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PeakTrader said...

U.S. manufacturers offshored low-end products, rather than discontinue operations, and imported those goods at lower prices and higher profits.

Freed-up limited resources shifted into high-end products and emerging industries.

So, U.S. manufacturers also exported more high-end products for higher profits, because of market power.

While emerging industries created and improved new products, also with market power.

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Andyweintraub says: "China would rather buy U.S. goods and services instead of U.S. treasuries. This should be a warning to those who assume we can finance deficits indefinitely."

We can finance deficits indefinitely, and have financed deficits in the long-run, by exchanging worth less paper for valuable goods.

China chose the inferior policy to boost output and employment through net exports, because it had to, unlike the U.S..

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The U.S. can offshore low-end and some high-end manufacturing to China, but what can China offshore to the U.S.?

And even if China could offshore a product to the U.S., why would it? I doubt it can afford, or even survive, reduced output and employment.

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PeakTrader said...

It depends how you define renaissance - rebirth, revival, restoration, renewal, resurgence.

The U.S. shifted from low-end manufacturing to high-end manufacturing, including through offshoring (note, offshoring reduces U.S. productivity and raises productivity offshore).

U.S. manufacturing produced more output with fewer inputs, particularly since 2000 (do you prefer more wealth or more work?).

Because of the differences in market power, the U.S. was able to import goods at increasingly better values, while the U.S. was able to export goods at increasingly better values (so, the U.S. gained more in both imports and exports than its trading partners).

The U.S. has maintained its global share of manufacturing output at around 20% with over 30% less labor since 2000. So, it's in a much stronger position to expand compared to 2000.

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It's more accurate to say offshoring existing U.S. technology, e.g. to China, is more productive to China than creating and shifting into new technology in the U.S., ceteris paribus.

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Ron H. says: "If I reduce the cost of my inputs for the same output, I am more productive."

Yes, however, the costs of inventing and building new technology typically raise input costs, until the new technology is installed, operated, and maintained.

The U.S. creates more new technology than other countries, e.g. China.

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PeakTrader said...

U.S. exports became a larger share of U.S. GDP, particularly since 2003 (which the second chart suggests).

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