Good for India, Good for Us
With so much zero-sum thinking on the trade issue this Charles Wheelan piece
offers some good points to keep in mind.
For example, point number 3: A richer India will make for a
richer America.
How can a place that “competes” with American companies and replaces
American workers make us better off by growing wealthier?
First, a growing Indian middle class will buy our products.
The guy in Bangalore who answers questions about your Dell computer
probably drinks Coke, uses Microsoft Word, and reads my column on
Yahoo! Finance. (Okay, I can’t prove that last one, but you get the
point.) It doesn’t matter what business you’re in, having 300 million
new middle class consumers in India is good for you.
Second, Indian firms will design and sell products that make
our lives better.
That’s what happens when you unleash new human potential. Imagine the
following scenario: Your child has just been diagnosed with a rare form
of leukemia. The doctor sits you down and says, “I have good news and
bad news. The good news is that the disease can now be treated
successfully. The bad news is that the treatment was discovered by an
Indian scientist, and the drugs are produced by a leading Indian
pharmaceutical company.” Actually, that’s not really bad news, is it?
Third, at a minimum, Indian competition and outsourcing by
American companies will lower the cost and improve the quality of all
kinds of goods and services…Cheaper imports from places like
India or China are just like a tax cut;
there is more money left in your wallet at the end of the month. And
they create American jobs, too, which is less intuitive and therefore
often overlooked. If you save money on cheaper cotton towels, much of
that extra cash is likely to be spent on American goods and services. A
Canadian trade minister made this point to me once when he asked
rhetorically, “Look, a DVD player used to cost $500. Now it
costs $40. What are you doing with the other $460?”
Original post here.