The Globalization Game

Great op-ed on globalization by Clyde Prestowitz in the Boston Globe (via Dave Farber's IP list). Argues that the current jawboning of China about the artificially low yuan is window dressing.

"The real problem is that globalization is a different game for many countries than it is for America.... [These countries have] policies specifically aimed at accumulating large trade and dollar surpluses as a matter both of stimulating growth from exports and of assuring national economic sovereignty by avoiding dependence on foreign lenders...."
 

Meanwhile, "The [US]federal government has long shown no interest in attracting foreign factories to or keeping US factories on its shores. Rather, America's emphasis is entirely on consumption-led growth. Banks aggressively offer credit cards to students with only part-time jobs. Home equity loans with tax deductible interest payments are used to pay for vacation trips. Not only does the White House call for tax cuts in wartime, but tells consumers it's their patriotic duty to buy more. Americans at all levels really do believe that debt and deficits don't matter.

"The confluence of America's consumerism with the strategic, export-led growth policies of many other countries has produced a world with one net consumer, the United States, which now consumes about $700 billion a year more than it produces."