Brad DeLong on US Productivity
He said that the Chinese (using my earlier example) are making the shoes for five dollars because they have not yet developed brands to market them for themselves. When they do, the US GDP will go down accordingly.
This process seems to be already beginning. The idea behind the expectation of the future success of US intellectual property economy was people in the United States would do the high-value work while leaving the country to others.
I’m reminded of an exchange between Boswell and Samuel Johnson:
“Very little business appeared to be going forward in Lichfield. I found however two strange manufactures for so inland a place, sail-cloth and streamers for ships: and I observed them making some saddle-cloths, and dressing sheep skins: but upon the whole, the busy hand of industry seemed to be quite slackened. “Surely, Sir, (said I,) you are an idle set of people.”
“Sir (said Johnson) “We are a City of Philosophers: we work with our Heads, and make the Boobies of Birmingham work for us with their hands.”
But already, South Korea seems to be making great progress in design work, supposedly the domain of the brilliant people in the United States who honed their minds on the complexities of Paris Hilton and cage fighting.
How long will it be before Chinese brands win a reputation for quality? Some older people may recall when Japanese cars were considered junk.