goose
I agree with your description, except.....
-It is not just the assembly jobs that go offshore. Each manufacturing job (or most other jobs also) also feeds a chain of related activity: other people make or sell the conveyors, floor mops, tool & dies, pop machines, boxes, pencils, accounting or timekeeping. The workers income supports restaurants, little league games, local grocery stores, etc. etc. Not one for one of course, but the chain effects many additional jobs.
-The money eventually should cycle back to the issuing country, if not for excessive debt. If the balance of payments was 0, Florida would buy the same amount of potatoes + firewood +.... from Maine as Maine bought oranges + Disneyworld + .... from Florida. Both economies become more efficient and both have higher standards of living. So the ideal is NOT protectionism to have a closed protected economy going in a circle, but a balanced one going in all directions equally. (I am not even going to touch the theory of increasing debt vs. growth in GDP. Trying to keep it simple here.)
The breakdown comes when the balance of payments has a large deficit. If Maine buys oranges and goes to Disneyworld, but sells only a few potatoes in return, eventually there is either loss of resources, no more savings account, or debt accumulates that has to be covered somehow by paying forever into the future.
As an example, envision an isolated family household: One person kills and grows the food, another cooks it, someone mows the lawn, someone weaves and makes the clothing, someone else does the dishes. If they 'paid ' each other to do these jobs (with a finite number of dollars, sea shells, bottle caps or acorns), the cycle can still continue forever. (If one promises to pay another in the future with sea shells yet to be earned, inflation can start unless productivity also increases by that debt, but that is another topic. Assume it is a fixed amount of sea shells.)As you have described, it could be more efficient if someone got a job in town (outside the circle of the local economy) and sold the excess garden stuff and bought clothes made in a specialized factory. As long as the sales equal the purchases, life is better for both economies.
The unsustainable part comes when the family goes to town to buy clothes, and buy food, but never sells anything, (or at least buys more than sells). Life style and standard grows, life is way better, but in the background the charge accounts at the grocer and shoe store grow bigger and bigger. At some point, the trading partner says no more credit, no more charging, no more groceries until you either pay the bill, or pay for todays purchases. The borrower either agrees to higher interest, refinances, makes more promises, or the lender takes title to the land in return for paying off the debt.
That is the biggest danger I see to our economy. We used to buy cheap labor content stuff and sell high tech stuff. Now we buy buy buy and don't sell much. So the debt builds up. To the credit of the chinese, japanese, indians, etc, they are better at long term planning. We are buying electronics, toys, plastic thingies, disposable or consumable items. They are buying up production equipment, technology, knowledge, mines, sources of raw materials, government bills, and long term assets as well as consumable items. Then, by using that knowledge to build their own economy to make their own consumable stuff, they are in a better position in the future. Our company has sold maybe $50 million of railroad equipment overseas in the last couple years. Maybe half of that is classic buy and trade back and forth. Half is transfer of technology and process and design and knowledge that will only go one way.
Answers? Way above my head. But I know at 60 I have different goals than back at 25. Personally I have been trying to get off the materialism addiction, consumption and china sourcing in particular. Reducing my consumption, not being a slave to possessions, paying more for usa made or quality made, buying quality stuff once, buying older quality used stuff, and not having to have as much certainly is a freeing experience. Working at getting the debt down on mortgages. No consumer charge card or car debt.
I need at least some semblance of on topic here: A good book, glass of wine, good wife, sitting by the woodstove with wood I have sawed and split refocuses life's priorities to what is necessary (heat in MN = need) vs what is just wants.
Anyway, back to the regularly scheduled programming.......
kcj
