The thing is trade has to balance. If we pay some guy in India 50k to program something for us, he then ultimately has to spend that 50k in America.
He can either buy American goods or services, or invest the money and when he gets return on that investmnet he is faced with the same issue. Or the other option is to sell his dollars to some other person which is then in the same position. This is why trade never hurts.
What I think the question really is, is can America continue to be the dominant nation in the world for innovation. And that surely is a tough question as other nations are reforming their systems to be free market oriented, and educating their people.
He can either buy American goods or services, or invest the money and when he gets return on that investmnet he is faced with the same issue. Or the other option is to sell his dollars to some other person which is then in the same position. This is why trade never hurts.
So trade did not hurt the Indians who, as the story goes, sold Manhattan to the settlers for $24 dollars worth of trinkets? The fact is, the article makes clear another way that foreign nations can use the dollars that they've accumulated from our trade deficits. They can buy our companies, land, and other hard assets. Even for those dollars which are spent on U.S. goods and services, you're ignoring the fact that the next generation will have to provide those goods and services and will receive nothing (except the return of our dollars). If we had balanced trade, then we could leave those dollars to the next generation and they could likewise engage in balanced trade, providing goods and services but also receiving them. Instead, they will be on the hook to provide more than they receive. It will be as though we left trillions of dollars of gift-certificates distributed around the world. Our children will be busy providing the goods and services to redeem them but I doubt that they will thank us.
What I think the question really is, is can America continue to be the dominant nation in the world for innovation. And that surely is a tough question as other nations are reforming their systems to be free market oriented, and educating their people.
I agree that we need to remain a leader in innovation, especially if we want to keep our cost of living from sinking to the level of other nations too quickly. However, I think that we should be looking to develop a global trade system from which all nations clearly benefit. We may try to remain number one in as many areas as possible but we should not be betting our survival on it.