> Yep, but as the dollar drops in value, foreign purchasing power
> increases which spurs US investment and the purchase of US products by
> those foreigners.
That is why after WWII the UK intentionally devalued the Pound and
over a five year time span it went from being 4 to 1 against the
Dollar to 2 to 1. That was also a time when everybody's currency was
based on how much gold they had in their vaults. Ten years ago
everybody's currency was based on how much it could be traded for
against the US Dollar, now as the value of the Dollar is dropping a
lot of countries are switching to the Euro which is holding a lot
stronger.
Moderate devaluing of currency is good for increasing the value of
exports, but since we have a significant trade deficit it also
increases the cost of imports, this imbalance will only increase the
trade deficit and will drain our economy of financial resources as
more of the money we spend on products are transfered to other
economies rather than reinvested or spent in our own.
>If left alone, (and that's a BIG if, because
> governments can NEVER seem to leave things alone), the market always
> corrects and everything equalizes.
Personally I am a big fan of a liberal economy (in the classical
sense, not the socialist sense), market forces are a great thing, but
only when free. Today American auto makers are moving manufacturing to
Canada to eliminate health care costs (in reality it's merely
transferring it to Canadian tax payers) and Airbus can build cheaper
jets than Boeing due to government subsidies, although total cost of
ownership is still cheaper over the life of an aircraft for Boeing
products due to lower maintenance costs, but as airlines try to expand
or modernize their fleets they tend to look at the short term costs.
In the long run these shifts in manufacturing to socialist or at least
more socialist countries will drain their economies since they are
exporting products at the expense of their own tax payers, but in the
short term it screws over our economy.
I'm not suggesting that we mimic their methods to compete now, that
would only screw us over later. The solutions to these challenges to
be able to sustain the ability to compete over the long haul before
the market has a chance to correct itself aren't easy, it's not
something that economists will be able to solve, it's not something
workers will be able to solve either. This situations require
corporations to find more efficient ways to produce products or to
find cheaper ways to do it, often through outsourcing, something that
in the short term is good for the bottom line, but in the long
run....only time will tell.
Of course one solution to the manufacturing problems would be to
deunionize, but as it is it seems that unions are more concerned with
wages that their members earn than whether or not they can keep their
jobs that's going to take a while. And for those who may take issue to
this, just look at the fact that the Japanese and Koreans can build
cars in America cheaper than the Big Three, the only difference is
that they have no unions.
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