Thursday, January 28, 2016

News flash for the Donald, China is losing!

China's Effect on U.S. Labor gets a Closer Academic Look is an example of economist examining recent phenomenon, China's economic rise and U.S. labor's dislocation, and then try to develop policies to remedy the perceived problem. Economies, however, adjust to reality before academics can identify it so that a so called remedy hinders rather than improves.  Trumps says China is winning.  It resonates with those who have been hurt by China's low labor costs but that's past.  Today China's labor is higher and those seeking low labor cost have moved on to other countries. Many business recognises labor is not the only cost; materials and logistics need accommodating as well so that labor can rise in a country with low costs commodities and transportation systems. China's Authoritarians have plucked all the low hanging fruit. For them to progress they need a free market unhindered by the crony capitalism of its authoritarian state and a free press, at least a business one, to audit the results for correct allocation of assets.  Otherwise its like saying in the 1930's that the Soviet Union under Stalin is winning.  

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