Footwedge;502018 wrote:Labor cost is a part of the equation....but blaming the high cost of labor in the US is only one tiny part of the problem. There are easy solutions.....but the elite have no interest in keeping Americans employed. By elites, I'm talking about the major players on Wall Street, and the enablers in the government.
Wall Street is fretting the impending "doom and gloom" as the upward spiral of wages (in China) is dipping into their pocket books.
I agree with you on these points Footwedge. Also agree with BG on the point that these things are cyclical. You even allude to that in your comment, "Wall Street is fretting the impending "doom and gloom" as the upward spiral of wages (in China) is dipping into their pocket books."
The key to an American turnaround in my opinion is equilibrium. I firmly believe that sooner or later Chinese wages will rise and American wages (and consumption power) will decline enough that American-made products will once again seem profitable to the Wall Street and government elites.
It should come as no surprise to anyone that these things are occurring...and quite painful. The key to a semi-free market peppered with a modicum of socialism is the age-old economic reality of the law of supply & demand.
Right now the Chinese are supplying Wall Street (and of course the American consumer) with inexpensive products for relatively wealthy Americans to consume. As time goes on those products will become more expensive as Chinese workers clamor for higher wages to improve their own quality of living. Meanwhile that American wealth will also decline meaning less consumption of the increasingly expensive Chinese-made goods.
The scary part of the equation in my opinion is that when this finally occurs and the Chinese government feels the economic pinch, they will call in the billions (trillions?) of dollars of debt our own government owes them.
The other major disadvantages in this relationship is that the Chinese have far, far fewer environmental regulations to deal with than American manufacturers and the Chinese government also has a propensity to prop up its manufacturing base with subsidies to a much higher degree than the United States (with the exceptions of farm subsidies, bank bailout's, and Government Motors of course
).
We have a precarious relationship with the Chi-coms right now. The Chinese are rapidly embracing capitalism while we clamor for more socialism. As our ability to to produce declines and the Chinese continue to kick our economic ass, sooner or later the bill will come due.
Will we default by necessity causing a world-wide economic calamity that will make Americans long for the good ol' days of the Great Recession or will Wall Street and government elites finally figure out that the key to a healthy economic future is a strong American manufacturing base?
