Larger global market offers more gains in trade

Larger global market offers more gains in trade

To spin a story of decline, one has to demonstrate that policies are considerably worse than they used to be, and that they're unlikely to improve. It's actually quite difficult to do this.

Good policy matters. But while lots of current policymaking in Washington is very bad, other sorts of policymaking are considerably better handled than they used to be. One could argue that things are different now, because there is a challenge from abroad. There is always a challenge from abroad. Ever since America ceased to be the challenger, there has been a challenge: the Soviet Union, Western Europe, Japan, the Asian tigers.

The nature of that challenge is the second matter on which perspective is important. America is home to just over 300m people. China and India together are home to over 2.5 billion people. Asia as a whole is filled with nearly 4 billion people. Africa accounts for another billion and Latin America a further 500m. America is a tiny country that produces and consumes a vastly disproportionate share of world output. If we weren't observing rapid catch-up growth in the emerging world, if we weren't watching ever more of the world's consumption, investment, and innovation shift to the emerging world, there would be something very, very wrong. When America's share of world output and innovation declines, that is a healthy and wonderful thing. Now, some aspects of this growth may have a depressing effect on American lifestyles. In particular, rising demand for commodities with relatively inflexible cone crusher supplies raises their price. But America isn't entitled to cheap commodities. And more aspects of emerging-world growth are out-and-out good for America. A larger global market offers more opportunity for specialisation and achievement of gains from trade. And the shift of most of the world's population from an existence in which talented individuals largely make a living on subsistence farms to one in which they go to university and contribute to growth in the stock of knowledge, well, that's very good for America. The rise of India and China is not an emergency that should drive cone crusher development America to panic.

In many ways, America is burdened by its legacy as economic hegemon. The dollar's reserve currency status allows America to borrow cheaply. At the same time, however, it allows America to borrow cheaply, encouraging an unhealthy level of borrowing, while also making it difficult for America to adjust its external imbalances. Should the yuan come to play a larger role in global finance (signalling, by some accounts, American "decline") one source of pressure on American ball mill exporters will be reduced. We shouldn't mistake change for decline; change will often provide a cushion to an adjusting American economy.