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The Tories co-thinkers in Europe can see no alternative to austerity, and in the US, Sarah Palin and the Tea Party are in the ascendant. Indeed, despite all the tea and sympathy at the G20 last weekend, the reality is that it is all those policies, being pursued by the same right-wing populist politicians that created the conditions for the Great Depression, and, just as they did then, they tried to look after their own backyard, by various forms of currency devaluation, and Protectionism. The US has already passed the necessary legislation to impose protectionist measures against China, and it can be used against others such as Europe too. In Trade wars as with any other fight, getting the first strike in is always a strategic advantage. That was the lesson the US learned in the 1930’s.
History is the sound of the silk slipper descending the stairs and the hobnail boot ascending. The US can’t compete with intelligent people making less than a dollar an hour. It is the reluctance to give up our place since 1945 as the masters of the universe that has caused the US to cast their lot with the banking swindlers who promise we can still have our tea at 4, and not worry. Protectionism here and using the tariff revenue
to reduce taxes and to slash all social spending and entitlements would leave the average citizen in the US thinking they died an went to hell with their wage of 2 dollars an hour, but as the world wage rate regresses to a world mean, the Chinese would be overjoyed at 2 dollars an hour. The Chinese probably will suffer from their tendency toward central planning and malinvestment in China
will catch up to their meteoric rise, but there is no smooth easy transition from the US economy in the last 20th century to that in the middle of the 21st century, without loads of pain and threat of war.