You Snooze You Lose

Somewhere in China...

Despite China's now-slowing economy, its share of world output and trade is expected to keep rising, with growth forecast at up to 8 percent a year over the next decade, far above U.S. and European levels. 

According to two writers with AP, JOE McDONALD and YOUKYUNG LEE, trade may get less publicity than military affairs or diplomacy, yet it is commerce that generates jobs and raises living standards. Trade can also translate into political power. As shopkeepers say, the customer is always right: Governments listen to countries that buy their goods, and the threat to stop buying is one of the most potent diplomatic weapons.

China has been slow to flex its political muscle on a large scale but is starting to push back in disputes over trade, exchange rates and climate change.

Shin Cheol-soo

Shin Cheol-soo no longer sees his future in the United States.  The South Korean businessman supplied components to American automakers for a decade. But this year, he uprooted his family from Detroit and moved home to focus on selling to the new economic superpower: China.

In just five years, China has surpassed the United States as a trading partner for much of the world, including U.S. allies such as South Korea and Australia, according to an Associated Press analysis of trade data. As recently as 2006, the U.S. was the larger trading partner for 127 countries, versus just 70 for China. By last year the two had clearly traded places: 124 countries for China, 76 for the U.S.

Apple, Samsung, Nokia and other electronics giants have shifted their final assembly operations to China. Shipments of mobile phones, flat-screen TVs and personal computers have jumped sevenfold over the past decade to nearly $500 billion. That made China a major customer for high-tech components supplied by countries such as South Korea, which swung into China's column in 2003, followed by Malaysia in 2007.

Capacitors...

In the U.S., Vermont-based manufacturer SBE Inc. started exporting capacitors - energy-storage devices used in computers, hybrid cars and wind turbines - in 2006. The company now gets 15 to 20 percent of its revenue from China, and has hired 10 employees there.

Cattle ranchers in Latin America turned grazing land into fields of soy, a crop few in their region consume. Soybean exports helped push Brazil into the China column in 2010, and put China neck and neck with the U.S. as Argentina's top trading partner.

In the Brazilian state of Mato Grosso, some 10,000 miles (17,000 kilometers) from Beijing, farmer Agenor Vicente Pelissa and his family raise cattle and soy on 54,300 acres, a farm twice the size of Manhattan. Half their 21,000-ton annual soybean harvest goes to China.

Brazilian Soybean Harvest

The recession of 2008 set everyone back, but China less so than the U.S. or other major traders such as Germany. China does a bigger share of its trade with developing countries that suffered less and rebounded faster, while the United States sells to rich economies that are continuing to struggle while Chinese companies have boosted exports by 7 percent this year despite anemic global demand.

This is the magic of the free market enterprise system that, for the most part, originated in the US, is spreading throughout the world faster than the flooding waters from Hurricane Sandy.  As our economy goes down or remains flat, there is another economy somewhere growing.  As our labor costs increase due to our affluence, labor costs in other parts of the world are low, and when their labor costs increase, there will be movement to another part of the world.

Infrastructure costs...

But, it is not just labor costs that accelerate this economic growth, it also comes from education and the retention of knowledge.  For instance, right now, those students who study STEM courses (Science, Technology, Engineering, & Math) are the ones who will have future jobs anywhere in the world.  Those students who do not take their education for granted and have on retaining knowledge rather than making a grade, will be able to add value to their potential future employers.

But, it is not just labor and education that accelerates this economic growth but not needing to refurbish infrastructures or pay increasing healthcare costs or provide retirement funds to a huge population that allows monies to be redirected.  Of course, in the US, there is a huge deficit that needs to be paid down and unless Congress can learn to compromise, or economy will continue to move like a turtle while other economies like China will continue to move forward.

The free market enterprise system is a perfect business model 

where any kind of government:   

Democracy, Communism, Dictatorship, etc., 

can play the game, including business cartels 

which are illegal in the US, but not in a global marketplace.

A Global Marketplace...

The arrogance of the American people prevents us from seeing:

If you always do what you always did then you will always get what you always got.