The alternatives for the US economy

Official US economic growth data suggest that the US economy nearly stalled in the first half of the year.

The US Congress debt deal comes with drastic spending cuts in an economy already sluggish, suggesting that the deal may tip the economy into recession.

In any case, the US cannot help its economy, as long as it does not revive its manufacturing industry, and it cannot do so as long as China continues to produce and sell goods in the US and the rest of the world at unnaturally low prices.

The US supported Chinese membership of the WTO in the hope that China would play the game by the rules. In fact, however, Chinese finance and economy are opaque, making it impossible to ascertain how much money the Chinese are really printing, how much subsidy is being given to which manufacturers, and so on.

The US has only the following alternatives:

(a) The US can try to bring China to book so that it is forced to play by WTO rules (the US has signally failed to do anything of that sort, even at the height of its comparative power vis-a-vis China).

(b) The US can withdraw from the WTO and go its own way, so that the US is not constrained by WTO rules.

(c) The US can begin to offer global leadership to integrate ecological and social considerations into WTO rules - which would have the effect of creating a global level playing field, on which the US could in fact compete (unlike the current "tilted" playing field in which the US cannot compete).

(d) The US can offer its companies targeted incentives to re-start manufacturing (specifically in new technologies). Any such move will produce loud howls from China and perhaps from the EU, but that is a problem that can be faced.

There is no other alternative if the US wants to revive its economy. Sphere: Related Content