The Transfer of Capital from the U.S. to China

Posted by jeckert on 01/19/2011

Mike Mandel breaks down the real reason that America feels poorer in relation to China.  He says that it is not because we actually ARE, but because our innovation is heading overseas along with our factories and jobs due to the artifically undervalued yuan. 

Mandel says, "the transfer of knowledge capital to China doesn’t mean that the same knowledge capital  disappears in the U.S. However, our knowledge capital  does become less valuable because there is more global competition–and that’s why we feel poorer."

The solution?  Well, it is a combination of things.  Mandel concludes, "what’s needed from Washington is a sophisticated  response that both focuses on rebuilding our own knowledge capital, while at the same time slowing down the exchange-rate knowledge capital pump."

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