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by Wolf Paulus.
Original Post: free vs. fair
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Most of us probably think that globalization is a good thing. We expand the market, develop, produce, and sell more goods and every body wins.
After a couple years into it however, we have a huge trade deficit, above all with China,
Chinese companies start buying (vital?) US companies like Unocal, the US's ninth largest oil and gas production company, China and India each produce more PhDs than the US, while we cut back on education and squeeze more children in a single classroom.
Has it ever been more expansive or less attractive to become an engineer in the US?
Would we at least know how to make a flat screen TV that could compete with one build by Sharp?
Cheap labor, weaker environmental regulations, subsidized loan programs are some of the reasons for why we seem to be not competitive in the global market anymore.
Globalization made us the world's biggest couch potato, consuming products made elsewhere, apparently, without even paying for them Ð at least not now. Foreign countries own as much as 53% of our Government debt (Fed Reserve, Dec 2004) and foreign purchases of US Treasury bonds keeps interest rates low and the money supply high.
Free trade is NOT a good idea if it means trade without rules and free trade today looks more like playing footballs without rules and referees.
We all know that the Fed chairman is not very much in favor of changing this anytime soon and would rather see how it plays out, which means waiting until the global economy is level and we all share the same standard of living.
Maybe we should be replacing free trade with fair trade, where the trade deficit would be capped at x% of the total trade volume with a certain country, etc.
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