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0 sats \ 3 replies \ @Undisciplined 26 Aug \ parent \ on: Chinese Yuan Overtakes the Dollar: BRICS Drive De-Dollarization Surge econ
It's still a very productive economy, there's lots of stuff that can be made in America.
Also, the way comparative advantage works, you don't really have to worry about aggregate productivity. Specialization and division of labor are almost always welfare enhancing.
China has gutted the industrial heartland of the USA over the last 30 years because they produce things cheaper and smarter and so if you take out the auto sector now then you need to find other jobs or see even greater dislocation, unemployment and despair.
The USA is only still solvent because of its global USD hegemony enabling $35 Trillion debt- but this is not sustainable much longer.
Biggest exports from USA today are military hardware and banking services- ie death and debt.
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America is not the wealthiest nation on Earth by pure chance. It's because it is still very productive.
Now, will there be major economic adjustments because of China's growth? Sure. The nature of a market economy is constant change and adjustment. That's creative destruction.
I don't know exactly what the final result will look like, but I do know it won't be China producing everything and America producing nothing.
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America was blessed with vast resources and opportunities and distance from the warring of Europe. America came to inherit the global resource hegemony of Britain post WW2 and with that global USD hegemony over trade payments via SWIFT.
Today USAs wealth and power is based on its domination and control over global institutions, protocols and trade with the worlds largest military to back it up.
But USA today does not enjoy the massive advantage it had post WW2 in manufacturing. Today China enjoys that position. Thus it is China that buys the commodities from commodity producers and sells manufactured goods to almost everyone. China thus controls the markets in many commodities and manufactured goods. Few if any nations today can afford to cease trading with China because its economy is so dominant in both commodities and manufactured goods. China can provide Russia and Iran with almost all the manufactured goods they need at the best prices and can buy all of their oil and gas exports. USA does not have such a comprehensive and broad mercantile dominance and is thus vulnerable if/when it loses its control over trade payments/banking...and this is already happening - USA is losing its monopoly over trade payments because now China can offer a broad and effective Yuan denominated alternative.
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