the portrait of a doddering, faltering economy on it's last legs--one that's managing barely to eke out a living largely from the exorbitant privilege of yesterday's reserve currency (which lets it essentially leverage itself to the hilt). Instead of making awesome stuff the world beats down the door for--it literally lives on exporting hypercommoditized raw materials, and importing back the disposable, transient, depreciating junk mass-produced from them at the lowest cost incurred, and smallest value added. It's a portrait of an economy which adds little or no value to, well, much--and is, instead, surviving by emptying out the last dregs in yesterday's rusting industrial age cup. It is the worst trade in the world--and rebooting global prosperity depends on creating the institutions that underpin a better one. _______________________________________________ Futurework mailing list [email protected] https://lists.uwaterloo.ca/mailman/listinfo/futurework
