Abstract:
The contrasting histories cultures and institutional structures of China and the US have drawn them into an ironic partnership: each outsources the most embarrassing parts of its political economy to the other. One outcome is a massive shift of intellectual property trademarks and profits to offshore tax havens by US multinationals aided and abetted by China in return for free access to that intellectual property. This is why the trade and macroeconomic inbalances between the US and China have not affected the US dollar. The macroeconomic inbalances should eventually be resolved via some mix of US debt repudiation China's expropriation of US multinationals and their joint shutdown of the tax havens.
