The landscape is moving so fast that officials at the WTO, the world's top trade-law enforcer, say they're relying on news reports to keep up with the changes, as governments are often slow to report them.
Granted, this is largely a self-inflicted wound. Free trade without demonstrable proof of shared benefits wasn't sustainable.
Protectionism won't solve the problem. Extremely mobile productivity (Ricardo was wrong) means that every wage/salary on the globe will inevitably equalize.
Additionally, a race to the bottom was always more likely than the opposite (the asymmetry of the numbers on each side of the equation alone...). The current crisis is merely the invisible hand slapping around the notion that endless debt/ponzi schemes can be used to prevent this from happening.
Sooner than we think, the business logic will be: why produce anything in China when an American worker is willing to accept the same salary/wage as a Chinese worker? Protectionism, counter-intuitively, will only accelerate this process.
And of course, Chinese workers can't afford to buy high-margin cars like SUVs so the cycle continues.
Posted by: Eminence Grise | February 06, 2009 at 06:52 PM