Economics of Outsourcing

If public policy is having the government consume over 40% of the economy, almost twice what the Chinese goverment consumes of its economy, then public policy is the problem.

What exactly does this mean? How do you figure that China's gov't 'consumes' only 20% of its economy when it is still mostly socialized with huge state industries dominating?

We need more reliable numbers for goverment expenditures, but here is my assessment, using state, local and federal.

The Heritage Foundation puts the goverment burden in China at 30% below the US goverment burden.

The Russian economic adviser to Putin has the Russians at 37% and the Chinese at 25%, and claims that Russia and the US are nearly the same.

Bill Buckley puts the US goverment burden at 40%, adding regulations, the tax freedom day puts it it 55%.

For a comparison, the Chinese are estimated to have a GNP equal to ours, if adjusted for the real currency values; but their defense costs are about $50 billion compared to our $400 billion.

When economics talk about how "we" benefit from international trade I think this is imprecise. There are people who will lose high paying jobs to international competition who will never get anywhere near the salary or experience anywhere near the living standards they previously had. Some people benefit a little. Others benefit a lot. Still others just suffer as a result.

As for retraining: as age increases that becomes less feasible. Old minds and bodies are less up to the task.

There are clear losers in all this. If the scale of rate of the displacement gets too high there will be a political backlash.