Here is Mariana Mazzucato from the University of Sussex discussing global economies in competition: http://www.bloomberg.com/...
In the USA, there is a static discussion about what we need to do to compete in the world markets. Many point to our loss of manufacturing jobs to countries such as Mexico and in Asia to show that Americans--hamstrung as we are by higher wages, taxes, health care, unions, etc.--need to have wage and consumption constraints foisted on the middle class. This would seem to suggest that the loss in real income of the American middle class since 1980 is not only a lamentable fact and problem, especially vis-a-vis the rich 1%, but it's been done by design, to create a more enticing labor landscape for investors.
This is the neo-liberal capitalist approach.
Mazzucato, argues however, that a post-ideological China doesn't give a damn what is proper to capital. Instead, China is investing heaps of money in research and development. China doesn't have the same capitalist hangups that the west does. Its approach is, invest wisely, avoid malinvestment, and if you can, watch out for those asset bubbles.
By cutting back on research, education, wages, etc., in order to make America more enticing to investment, we are essentially guaranteeing that the USA is not going to be the leader in world-class innovation in the future, and that furthermore, we will not have the clean energy resources to compete with the likes of China.
The logic of capitalism doesn't work in this new world. We can't adopt beggar-thy-neighbor policies that reduce living standards here IF that simultaneously means that we also stop investing in people and in the future. Unfortunately, the logic of capitalism seems to lead inexorably toward that conclusion. Cheap labor is foremost on the capitalist's mind. Why? Because they want to squeeze margins and get paid--that's what the stock market demands. Smaller margins. No matter if it doesn't lead to increasing the country's wealth and creating new efficiencies.
Listen to the video again. Amazingly, the interviewer keeps blathering on about how Germany managed to create half-time McJobs and keep wages down in order to undercut its quickly-inflating euro periphery, and Mazzucato has to go through pains to talk of Germany's fantastic manufacturing base, the levels it spends on R&D, its clean energy program--in other words, the very things that make Germany productive.
Granted, Germany used the euro to stoke its economy out of the doldrums in the last decade, therefore inflating asset bubbles elsewhere, but Germany would still have been more productive regardless.
I fear that Americans are going to get a lesson in economics from China in the future.