Originally Posted by
Gooch
Yoshi's actually pretty much completely right on this one (until he says something later on I'll disagree with on the same topic) and you're wrong. Germany has the lowest wages in the Euro Zone, they have piss poor consumption as a percentage of GDP, they are in effect subsidizing exporters at the expense of household income. They also socialize their employment bringing down average annual household income which impacts consumption. They maintain a trade surplus because they are not able to consume - domestically or via imports - and rely on exporting to other nations, in the Euro Zone, and in China, Asia, and America where the devalued Euro (though it has been appreciating recently for a various reasons I won't go into unless requested) making their already competitive goods even more competitive. At least Germany's goods are competitive due to quality, however. The economic growth you cite in Germany is coming at the expense of other Euro Zone nations, all of which are running at trade deficits (aside from Austria, I think even Belgium is at a deficit) meaning that Germany, due to the shared currency and suppressed labor costs (much lower that the rest of the Euro Zone) has in effect been exporting unemployment, very simliar to what China does.
The fact that you cite China, whose eggregiously low interest rates and undervalued RMB represent a form of financial repression on households (households are even more so subsidizing exporters) as a shining example of this is shocking.
America needs to and will bring manufacturing jobs back to America. It will require a combination of fiscal policy modifications and global trade rebalancing. In terms of fiscal policy, lower corporate tax rates must be considered, at least copy the same tax structures foreigners implement when they attract multinational. Also introduce tax credits and tax holidays, the latter of which is really a deferral of taxes that will eventually be collected, but it costs Intel $1bn more to open factories in the U.S. than it does in China not even considering the lower labor costs, just based on tax and capital laws in place. By encouraging the repatriation of manufacturing, you wil increase employment and collect more taxes from employed workers compared to no tax revuenes and increased budget deficits resutling from having to pay unemployment. Tax holidays will not decrease current revenue streams either, rather increase them.
Global trade rebalancing is the other component. All nations cheat in trade, but China especially so. Globalization is multilateral, not bilateral. A revaluation in the RMB will greatly contribute to this rebalancing and increase employment in the U.S.
