Henry Ford wanted his workers to be able to afford his cars. But he only sold perhaps less than one percent of his cars to his own workers. How much of America's production is sold to America's workers? About 87%. Only about 13% of US GDP is exported. And we import about 16% of GDP (meaning that foreigners lend us about 3% of GDP per year to buy more of their stuff).
One of the ironies of globalization is that very little production is actually traded internationally. This is mainly because people mostly buy services and real estate which rarely can be outsourced to another country. In the future, if the global economy continues to become more service-sector oriented, we may trade even less of our production.
People often think that 'everything is made in China', but that is because of the availability heuristic: images that are readily available when you think about a subject are emphasized more than their actual importance and Americans really do import most of our consumer goods. But we spend most of our money on real estate, health care, education, restaurants, police protection, etc. And America exports almost as much stuff as we import, but the kinds of goods that we export are not consumer goods. We export airplanes, military hardware, and capital goods that foreign businesses buy. That means that foreign business owners may think of the US as an exporting juggernaut because they picture all the things that they buy from the US, but foreign consumers (most people) do not buy much American production except for cultural goods like movies and music.
Wednesday, July 4, 2012
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment