Posted: 3/2/2010 5:40:20 PM EDT
| For better or worse, we operate in a global economy. Given such an environment, it does not seem reasonable to expect to maintain a higher(monetarily speaking) standard of living compared to other similarly educated and trained countries. Particularly, since our current tax structure and social programs nullify certain advantages we once had. In order to compete we are going to need wage decreases across the board, lower priced real estate, as well as cheaper domestic energy sources w/ reduced use. Discuss and comment. |
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In the very long term, current account deficits cannot persist. So since we've been running current account deficits for 40 years, it's reasonable to assume we're going to need to run surpluses for an extended period, or else default on a lot of debts. Our superpower status and the dollars status as global reserve currency combined with a lender of last resort making unlimited amounts of credit available have made a persistent imbalance possible that would not otherwise be, which has increased our standard of living at the cost of our long term financial and social health. It's like the financial and psychological ruin that would occur if credit cards had no limits and no credit/income checks. Reversing that balance of trade would lower our standard of living, meaning effectively lower wages.
This is the missing factor in most discussions of trade, which tend to revolve around whether tariffs or "free" trade is better, which isn't the issue at all, and trying to regulate outsourcing and so on which are effects of the persistent deficit. There are always unintended consequences to central planners interfering in the marketplace. Without free capital markets such that there's a market pricing mechanism for capital and credit, and specifically short interest rates, we'll continue to have major imbalances that SEEM to require huge amounts of regulation just to keep the system functional. No amount of regulation can stabilize an inherently unstable system, so the leftists win incrementally as the compounding imbalances in the system become clear and will continue to until the right embraces capitalism again. |
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Quoted:
For better or worse, we operate in a global economy. Given such an environment, it does not seem reasonable to expect to maintain a higher(monetarily speaking) standard of living compared to other similarly educated and trained countries. Particularly, since our current tax structure and social programs nullify certain advantages we once had. In order to compete we are going to need wage decreases across the board, lower priced real estate, as well as cheaper domestic energy sources w/ reduced use. Discuss and comment. In a global free market, such disparities would only happen if they were the result of some other variable. Likely candidates for the cause are form of government, Local economic environments and Simple cultural differences. All of these are very hard to quantify. |
| What I'm looking at is the average chinese makes $1000 a year, the average american makes around $36000. Unless the american worker is producing 36 times the output of the chinese worker, the americans income needs to go down, and the chinese needs to go up(Adjusted for shipping costs etc). |
| Wages need to decrease but only for those jobs that compete with the chinese like manufacturing. There might be some secondary wage decreases as well, but basically you have the economics correct. Wages for jobs that can't be exported will tend to stay higher. Unions can strike all they want but all they'll ultimately do is put themselves out of work. This might be a good thing if new companies can grow without the union monkey on their back. |
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Quoted:
Wages need to decrease but only for those jobs that compete with the chinese like manufacturing. There might be some secondary wage decreases as well, but basically you have the economics correct. Wages for jobs that can't be exported will tend to stay higher. Unions can strike all they want but all they'll ultimately do is put themselves out of work. This might be a good thing if new companies can grow without the union monkey on their back. We have been educating China's and India's brightest student's for the last 20 years. In a few years they should be able to easily turn out their own engineers, DR.s, and chemists. It makes little sense for a manufacturer to have engineers that have a communication gap w/ its manufacturing base. The only jobs that can not be exported are either tied to the land(farming, mining etc.) or local service jobs that depend on a healthy economy to draw from. I'm pro capitalism and generally anti-union, but with regards to trade, importing goods only works long term if you have something of equal value to export. |