Business Is Booming

Fundamentally, the businesses (outside of technology focused firms) are nothing more than middlemen that add little value.

I'm waiting for Foxconn or similar to start making their own commodity items and selling them directly - you can, for example, already buy SFF computers with the Foxconn label on them.

It's just a matter of time for the profit engines that US corporations have created to be cloned and have the entire profit center go overseas.

The author of this article has internalized some Keynesian assumptions so deeply that he doesn't realize the story he is writing directly falsifies one of them. A major assumption of Keynesian economics is that employment scales with production. Thus, if you stimulate aggregate demand, you will increase production, and thereby increase employment. This hasn't happened - aggregate demand and production have recovered, but employment has not.

The fact is, our economy is a lot more complicated than it used to be. Workers are not interchangeable cogs and expanding profits does not necessarily involve expanding employment. Stimulating demand in retail will not raise the employment of construction workers or realtors. Many employees produce nothing directly, but merely improve the value of capital [1] - increased profits don't demand hiring more employees, and reduced profits don't demand firing them.

Until economics catches up with the times, all we will get are silly ideas like "invest in infrastructure" and "stimulate demand". Really, you think jobs are moving to India because of their infrastructure? Lets get real here. I've done a little work for someone who created about 30 jobs in Pune. He drives for 2-4 hours on crappy roads to get from his house in Bombay to the office, only to discover that the power is out and no work can be done today. You think he'll come back to the US if you widen a few highways?

[1] I'm a good example. My labor is directly worth nothing - all of my companies profits are directly attributable to capital (a trading system + money in the brokerage account). My employment is an investment - I have a significant probability of increasing the value of that capital.

its usually observers that keep such nationalistic score cards; participants just see people and markets.

The businesses that "add little value" are envied in China because they have access to demand, and he who owns demand is key. The Chinese are making it a priority to advance their marketing, design, etc. abilities to compete in the West's consumer culture. While you may not like marketing, it brings in the money - and in our consumerist economy that's our GDP...

I'd like to see Foxconn try to replace Apple - hell even Dell. Lenovo had to buy their business from IBM to get the marketing / brand support to be successful beyond their manufacturing capabilities.

It's hard to market from a culture from the outside. VW made their German designers live with US families - which is when they figured out why we want cup holders so badly ;-)

"The fact is, our economy is a lot more complicated than it used to be."

Or, our economy is actually just not the top of the heap anymore, and probably never will be unless Asia suddenly slides off and sinks into the Pacific. If it weren't for anomalously successful companies like Apple or Wal-Mart, multi-nationals will eventual write-down the US market as dying and move everything overseas. If KFC can make more money in China than here, we're not really going to recover and be their #1 market again, unless we just open the immigration floodgates (even then, that adds 100 million TOTAL Mexicans, which is a drop in the bucket in comparison). GM sells more cars in China than in the US. You think that's ever going to "pivot" back to us, no matter if we build infrastructure or let it crumble?

It's simpler than you think. Multi-nationals will continue to benefit from the stable political structure and docile and manipulable populace, executives from said companies will continue to live here with its favorable individual tax and seasonal climate (not everyone can stomach the heat in Singapore no matter how tax advantageous it may be) and liquid assets can be increasingly secreted away in wherever pleases them (Caymans, Switzerland, etc.). The only thing that actually changed is that their money makes the world flat.

This is the end of the empire, whether by brute force (Chinese market and labor force) or by increasing political and military irrelevance. We used to own all the money and guns. Now everyone's got guns and everyone's getting money. Now we're just 300 million people pointing fingers at each other.

It's not complicated; there just isn't going to be any solution that we want to hear.