by Summary:
Capital flows to where it is most profitable. But, in every economics system a balance must be drawn between efficiency and resilience in the interest of efficacy. This is an issue in a competitive environment focused in quarterly earnings reports. Firms are incentivized to curtail resilience in order to complete in the market place where buyers are looking for the best deal in the present.This is a problem in a system in which analysis is based on microfoundations, which assumes methodological individualism based on a presumption of ontological individualism. This overlooks network effects, e.g., involving the fallacy of composition, as Keynes pointed out.So it was perfectly logical for firms to outsource supply chains abroad in the interest of short-term profits as the market requires,
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Capital flows to where it is most profitable. But, in every economics system a balance must be drawn between efficiency and resilience in the interest of efficacy. This is an issue in a competitive environment focused in quarterly earnings reports. Firms are incentivized to curtail resilience in order to complete in the market place where buyers are looking for the best deal in the present.Capital flows to where it is most profitable. But, in every economics system a balance must be drawn between efficiency and resilience in the interest of efficacy. This is an issue in a competitive environment focused in quarterly earnings reports. Firms are incentivized to curtail resilience in order to complete in the market place where buyers are looking for the best deal in the present.This is a problem in a system in which analysis is based on microfoundations, which assumes methodological individualism based on a presumption of ontological individualism. This overlooks network effects, e.g., involving the fallacy of composition, as Keynes pointed out.So it was perfectly logical for firms to outsource supply chains abroad in the interest of short-term profits as the market requires,
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This is a problem in a system in which analysis is based on microfoundations, which assumes methodological individualism based on a presumption of ontological individualism. This overlooks network effects, e.g., involving the fallacy of composition, as Keynes pointed out.
So it was perfectly logical for firms to outsource supply chains abroad in the interest of short-term profits as the market requires, but this resulted in foregoing of resilience, in addition to the shifting of the global balance of trade, capital flows and the emergence of the developing world (former colonies) as a global economic factor.
From the perspective of the world system, this was a consequence of de-colonization and greater global liberalism in addition to the normal process of free market capitalism that if resulting in the great leveling, a good thing from the POV of the world system but disruptive in some areas that are getting leveled down. In the end, everyone will be better off socially and economically, as well as politically if one accepts greater liberalization as progress politically.
The problem the US has is that China is not liberalizing quickly enough to suit the American elite, but China is taking a managed approach and has the experience of the collapse of the USSR as precedent of liberalizing too quickly.
Industry Week
OEMs Have Long Enabled China to Out-Compete the US
Paul Ericksen