Specification review and analysis

Business Creative Writing

Globalization is important to all businesses, not to mention the economies of the nations in which they do business. Furthermore, there's not a chance that outsourcing or any of the other consequences of globalization are costing jobs in this country, or in any other country, for that matter. Think about it for a minute. Companies in other countries manufacture goods to sell in this country, which means they'll have to accept dollars as payment for those goods. Where do you think they'll spend those dollars? They might, possibly, redeem them for goods and services in other countries besides the U.S., because, after all, the dollar is negotiable in most places in the world. But the dollar only has real value when it's used to buy goods and services in the U.S., which means that, ultimately, money we spend overseas has to come back here to be spent. When it does, it creates jobs providing goods and services that Americans are good at producing, this country's competitive advantage, as it were.

International trade is self-adjusting. When one country has a trade surplus with another country, its currency gains value with respect to the country running the trade deficit, which acts to make the deficit country's currency devalue, making its goods more competitive with the surplus country's products and reversing the flow of trade until the surplus and deficit level out. It is possible, as China has spent the last few years doing, to prop up the price of your own currency with respect to the deficit country, in this case the U.S., but it's not possible to pursue such policies indefinitely. Eventually, the surplus country will tie up so much of its national wealth in dollars that it will have to spend them or run the risk that if the dollar ever devalues uncontrollably, they'll lose a good bit of it. They'll therefore wind up having to spend those dollars -- here, of course -- and who knows what inflated prices they'll have to pay for things? In the 1980s, the Japanese pursued the same strategy of aggressively exporting to the U.S. while propping up the dollar, and in the end, they wound up buying companies and buildings in this country for vastly inflated prices. For example, the purchased Rockefeller Center for about three times its appraised value, and wound up selling it back to U.S. investors for about a 2/3 discount a couple of years later. Their economy paid the price for these policies, too. Starting about 1990, it went into a decline from which they're still trying to recover. No one know yet what the impact of China's policies will ultimately be, but it wouldn't be at all surprising to see them suffer the same fate.

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