Hi Greg Posehn,



Although your comment hasn't yet appeared on the PS website, I'll answer it now.



1) You questioned my assertion, "[Martin Feldstein's essay] must be seen in the context of what's best for the overall financial health of 326,474,013 Americans, and by extension, the rest of the world."



If America's economy goes into recession or depression -- by extension -- so will the rest of the developed world.



So yes, what happens in America has huge ramifications for the rest of the world.



2) You say what's missing from Professor Feldstein's analysis, "is that America has priced itself out of competition."



Part of being a developed nation means that we have paved roads to drive on, hospitals with the highest quality care on the planet, useful and massive infrastructure such as hydro-electric dams and nuclear power stations, airports, etc. high quality education and a high standard of life.



All of that doesn't come for free just because the U.S. has the prettiest flag.



America is great because of decades of growth, and unless you share the wealth with the workers, growth ceases.



To wit: The reason the former Soviet Union collapsed, can be summed-up in one phrase that is very familiar to anyone who ever visited the former Soviet Union as it was frequently spoken by workers there: "As long as they pretend to pay us, we will pretend to work."



Which doesn't do much for productivity!!!



All the propaganda aside, that's the real reason the former Soviet Union collapsed.



President Reagan's Star Wars Initiative threat merely convinced communist party apparatchiks that it was a fight the Soviet Union couldn't win. Lowering wages and living standards even further to be able to afford to match Reagan's SDI spending program would've led to violent civil war in the former Soviet Union. (They knew that was a fight they couldn't win, so they capitulated and gave up communism due to the SDI threat) A brilliant plan, but I can only say that because it ended peacefully. (No nuclear war between the superpowers)



3) Your comment about America needing higher productivity is fine, except that in highly developed nations, productivity has hit a plateau. (You can only get so many horsepower out of any machine)



On the other hand, developing nations have lower productivity, but their yearly productivity improvements are sometimes very impressive -- but only because they have the room to improve.



There is practically zero ability for large U.S. corporations to improve their productivity (see one exception to this, below) and there is some small ability for SME's to improve productivity in America. But that's it.



Except for the one thing that everyone is afraid to talk about -- because it is the ultimate disruptor -- and will change the face of society in only a few years time.



*Robotics and automation (easily) have the potential to replace 1 in every 8 jobs in the U.S. and other developed nations. And that change-up could begin now, and be complete in 40 months.*



And no, there won't be 'other' jobs for workers to transfer to (magical jobs that suddenly appear out of nowhere to replace the jobs lost to robotics, just because workers need jobs) but yes, productivity would increase dramatically!!!



In fact, the 37% of manufacturing jobs shipped overseas since 1975 would return -- except U.S. robots would be doing those jobs, not humans.



(Which is why smart people like Bill Gates suggest 'taxing' the virtual 'income' of robots, so that all unemployed/welfare status folks could receive a Guaranteed Basic Income that would replace all other welfare schemes for worker's whose unemployment insurance benefits have run-out)



Productivity would go through the roof, manufacturing would return to the U.S., profits would skyrocket, and the unemployment rate would be 25 percent -- permanently.



The government would love it, corporations would love it, global consumers that actually had a job and could afford to buy any manufactured thing would love it (lower cost manufacturing might translate into lower-priced goods) but 25 percent of Americans (and other developed nation workers) would soon run-out their unemployment insurance benefits and wind up on welfare.



Workers should never talk about productivity, because the only step left to increase productivity in developed nations like the U.S. is to replace the workers with robots and other automation. (Don't get them thinking!)



4. Your point about bilateral trade agreements accomplishing nothing, is wrong.



International trade is always a positive -- that's what turned America into an economic powerhouse -- a process that began decades ago. And it continues, however, trade agreements must be fair to both sides, and that's what's been lacking for America.



First, postwar Europe, then, the developing world, has lived off America's largesse since 1945.



But no more, can America afford to be so generous to it's trading partners. (However, changing this too quickly will result in a global economic catastrophe)



The reason the German economy is booming is because they export billions more euros per month, than Germany buys from the rest of the world.



Their *annual export surplus* is bigger than many developing nations' GDP!



And the Germans tend to pay high wages to their workers.



Would you want to buy a Mercedes Benz that is built/assembled by €8.00/hr workers, or would you rather buy a Mercedes Benz that is built/assembled by €100./hr workers. Remember, some of those AMG Mercedes go pretty fast, and those workers DO build/assemble the braking and steering systems...



It's really your choice.



In summary:



1) America has an outsized influence on the world, regardless of small population relative to the global total population.



2) America hasn't 'priced itself out of competition'. America, like any developed nation, has high skilled workers and they cost money. Remember the Soviet Union example.



3) There is only one way to higher productivity in America and that is by replacing human workers with automation. Which will increase the unemployment rate to 25 percent and it will be a permanent state of affairs. (This is especially true in the United States)



4) Any kind of international trade is a good thing for the U.S. economy -- as long as the trade agreement is fair.



Also on that, the U.S. shouldn't bother to compete with (for example) the Indonesian T-shirt industry. We can't. Nor should we try.



Rather, the U.S. should compete (on a level playing field) on the products and services that the U.S. is best at. (That is the secret of a booming economy... ask Germany)



Cheers, JBS



