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The only countries that need to devalue their currency are the ones with a large and persistent trade deficit. These are few.
US and the PIIGS. They can't print there own currency. We can. and everyone is currently chasing international trade trying to drive their currency lower at the same time.
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Originally Posted by rruff
Their comparative advantage will disappear, and development will end immediately.
Why would anyone invest in a poor country with a poor infrastructure, education, and weak or precarious government, if the wages are as high as they are here?
The people that live there would be obliged to invest in their own country.
US and the PIIGS. They can't print there own currency. We can.
Precisely.
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and everyone is currently chasing international trade trying to drive their currency lower at the same time.
How are they doing this and why is the US the only country that is unsuccessful?
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The people that live there would be obliged to invest in their own country.
They haven't and they won't. The ones with the means deem it too risky. The rest are just trying to survive. Industrial development is a major project that requires a concerted effort, and strong socio-political institutions. At the very least you would need a coordinated oligarchy willing to carry out this vision. This is the case even if you pay the workers subsistence wages. If you pay them US wages as you propose, investment would never occur.
You do understand that different places have completely different levels of productivity? High productivity can only occur after decades and even centuries of development and education. Relative wages must be in line with the productivity of the societies.
I am shocked. I would have thought that after two costly wars, apparently huge intelligence budgets to snoop on everyone all the time, massive bank bailouts, an unaudit (privately held) Federal Reserve bank putting the printing presses into overdrive to distribute the currency like confetti to market investors, flash trading that rigs the stock market, and 0 percent interest bearing savings there would be no middle class left. Oh, well, let's wait for the next President to turn us all into serfs.
How are they doing this and why is the US the only country that is unsuccessful?
Not unsuccessful just look at the timing. When we were doing QE and the EU was looking better our currency went down theirs went up. Now the roles are reversed. We are going up and they are going down. Someone said best looking nag in the glue factory.
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Originally Posted by rruff
They haven't and they won't. The ones with the means deem it too risky.
I come from Mormon stock. My cultural history is go out and convert people. Convert them to the Japanizes model and they will do just fine. If they don't then that is their loss.
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Originally Posted by rruff
The rest are just trying to survive. Industrial development is a major project that requires a concerted effort, and strong socio-political institutions. At the very least you would need a coordinated oligarchy willing to carry out this vision. This is the case even if you pay the workers subsistence wages. If you pay them US wages as you propose, investment would never occur.
Take the existing investment that is already there. We run a trade deficit or did before the oil boom with 125 of our trading partners. They way I'm envisioning it they could cheat rather easily as long as they sell to mom and pop shops not corporations. Small time operators wouldn't be hit with the capital gains tax. So it would have some time to work its way through.
Quote:
Originally Posted by rruff
You do understand that different places have completely different levels of productivity? High productivity can only occur after decades and even centuries of development and education. Relative wages must be in line with the productivity of the societies.
Take a $1 a day work force. If you get 2% productive enough to justify $7.25hr you double the GDP of that workforce. Those islands of high pay will expand and drive up productivity.
That is the elephant in the room we don't talk about. Until total debt comes down in % of GDP we aren't going anywhere.
At over 350% of GDP total debt, government, personal and corporate debt, we aren't in a position to take on more debt.
Thanks for bringing this up, debt levels have gotten beyond scary. What's the average credit card debt in the US now??? $12,000????
Previous posters have discussed a revolution, the revolution we need in this country is people dumping their debt!
Thanks for bringing this up, debt levels have gotten beyond scary.
Some perspective:
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