So, according to this Center for American Progress report, we’re now running trade deficits across the board in high-tech while the dollar continues in free-fall (for an interestingly-annotated version of the story, without the charts and graphs, check Sterling’s blog). Like a lot that goes on these days, this goes completely against classic economic theory. When your currency is worthless (or even just worth less), other countries with strong currencies (pretty much every developed country on Earth right now) should want to buy things from you. And yet they’re not, at least not as fast as we want to buy things from them.
Another article I read recently indicated that we have been running an agriculture trade deficit since 1996. The USDA seems to agree. Wow, as late as 1985, I remember hearing in school that we were the world’s breadbasket. Without us, the rest of the world would starve! What happened? We’ve been running steel deficits even longer. The current issue of Consumer Reports (sorry, the article is not online) indicates that certain “American-made” automobiles are being assembled in the United States (or Canada or Mexico, for that matter) of 99% imported parts. And I’m not talking about the total trade deficit, which will pretty much always exist due to our dependence on foreign oil, but specific-industry deficits, industries where at one time, in the very recent past, we were quantitatively the world leader.
Anyway, my intention here is not to get into a free trade discussion or a debate about off-shoring of jobs or assets. The real question to me is, what the hell is America making these days? I mean we have fairly low unemployment right now, so all these people are going to work and doing something all week long. So what is it? Of course we know, and this was predicted as far back at the late 80’s. It’s all service industry. We’re all busy sending each other spam and cutting each other’s lawns. And of course we’re doing it with imported computers and lawn mowers.
Wired had an article last month that basically says that we need to move on. The Information Age is already over, not because it’s been outsourced or offshored per se, but simply because the rest of the world has caught up. As the speed of the cycle of “ages” has increased, so has the speed of adoption globally. It took us almost 100 years to get from Industrial Age to Information Age; it took China half that; Singapore did it in half that again. The wired article claims our next boom, and our next big export (no matter how you feel about globalism, they’re inexorably linked from now on) will be creativity. Sounds ridiculous, but so would have the idea of importing and exporting “information services” in 1980. Whether you buy this argument or not, if you still believe in the “American way” (what we used to mean by this, anyway) of pulling yourself up by your bootstraps, of growing past your problems, of being the world leader in everything (but especially innovation), you really have to hope that something is next, because right now we’re looking pretty irrelevant. I mean if we’re just another country with a depressed currency, shaky credit, across-the-board trade deficits, huge national debt, hinky elections, and a questionable human rights recordâ€”basically another Brazil, without the tropical climate and sceneryâ€”then what do we have that makes us special? Okay, maybe Hollywood, the last great exporters (literally, we have really good trade numbers for entertainment) of the American way, the accidental patriots. And guess what business they’re in: creativity.