Reich Puts His Finger on the China-Us Problem

Here, in a nutshell, is the problem that the elites in China and the US have created for themselves and for each other. This is Robert Reich's diagnosis of the problem found in a posting on his blog entitled "Why China's Currency Announcement is Hokum":

Here’s the awkward truth that’s not openly discussed on either side of the Pacific: Both the United States and China are capable of producing far more than their own consumers are capable of buying. In the United States, the root of the problem is a growing share of total income going to the richest Americans.

Inequality is also widening in China, but the root of the problem there is a declining share of fruits of economy growth going to average Chinese and increasing share going to capital investment.

Both our societies are threatened by the disconnect between production and consumption. In China, the threat is civil unrest. In the United States, it is a prolonged jobs and earnings recession which, when combined with widening inequality, could create a political backlash.

What bothers me is that the elites on both sides of the Pacific show no regard for their population. The elites are engaged in a zero-sum game that is relegating their population to a subservient status. This will blow up because you can't keep people down while the guys at the top feast and show contempt for others.