that derives it's information from the countries
themselves reports:
Debt as a % of GDP (2003)
Japan 154.6%
Italy 106.4%
France 68.8%
Germany 64.2%
US 62.4%
UK 51%
There is another aspect of this debt, trade deficits and another aspect: cultural
imperialism, that is setting the US apart.
In Running Money (a book by a hedge fund manager Andy Kessler) he tells a story
about a Toshiba laptop. For a typical Toshiba laptop, made in Japan, it sells for about
$1,000 US$. Of that, about $50 is profit for Toshiba, $450 goes to Intel, who only
pays about $75 for the chip that is their design and built in Taiwan. $50 goes to
Microsoft for the Windows operating system that costs them $0.50 to install. If the
notebook is built in the US, This is a $1,000 trade deficit with Japan. Our exports
were only the email of one copy of the Microsoft Windows software for the Toshiba
factory to copy and place into the machines (virtually no value) and the email of the
chip design between Intel and their chip manufacturer in Taiwan (also no value to
export). So, out of the $1,000 for the laptop, $425 of it came back to the US in
profit, but it was considered completely an import from Japan. Less than $75 went to
all of the other component manufacturers including Toshiba.
Who cares about trade deficits?
The countries that don't have these good deals going on, like France. These laptops,
and millions of others, are built from countries around the world and the VAST
majority of profits are being reconstituted back in the US. This makes us richer and
richer (and more willing to buy imports) while other countries can do less and less
with the money they have. It's gotten so out of balance, that people are now being
FORCED by the invisible hand of Adam Smith (An American economist out of the early
1800s) and market forces to buy American built items (that are now extremely cheap
due to the exchange rate. The exchange rate is cheap because we keep giving away
American dollars to buy Japanese laptops. We spend $1,000 into yen and only
convert $425 of it back into $ as the profits come home.
This is repeated especially with US movies (exporting a copy is the price of a FedEx,
yet it makes dozens of showings and sends pure cash home.), video games and
here's a strange one: toys. Because countries like France can't seem to export their
culture with movies, video games and toys, they can't collect the profits and they end
up in a worse place.
Although almost all of the toys in the world are NOT made in the US, Mickey Mouse,
Homer Simpson Barbie, GI Joe, Superman, Spiderman are all US inventions. The toys
are designed here, a "no dollar export" of an email of the design is sent to China or
India, the toys are made and then "imported" to the US. The $25 toy is $5 paid to the
manufacturer overseas that maybe profits $0.45 The other $20 goes as profits to Fox
for Homer Simpson and Disney/ABC for Mickey Mouse. This still means a trade deficit
of $25. If the toy is sold in another country, like France, the same thing goes. US
companies make $20 on a $25 toy and the toy is counted as a trade deficit between
France and China or India.
The reality is that in many European countries life is so expensive, and food, taxes
and shelter take up so much of their spending, they have extremely little left over for
buying Homer Simpson dolls, movies, videos or any other important.
Why is the US in such a good position?
Cultural imperialism. Quick, name any French: Movie actor? Cartoon character? Rock
Star? videogame character? One Japanese actor? If you went to those countries, could
they do the opposite and name a US Movie actor, Cartoon character, Rock star or
Videogame character? Of course!
This is cultural imperialism. we invade a country with our ideas, our philosophies and
our thoughts by bringing in items such as cute dolls, movies, music and games that
are REALLY fun to watch and play. They are creative, original and unlike anything
they've seen before. With time, the children first, begin to believe in what they see.
Subliminally, they are being marketed in the "American Way". Before the last few
decades, you never heard people talk about their "RIGHTS!". Now, globally, people
believe that their are certain unalienable rights. Sometimes, they don't believe in the
same rights as in our constitution, but they do get the concept.
Culture is as much a part of economy as money is. Watch out, with the new
information age, we are experiencing a tidal wave that is slowly filling our basements
and will come up so high that the unprepared will drown.
In the 1920's and 30's we had this happen with the global industrial economy. It's
now happening with the information economy. The scary part is that we don't have
the econometric tools to measure what is happening. This results in the false trade
deficits like described in the Toshiba notebook computer are nt reflecting what is
really happening economically. It will be interesting (but probably not pleasant) to
watch the events unfold over time.