China is Losing Its Edge

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This is one of the reasons that I’m a little less preoccupied by China than some people:

Rising Chinese labour costs are changing the economics of global manufacturing and could contribute to the creation of 3m jobs in the US by 2020, according to a study being released on Friday.

….The Boston Consulting Group estimates that the trend could cut the US’s merchandise trade deficit with the rest of the world, excluding oil, from $360bn in 2010 to about $260bn by the end of the decade. The shift would also reduce its soaring deficit with China, which reached $273bn in 2010 and has triggered an intense political controversy over China’s exchange rate policies.

This has been inevitable for a long time. As China grows and gets richer, its workers will get paid more and it will make less and less sense to move U.S. production there. It’s a natural brake on offshoring. Add to it China’s demographic trends and you have a country that still has a bright future but is almost certainly not going to be able to keep up the torrid growth rates of the past few decades. Once it hits per capita GDP of $10-15 thousand or so, continued progress is going to come ever more slowly.

At the same time, this isn’t automatically great news for American manufacturing, which, in the short term, is just likely to migrate to India and Malaysia and other countries with even lower labor costs than China. And as for our current account deficit, the key phrase in the article above is “excluding oil.” Obviously China is a significant factor in our trade deficit, but oil is both a bigger and more persistent one. If we want to tackle that — and we do! — we need both macroeconomic action (a weaker dollar) and policy action (ways to reduce our use of OPEC oil). Both a weaker dollar and a carbon tax are our friends right now.

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SIX TRUTHS

Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

Truth #4: When we go to work, we're in the fight.

Truth #5: It's about minority rule.

Truth #6: The only thing that can save us is…us.

Please take a moment to see how all these truths add up, because what happens in the weeks and months ahead will reverberate for at least a generation and we better be prepared.

And if you think journalism like Mother Jones'—that calls it like it is, that will never acquiesce to power, that looks where others don't—can help guide us through this historic, high-stakes moment, and you're able to right now, please help us reach our $350,000 goal by October 31 with a donation today. It's all hands on deck for democracy.

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