Monday, October 3, 2011

Trading Places with India and China

After World War II, the American economy embarked upon an era of tremendous growth and prosperity. This was fueled in part by new technologies that were developed for the military during the war, but mostly by a rapidly-growing population and pent-up demand for bigger houses and durable goods like automobiles and household appliances.

We have reached a point where our birthrate and population growth from immigration have slowed. We have also saturated our market with automobiles and appliances. Consumers in China and India, on the other hand, are just beginning to acquire automobiles in large numbers and move into less-crowded housing.

That is why large corporations are much more interested in doing business with China and India. Steve Wynn is blowing smoke when he says the Chinese government is more favorable to business. The real reason he prefers the Chinese market is because Macau has only a handful of casinos and proximity to millions of newly-wealthy Asian gamblers, while Las Vegas is saturated with competition.

When large corporations push tax-the-poor memes and schemes to end employer-sponsored health insurance and replace it with vouchers for individual policies, they really don't care that they are reducing the buying power of American consumers. Their future profits will come from overseas markets.

Once an entire generation of Americans has given up the "American Dream" of owning a spacious single-family house and a car for every adult, big corporations will again find the American consumer worth courting. Getting us to that point while expanding their markets in Asia is their long-term strategy.

2 comments:

Deekaman said...

Meh. Not really buyin' it. There isn't a lot of money in India (at least right now) and the money in China is tied up in the hands of the (very) few. There is no indication thse will change in the near-term. In fact, some reports indicate China is in serious economic trouble. They have delayed inflation for many years by "pegging" to the dollar. Allegedly it was stopped in August. Healthcare debate from "PaulRyanWatch" is hardly a balanced source.

I will also argue that your side believes we consume too much and SHOULD give up on the American Dream. It is your side that is making energy far more expensive than it need be. It is (mostly) your side driving business and industry overseas with draconian regulation (especially EPA) and the threat of high taxation ("tax the rich and the evil corporations").

James L. Greenlee said...

I am curious about what the "draconian" regulation is. Are you talking about safety regulations? Environmental regulations? Has there been a sudden rash of regulation only since 2009 when Obama took the White House? I don't think so.

I hear a lot about the crazy regulations, but little about what they actually are. I'd be on board with you if they were meaningless regulations, designed only to gum up the works. I haven't seen those.