Exponential Growth, Deficits, and the Made in China Kitchen Sink

The following link is a must see. Trust me.

Watching the Growth of Walmart Across America

That's the problem with exponential growth. It can go on for years and years without anyone really noticing or caring. In the later stages, everyone notices and cares though.

That's exactly how I see China. When we first started sending our jobs overseas it didn't seem like it was a big deal. Of course, we didn't have a massive unsustainable trade deficit back then though. We also still had plenty of jobs.

Calculated Risk: U.S. Trade Deficit Graphs

The trade deficit with China was $23 billion in November alone, and even with declining imports from China, the deficit with China will probably account for well over half of the U.S. trade deficit in January.

Welcome to my petri dish. I no longer feel immortal. We can't afford to put the disease back in the bottle and we can't afford to cure it.

Got antibiotics? You do? Are they still made in America?

Does the United States make anything anymore?

WASHINGTON — It may seem like the country that used to make everything is on the brink of making nothing.

In January, 207,000 U.S. manufacturing jobs vanished in the largest one-month drop since October 1982. Factory activity is hovering at a 28-year low. Even before the recession, plants were hemorrhaging work to foreign competitors with cheap labour. And some companies were moving production overseas.

But manufacturing in the United States isn't dead or even dying. It's moving upscale, following the biggest profits, and becoming more efficient, just like Henry Ford did when he created the assembly line to make the Model T.

The article tries to put a positive spin on it. I guess I've just been spun enough.

Judy Horkman, 47, was devastated when she was laid off after 13 years of attaching handles to saute pans on the Mirro Cookware plant assembly line. But two years ago, Horkman took a job making industrial light fixtures for office buildings and warehouses at Orion Energy Systems Inc. She makes $12.50 per hour - not quite the $13.80 she earned at Mirro, but Horkman says she is fine with that.

No good can come from middle income wages not keeping up with inflation and no good can come from an unsustainable trade deficit.

November 22, 2004
The Trade Gap: How Long Can It Go On?

Still, doesn't everyone agree that the trade deficit should shrink?

No -- some argue that U.S. deficits serve vital interests. American factory workers suffer, but consumers and the government get to spend more than they earn.

It made me want to pull my hair out. It still does. Common sense as an economic policy must have died at some point.

What's the bottom line for the deficit?

It's hard to say because this experiment has never been conducted before. What happens when the world's sole superpower becomes history's biggest debtor? No one's really sure.

The experiment isn't doing all that well lately, in case anyone didn't notice.