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June 15, 2007



WHen China and the U.S. increase trade, now to about 5-9% of China's GDP, then each side has to accommodate the investment profile of the other according to the coorelation coefficient. In other words, we have to look like China with about 5% of our economy.

But, China is a two tiered system. Hence we have to look somewhat like a two tiered system to get the most efficient investment profile.


Er, yes, let's consider which jobs get to get outsourced: middle class positions in either manufacturing or (depending on the industry) lower-level white-collar work.

Saying "it's reducing the demand for the factor of production" is somewhat disingenuous. The problem isn't simply labor vs. capital as a whole, but which labor, and which capital. After all, the poor shlubs buying mutual funds from television ads aren't the ones making big money... it's the guys investing the millions of dollars they make from the "labor" of executive management.

And they can do it because their jobs cannot be exported. They're in a superior bargaining position precisely because of this trade, and they're milking it for all it's worth. They aren't the only ones in this position--some kinds of skilled labor are doing very well too--but it has a lot to do with things.

And we can't all be plumbers.

Too Much Fed

"collapsing unions, migration, changing norms, monetary policy, and other factors as more likely to be responsible for the lion's share of the increase in U.S. inequality over the past generation and a half."

IMO, most of those are directly or indirectly related to cheap labor.

Too Much Fed

"And "outsourcing": outsourcing seems at least as likely to me to equalize the U.S. income distribution as to give it a further inequality boost. Consider what kinds of jobs are likely to be outsourced."

When the 99% (or higher) of economists who got it wrong start having their jobs outsourced, we will FINALLY get somewhere.

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