Nice work, Philip! I quite agree that dollar hegemony will disappear soon. But I'm skeptical about the feasability of any useful Import Substitution program for the USA.
One substantial obstacle would be the availability of a properly-skilled workforce. By and large, Americans no longer covet jobs in the industrial sector. The loss of dollar hegemony would diminish the ability of the USA to acquire skilled immigrants (or even those willing to be trained) because the depreciation of the dollar would weaken the value of any remittances back home.
A more significant problem, however, is that of capital goods. The USA is no longer self-sufficient in that area and would need to import large quantities of these to produce the needed substitutes. These, obviously, would become a great deal more expensive with a weakened dollar. There is also the possibility that countries would impose export controls preventing the USA from acquiring them at any price. You can refer to the current dispute between Russia and the EU - now a matter for the WTO to consider - for a recent example.
And speaking of the WTO, any large-scale import substitution effort will likely result in grievances being filed against the USA.
You’re not wrong. It wouldn’t be easy. It’s not like turning on a light switch. But I don’t see many other options on the table. US foreign and economic policy has been strategically naive and highly ‘reactive’ for decades. Now we’re seeing the consequences of that. I’m not hopeful they could retool to run a solid import substitution program and overcome the obstacles you highlight. But, well, TINA.
Nice work, Philip! I quite agree that dollar hegemony will disappear soon. But I'm skeptical about the feasability of any useful Import Substitution program for the USA.
One substantial obstacle would be the availability of a properly-skilled workforce. By and large, Americans no longer covet jobs in the industrial sector. The loss of dollar hegemony would diminish the ability of the USA to acquire skilled immigrants (or even those willing to be trained) because the depreciation of the dollar would weaken the value of any remittances back home.
A more significant problem, however, is that of capital goods. The USA is no longer self-sufficient in that area and would need to import large quantities of these to produce the needed substitutes. These, obviously, would become a great deal more expensive with a weakened dollar. There is also the possibility that countries would impose export controls preventing the USA from acquiring them at any price. You can refer to the current dispute between Russia and the EU - now a matter for the WTO to consider - for a recent example.
And speaking of the WTO, any large-scale import substitution effort will likely result in grievances being filed against the USA.
Thoughts?
You’re not wrong. It wouldn’t be easy. It’s not like turning on a light switch. But I don’t see many other options on the table. US foreign and economic policy has been strategically naive and highly ‘reactive’ for decades. Now we’re seeing the consequences of that. I’m not hopeful they could retool to run a solid import substitution program and overcome the obstacles you highlight. But, well, TINA.