The Socialist Program with Brian Becker
Treasury Head Yellen’s New China Complaint
Apr 10, 2024
Professor Richard Wolff discusses U.S. Treasury Secretary Yellen's complaint about China producing too much. They explore the concept of excess capacity, China's economic strategy, and the impact of protectionist policies on the working class. The episode also analyzes the evolving international trade dynamics between the US and China.
32:23
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Quick takeaways
- Exposure to capacity utilization highlights how economies can benefit from excess capacity for cost efficiency and competitiveness.
- Debate on protectionist policies emphasizes the complexities and trade-offs involved in balancing domestic interests and international competitiveness.
Deep dives
Understanding Excess Capacity in Economies
Excess capacity, a term highlighted by the U.S. Treasury Secretary Janet Yellen during her trip to China, refers to the ability of an economy to produce more than its current output. Despite the U.S. expressing concerns about China's alleged excess capacity in areas such as electric vehicles, statistics like capacity utilization show that excess capacity is a common feature in most economies. Building excess capacity enables companies to achieve economies of scale, leading to cost efficiency and competitive pricing, a strategy used by many successful firms.
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