The campaign for US Congress election has united democrats and republicans in China bashing for all their economic woes. Republicans are expected to win majority seats in Congress and participate in US governance with Democrats to tackle with difficult economic challenges of high unemployment and massive deficit.
United States needs to invest more in research, development and capacity building to create new jobs for Americans, while cutting its defense spending to stall its exponentially growing deficit. Criticizing China for United States economic woes will not help republican and democrat politicians in earnestly focusing on the challenges and resolving them.
US defense spending accounts for 46% of world’s total defense expenses. Two wars in Afghanistan and Iraq have added more than a trillion dollars to American deficit and neither war has yielded any financial dividends for American people.
China can neither be blamed for extraordinary US consumption of 70% of the GDP, nor for providing cheaper labour for US manufacturers. The consumption spree worked for US during 1950s economic downturn and later, transforming US into world’s largest market. US spending on research and development and ‘ease of business’ helped it in becoming the top producer of advanced technology and the biggest manufacturer of industrial goods.
Global communication and global economy today has evolved emerging markets with cheaper skilled labour attracting enterprises to shift their manufacturing base from US to Mexico or China for instance.
Shifting manufacturing bases from US has caused job loss for US skilled workers. When GM motors can pay $7 an hour to Mexican workers for the same job that they have to pay $14 to a US workers, then it makes less economic sense not to move their plants from US to Mexico.
Fareed Zakaria recently published an incising analysis to restore the American dream in Times magazine. He mentions that the American dream is no longer the only dream in the world today. Emerging economies have given birth to new dreams.
Fareed suggests a multi-pronged approach to United States to overcome economic challenges of high un-employment and alarming national debt to restore the American dream.
He recommends a shift from consumption to investment, investing more in research, technology, development and training by controlling health care costs, and pensions at the state level.
Fareed writes “My proposals are inherently difficult because they ask the left and right to come together, cut some spending, pare down entitlements, open up immigration for knowledge workers, rationalize the tax code — and then make large investments in education and training, research and technology, innovation and infrastructure.”
Like all other leading journalists of US mainstream media, Fareed avoids mentioning US defense budget that has ballooned over the years adding exponentially to US deficit.
Democrat and Republican politicians are not discussing curtailment of US defense budget either.
US president Dwight Eisenhower had warned American public of the dangers of developing a huge military industrial complex in his speech in 1961 and his words still resonate. He said, “We annually spend on military security more than the net income of all United States corporations. In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military industrial complex. The potential for the disastrous rise of misplaced power exists and will persist.”