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Could Nixon going to China be a cause for the big stagnation?

by ChristianKl1 min read5th Jul 20204 comments

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The big stagnation is commonly said to have begun in the 1970s. There are many theories of possible causes that are already discussed, but haven't heard blaming Nixon before. Especially I haven't heard blaming Nixon going to China.

Timewise, that makes Nixon going to China in 1972 is an event that happened at the right time to explain the change in innovation.

Maybe it's crucial for innovation to have basic economic production to be done by skilled labor which can think of better ways to do it instead of outsourcing it to the other side of the globe?

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" Maybe it's crucial for innovation to have basic economic production to be done by skilled labor which can think of better ways to do it instead of outsourcing it to the other side of the globe? "

This seems like a false dichotomy to me. What's the argument, here? Chinese factory workers and engineers were less skilled than their American counterparts, and thus less good at inventing new automation techniques? I'm pretty skeptical of this.

A better argument would be that there is less incentive to automate if labor is cheaper. Even so, I would be surprised if the effect was large enough to account for a substantial portion of the Great Stagnation.