←back to thread

162 points TaurenHunter | 3 comments | | HN request time: 0.601s | source
Show context
forgotoldacc ◴[] No.43580069[source]
A long time ago, Britain was the dominant economic power in the world.

Britain had a massive trade deficit with India. It imported far more from India than it exported to India.

But what Britain did was import massive amounts from India and made high value goods at home and provided high value services that couldn't be provided elsewhere.

Should it have flipped the other way? In 1800, should Britain have suddenly shifted gears and started massively exporting to India in order to balance the trade?

Sure, India was a colony and not a mere trading partner, so no need to argue about that. But the US is also an empire that has bases around the world and has many countries in an economic chokehold. The situation is similar in a modern context since official colonization is kind of gone. The US takes in lower value products from around the world and sells them back to the original country at a higher price due to some sort of added value.

Should America do the opposite? Should we drop all of our high value scientific and medical research, drop our engineering, and go all in on making t-shirts to balance the trade deficit? Because we very well could do this. We could steal away the fine industry of Cambodia and Bangladesh and have them buy all our t-shirts and balance the deficit pretty quickly. But is that a long term benefit?

Cambodia and Bangladesh are countries that can't really afford to buy massive amounts of American high tech exports or foods. But they're essentially colonies that export goods to other countries, and through accumulating wealth through that development, more people can afford to buy American high tech products. But we're demanding that these countries buy lots of American products now with money that they don't have. The only way to balance that is to make things they can afford. Which means low value items.

replies(10): >>43580174 #>>43580179 #>>43580203 #>>43580238 #>>43580290 #>>43580294 #>>43580354 #>>43580937 #>>43581234 #>>43589180 #
kdjs7 ◴[] No.43580238[source]
Thats just half the story.

What the US has traditionally done is make these countries then take Dollar loans from the IMF and World Bank to buy American defense and high tech products. When they naturally then default (right now there are more than 50 countries that cant pay back these dollar loans cause where the fuck are they going to get dollars from) their only option is to sell off their natural resources to Wall St/build a US mil base/hand over port etc.

This game has been going on so long (google super imperialism) the US with 5% of the worlds population has accumulated more than 50% of the worlds market cap value.

So the US starts overdosing on leisure/luxury and pace of innovation starts slowing cause they dont even need to be innovative. Try to build a ship in the US and its not possible anymore cause the experience is all gone. There is no great magic solution. When you talk about British history look at the 60s and 70s. There was major turmoil economically and socially post the Ww2 rebuild cause the entire system dependent on colonies had to restructure itself.

replies(2): >>43580980 #>>43584396 #
1. whall6 ◴[] No.43580980[source]
I get the sentiment, but using ship building is an unfortunate example with respect to substantiating your point. The US shipbuilders are alive and well (not to the extent they were in WWII era). Military ships, Jones Act compliant commercial vessels, ferries, tugboats, etc. All US made.

Separately, your first paragraph also seems problematic. Let’s take Vietnam and Cambodia as examples: neither has a US military base, port, nor sells natural resources to “Wall St”.

Finally, I’m not sure I follow how that would cause the US to accumulate 50% of the world’s market cap—especially because the vast majority of the companies in the S&P 500 have nothing to do with defense, shipping or natural resources. I haven’t done the math, but I would venture to guess that >50% of the S&P 500 market cap is tech or tech-adjacent.

I decry this misplaced pessimism.

replies(2): >>43581923 #>>43581928 #
2. ◴[] No.43581923[source]
3. LeonB ◴[] No.43581928[source]
I generally agree.

This bit I see differently, though only with ~ 30% confidence.

> vast majority of the companies in the S&P 500 have nothing to do with defense, shipping or natural resources.

If you were evaluating the impact that a road has, and you looked at all the vehicles that passed over it every day, most of the vehicles you see would be in other industries — retail, industrial, commercial, domestic — very few of them are professional bitumen pourers who make roads. So clearly bitumen pouring only affects a low percentage of the city.