The price of global power
The United States has always tried to defend its position as the world’s leading power, but is it achieving its goal?
According to the data, the American state had its moment of glory, but it seems that this moment is evaporating. Taking increasingly regulatory measures on taxes and with the state taking on more and more debt, the U.S. is not what it used to be.
Once the cradle of inventions, we see that the big tech companies, such as Google (NASDAQ: GOOGL), Apple (NASDAQ: AAPL), Amazon (NASDAQ: AMZN), Verizon (NYSE: VZ), Intel (NASDAQ: INTC), are all from there.
The United States is defined as a service country, which makes the intangible part of the products. But what do I mean by this? In the U.S., the planning and design of products are done. Still, these are manufactured in other countries for various reasons, such as the availability of commodities or the reduction of labor costs, a reality that we cannot deny.
But this brought a serious problem; there is no labor in the land of the American dream, which leads companies like Apple or Intel to take their productions to the Asian continent. In Donald Trump’s presidency, there were intentions to repatriate these companies, but the effort was in vain.
Today we are seeing the consequences of the dependence generated, in this case by the United States (but also by most countries), on China, ‘the world’s factory.’
The health crisis brought all production lines to a standstill. This made it necessary to wait for some time for them to return to normal. In addition, China also has its difficulties, since the rising prices of commodities such as oil (NYMEX: QMZ21), used in all its forms, whether for energy, fuel, or for the manufacture of products such as plastics, have made manufacturing costs more expensive.
Here we can see the first disadvantage of the eastern country. But it does not end here. Another aspect they have neglected is the technological advantage presented by 5G technologies. In this section, the American country was not at the forefront as companies like Nokia (NYSE: NOKIA) or Huawei did, leaving the worst part to Verizon or AT&T (NYSE: T), which were harmed in the telecommunications race.
As we can see, the American country left technological advances aside to take advantage of lower costs, but now it has generated such a dependence that repatriating its companies could generate very high costs and at the same time incur the costs of relocation, in addition to the fact that the labor force in its own country is more expensive.
At the moment, there is no short-term solution, and the United States must act quickly. The pandemic showed us the drawbacks of globalization. This is just one aspect, but they must always have a plan B, even more so when it comes to the world’s leading economies.