Tag Archives: comparative advantage

Following the US into Decline

[The new Australian government, elected in September, has refused to do anything to help to retain car manufacturing in Australia, and all three manufacturers (GM, Ford and Toyota) have now announced they will close within the next 2-3 years.]

trickle-downIt’s amazing the Abbott government can run such a market-fundamentalist industry strategy, to general acquiescence, in the face of so much obvious evidence of the profound damage the same strategy has done to the USA.

The free-trade doctrine has seen US industry hollowed out, and industrial jobs exported en masse, as US corporations moved their plants to countries with cheap labour and few environmental constraints.  The US used to have consistent trade surpluses, but since 1976 it has run enormous trade deficits that free-market policies have done nothing to reduce.  The trade deficit leaves the US indebted to the world, and increasingly dependent on China, which holds the most US debt.

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