This is another insightful and valuable analysis by Profesor Roach. He sheds light on an aspect I cannot remember having seen in recent assessments by other observers. Indeed, I share David Ginsburg's reaction, because I knew of the value added contribution of China from research I had read several years ago, but forgotten in the meantime.
In regard of Professor Roach's findings, it seems to me that simple mindedness, rather than simplicity of concept, is guiding the US administration's actions.
For this reader, Stephen Roach’s article, Ninety-five Years Ago, was an epiphany - one of those moments when you slap your forehead, saying to yourself “of course. Why haven’t I been thinking of value added chains within and across international borders, and China as an assembler of 75% of the components and parts in the finished products it exports.” In retrospect, it was such an obvious question to have asked, but didn’t. At least for a dunderhead like me.
The de-industrialization of America was done by the respective boardrooms of the companies that moved production off-shore, to the benefit of their bottom lines, and to the applause of their shareholders reaping the commensurate rewards. No theoreticians involved, except the profit making kind. Reversing that trend will not be easy, not in the interests of efficiencies, nor achieved by tariffs.
Critical industries like semiconductors, pharmaceuticals, and autos perhaps, may return with the help of incentives or other forms of federal persuasion.
As far as communist dictatorships go, they don’t allow the opposition to get elected. So, either Trump is a Party Member in the dictatorship, or your assertion fails at the ballot box.
The mountain of government debt cited, is the product of successive governments on both sides of the political spectrum, with each topping the next going back as far as you like. There have been hiccups of surpluses, but neither the Republicans nor Democrats can lay claim to meaningful fiscal restraint.
IMHO the analysis misses the big picture, which is the current negative export value at -3.1% of GDP. If fair and balanced trade is insisted by the USA, which Trump is attempting to do, then that would pump our GDP by 3.1%, that would be tremendous for the economy! For decades policies advocated by theoreticians have resulted in trillion-dollar deficits and unsustainable debt, the deindustrialization of the US, which carries great human suffering, as well helping to enrich a communist dictatorship.
Brilliant analysis and of course, not unique to imports from China. Is there a parallel with respect to services? For example, many of the big American accounting and consulting firms do their ‘number crunching’ with talented staff in places like India, but the big contracts are led by consultant and accounting partners from the US (although to be fair, no small amount from Europe as well). So which country actually gets credit for the ‘service’ component?
Conversely, the current tariff situation cannot be assessed in isolation. It is intertwined with global power rivalries, the desire to reshape supply chains, and the redistribution of jobs in alignment with national values. As Yuval Noah Harari has noted, the human information network has evolved to a point where both massive democratic and totalitarian systems may become viable. In my opinion, the United States should steer the discussion on the tariff war toward achieving a balance, such as between strategic subsidies and protectionism. The actions of major powers are essential for the advancement of human civilization.
This is another insightful and valuable analysis by Profesor Roach. He sheds light on an aspect I cannot remember having seen in recent assessments by other observers. Indeed, I share David Ginsburg's reaction, because I knew of the value added contribution of China from research I had read several years ago, but forgotten in the meantime.
In regard of Professor Roach's findings, it seems to me that simple mindedness, rather than simplicity of concept, is guiding the US administration's actions.
For this reader, Stephen Roach’s article, Ninety-five Years Ago, was an epiphany - one of those moments when you slap your forehead, saying to yourself “of course. Why haven’t I been thinking of value added chains within and across international borders, and China as an assembler of 75% of the components and parts in the finished products it exports.” In retrospect, it was such an obvious question to have asked, but didn’t. At least for a dunderhead like me.
Excellent analysis. I am surprised there are enough statisticians still employed after Dodge to do this.
So enlightening. This is the real economics education I missed in my late 60s college days. Thank you Dr . Roach!
The de-industrialization of America was done by the respective boardrooms of the companies that moved production off-shore, to the benefit of their bottom lines, and to the applause of their shareholders reaping the commensurate rewards. No theoreticians involved, except the profit making kind. Reversing that trend will not be easy, not in the interests of efficiencies, nor achieved by tariffs.
Critical industries like semiconductors, pharmaceuticals, and autos perhaps, may return with the help of incentives or other forms of federal persuasion.
As far as communist dictatorships go, they don’t allow the opposition to get elected. So, either Trump is a Party Member in the dictatorship, or your assertion fails at the ballot box.
The mountain of government debt cited, is the product of successive governments on both sides of the political spectrum, with each topping the next going back as far as you like. There have been hiccups of surpluses, but neither the Republicans nor Democrats can lay claim to meaningful fiscal restraint.
IMHO the analysis misses the big picture, which is the current negative export value at -3.1% of GDP. If fair and balanced trade is insisted by the USA, which Trump is attempting to do, then that would pump our GDP by 3.1%, that would be tremendous for the economy! For decades policies advocated by theoreticians have resulted in trillion-dollar deficits and unsustainable debt, the deindustrialization of the US, which carries great human suffering, as well helping to enrich a communist dictatorship.
Brilliant analysis and of course, not unique to imports from China. Is there a parallel with respect to services? For example, many of the big American accounting and consulting firms do their ‘number crunching’ with talented staff in places like India, but the big contracts are led by consultant and accounting partners from the US (although to be fair, no small amount from Europe as well). So which country actually gets credit for the ‘service’ component?
Conversely, the current tariff situation cannot be assessed in isolation. It is intertwined with global power rivalries, the desire to reshape supply chains, and the redistribution of jobs in alignment with national values. As Yuval Noah Harari has noted, the human information network has evolved to a point where both massive democratic and totalitarian systems may become viable. In my opinion, the United States should steer the discussion on the tariff war toward achieving a balance, such as between strategic subsidies and protectionism. The actions of major powers are essential for the advancement of human civilization.