Sunday, August 07, 2005

Offshoring manufacturing as a form of hegemony

American manufacturing companies and leaders forced China's hand and produced the Yuan revaluation. Goal was to protect US manufacturing jobs by making Chinese goods less competitive in pricing. At the heart of the arguments was the notion that continued offshoring of US manufacturing jobs would impair long-term US economic leadership. This appears to be a short-sighted view.

In the emerging era, intellectual capitalism is replacing industrial capitalism. The former is superior to the latter in a number of ways, but most importantly, intellectual capital is far more nimble that industrial capital, which cannot be redeployed quickly in the fast-changing economic landscape. Think of it as the US forcing the third world to turn their resources (labor, capital, energy, equipment) into fixed assets while we are deploying our resources into variable assets. This is a highly advantageous situation for us.

Most economists view the current transition as a sign of deteriorating US leadership on the global economic stage. It's possible, however, that historians will look back at this era as another brilliant move by the great imperial power to hegenmonize the rest of the world by saddling the third world with the detritus of the passing epoch of the industrial age: menufacturing. timing is also perfect. the spoils of the industrial age of the past 200 years are already won by the west. just at the time we are moving on to the higher-value intellectual economy, we are albatrossing the third world with the lower-value industrial economy, which could set-back their progress for a couple centuries while we expand our leadership on the global stage.

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