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162 points TaurenHunter | 2 comments | | HN request time: 0.46s | source
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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.

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mhogers ◴[] No.43580174[source]
The t-shirt metaphor is completely unjust - there is no value there for national security nor strategic autonomy.

Consider instead:

- Semiconductor low-end fabrication (Taiwan, Korea)

- Basic electronics: circuit boards, USB devices, .. (China)

- Auto parts (Mexico, China, Germany)

- Generic drugs (India, China)

The reality is that the US is not the ultimate global hegemon anymore and therefore offshoring industries cannot simply be viewed through an economic lens.

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sandworm101 ◴[] No.43580333[source]
>> the US is not the ultimate global hegemon anymore

The hegemon concept is also out of date. World trade is not dominated by countries but by multinationals. For instance, there are no real "US" car companies. There are a handful of huge conglomerates who can choose to operate wherever best suits their needs. These respond to edicts from individual countries but operate at a level above nation states.

This is why international cooperation on things like taxation or environmental protection is so important. And it is why petty bickering by individual nations will be so damaging.

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jocaal ◴[] No.43580752[source]
That is the case for western economies. China controls nearly all levels of its supply chain. In the past, they didn't have the skills for design, but over time has gained that skill set (china now creates nearly a third of the worlds new engineers per year) and is now capable of designing and manufacturing world class products all in-house.

I guess the only exception is semi-conductors, but we all know they are desperately trying to remedy that.

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1. sandworm101 ◴[] No.43581939[source]
And Chinese companies may soon have to evolve too should they want to remain competitive. Being at the behest of a single country is a weakness. A strong company is one that can shift between countries and therefore does not need to bend to their will. The largest Chinese companies will, one day soon, have to step away from Chinese government control.
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2. ◴[] No.43585509[source]