That correction occurs when the currency collapses and the newly impoverished continue working at massively reduced real wages and living standards. The inability for Spain, Italy and Greece to inflate their currency is one of the things leading to high unemployment. If this was to happen the trade with China will still be beneficial - the question is how much loss of wages and living standards could the west tolerate. And since much of our current living standards is based on continued access to cheap Chinese goods then there will be a loss of living standards either way.
China is still a big importer of raw materials so there will always be that. But it's not like we can all become farmers and miners.
I can't really see what you're saying, and I tend to suspect that's because you don't know either.
But here, look at it this way:
The worst-case scenario is that "the rest of us" continue producing the things we already produce, and the Chinese aren't willing to buy them, so we have to use them ourselves.
Is that what you're afraid of, or did you have something else in mind?
I thought you were eluding to an idea from Macroeconomics where two countries can both benefit from trade even when one country is more efficient that the other. But you have now entered into a nonsensical realm so I'm starting to consider that maybe I misunderstood.
So I will address your most recent comment directly; that's not the worst-case scenario - we produce the things we already produce but our customers would still prefer to buy from China instead and we are now no longer able to sell our same goods to the same people.
Let's say I'm a cobbler and I make shoes. New efficiency gains in China mean that the exact same shoes from China can be bought by my former customers for below the cost of my production. Who would continue to buy shoes from me at my necessarily higher prices? I can't sell them to China. I can't sell them anywhere as China sells the same shoes everywhere. I already have more shoes than I need and I can't use the shoes for other things. Even if I could, it would be cheaper to buy the shoes from China than to make them myself.
There is no option to keep things same, we can't stop China from becoming higher quality and or cheaper, the best we could do to try is to increase tariffs, but that would apply to local customers we would still lose the international ones. Sure we could try to race them in efficiency gains we should have been doing that anyway and whatever we're currently doing is not working as we are losing ground.
> Let's say I'm a cobbler and I make shoes. New efficiency gains in China mean that the exact same shoes from China can be bought by my former customers for below the cost of my production. Who would continue to buy shoes from me at my necessarily higher prices? I can't sell them to China. I can't sell them anywhere as China sells the same shoes everywhere. I already have more shoes than I need and I can't use the shoes for other things. Even if I could, it would be cheaper to buy the shoes from China than to make them myself.
In order to make this paragraph work, you're assuming that your customers, and you, are producing things that are valuable to China. (How else are you going to pay for their stuff?) This already contradicts your premise that Chinese superiority will mean you and your customers have nothing valuable to do.
If you don't want to start with contradictory premises, the most that Chinese superiority can mean is that you and your customers can't afford to buy Chinese products. That really can shut you out of consuming Chinese products, but it can never shut you out of consuming what you produce yourself.
“New efficiency gains” suggests a before and after. We are talking about china becoming more efficient from a previous state where they were less efficient. As circumstances refer to different times there is no contradiction.
What is a cobbler going to do with a bunch of shoes that will cost him more to make than it would cost to buy. What good would it do him to be able to consume his own products - are we still talking about a cobbler or have you somehow mixed in the notion of a nation state? Are you suggesting the cobblers consumption needs are met by his own production? Is he to eat his shoes?
Even if he was, he would still be better off buying them than making them.
> What is a cobbler going to do with a bunch of shoes that will cost him more to make than it would cost to buy. What good would it do him to be able to consume his own products - are we still talking about a cobbler or have you somehow mixed in the notion of a nation state? Are you suggesting the cobblers consumption needs are met by his own production?
If the cobbler is the only person with this "problem", what are you worried about?
> Is he to eat his shoes?
> Even if he was, he would still be better off buying them than making them.
Please think about whether what you imagine is logically possible. What is this cobbler going to use to buy imported shoes?
In this hypothetical I am the cobbler, thus I'm the one with the problem. Even if I wasn't the cobbler, if the same circumstances are repeated across a large number of industries I have to be worried when a large number of people are made effectively unemployed and unemployable in a short period of time.
The cobbler has money left over from before the time China became more efficient. Remember how I mentioned there was a change from where China was less efficient to a time where China is more efficient.
Since you apparency have great difficulty with the concept that things can change with time I'm going to consider any further discussion on this pointless and will not respond to you any further.
> if the same circumstances are repeated across a large number of industries I have to be worried when a large number of people are made effectively unemployed and unemployable in a short period of time.
You were just complaining that you didn't want to think about what would happen if this "problem" occurred at a systemwide level. What would happen is not compatible with your worries.
If you're then going to insist that the cobbler's problem matters because it happens simultaneously to everyone else, you need to consider the systemic effects. At the system level, this problem cannot exist.
China is still a big importer of raw materials so there will always be that. But it's not like we can all become farmers and miners.