If USA is dominating in manufacturing, overcapacity will not be a dirty word

It is all about inability to compete. Were the USA in a dominating position in manufacturing, overcapacity will not be a dirty word. They will claim this is globalization and comparative advantage must be observed for the betterment of the world.

Too bad about trying to flog a dead horse. The whole world is benefitting now from cheap, but not necessarily inferior quality goods. China can make high end goods as well, like luxury bags and Rolex watches, if the price is right. iPhones made in China is another classic example. What the USA customer wants is cheap goods and China just oblige using cheaper materials. It is the same as buying a cheap car versus an expensive high-end car, where the price differential determines the quality. China never put a gun to USA consumer's head or consumers of other countries to demand that they must buy cheap Chinese goods. They can always buy expensive high-end bags, also made in China without the label, or from Japan and the EU, paying a different price.

The USA can only compete by getting rid of the competition, like what they did to the Germans and Japanese. The latter two were also not making enough of cheap products like China, due to their high cost of input like higher wages and supply chain restrictions. China is in a different position, leveraging on its cheap wages (though that is not the case today), cheap energy, automation and robotics and its total almost in-house supply chain enabling China to cut away middlemen costs as well.


Anonymous