> But isn't it also true that little of this profit is really beneficial to
> "America" since little of it is reinvested in US infrastructure, most of
> it
> is kept abroad, even if it doesn't stay in China?
Colin Brace::
> Not sure I follow your thesis. Where does all the wealth end up if it
> doesn't stay in China or return to the US?
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I could have been more clear in distinguishing between US-based
manufacturers and manufacturing in the US. The latter is decline, but the
companies aren't; they've increasingly shifted the locus of their production
and profits abroad. American companies still dominate the top 200 (40%) but
I don't know the exact breakdown between financial institutions, resource
producers, and .manufacturers. Maybe Doug or someone else does.
And maybe they could corroborate (or refute) whether this is why the dollar remains stubbornly high despite the ever-widening trade gap - it advanced strongly last year when everyone expected it to slide, even collapse. But foreign investors seem inclined to keep buying US stocks and corporate bonds and Treasuries so long as American firms are profitable - whether this is derived from their overseas operations or at home. And so long as imports from China and the rest of Asia remain relatively cheap, Western consumers will continue to spend. Of course, if the cost of capital continues to edge up, or there is an geopolitical energy crisis, it will show up in consumer spending and corporate profitability and interfere with this decade-long "virtuous circuit" of global capital. The gold price runup is, at least in part, a hedge against this eventuality.
I agree, of course, that this circuit benefits the capitalists and is a net loss for the working classes in the OECD countries.