How much will taxpayers shoulder?

[kandrathe]

You didn't mention trade before, either, but I'm glad you bring it up. Let's take a look at this EPI article from July 2008: China trade costs jobs in every state.

"Unbalanced U.S. trade with China since 2001 has had a devastating effect on U.S. workers. Between 2001 and 2007, 2.3 million jobs were lost or displaced, including 366,000 in 2007 alone. These jobs were displaced by the growth of the U.S. trade deficit with China, which increased from $84 billion in 2001 to $262 billion in 2007.

Growing China trade deficits between 2001 and 2007 eliminated jobs in all 50 states ..."

I see no reason to disagree with this article. It mentions trade deficits, and not foreign reserves as a cause of problems. But how come there is a trade deficit? The answer to that must be obvious: China exports a lot, to the USA and other nations, while the USA exports only warfare material which the Chinese don't need (they make plenty of it, themselves). And China isn't the only one.

The real problem is that the USA is no longer a producing nation. It can't produce enough to sustain it's own population, let alone to export much. And the things it could export are too expensive, due to high wages. I'm afraid a powerful automated industry is no match for a billion cheap hands, nowadays.

I don't think the Chinese are responsible for this mess, because they manipulated with currencies. I do think they play a bit unfair, because better circumstances for their population would make competing harder, in the big game of global economy. Then again, it's a free market, not?

In addition to what Jester said, my only quibble with that article is that it fails to recognize the global trend of replacing manufacturing jobs with automation and productivity. China is also losing manufacturing jobs, although new sector growth more than offsets their loses. It is the opposite in the US, where the manufacturing workers are hit by global competition for wages, efficient production, and advances in automation.