First of all, I am not an economist but an engineer with a long history of being associated with corporate decision making.I believe that in the coming years we will see an unbelievable level of profitability for many of our corporations combined with deepening crisis for individuals.These twin outcomes are the natural outgrowth of improved productivity through the extensive uses of automation and the remorseless movement of capital and technology to China, India and other countries.
Brace yourself as you see many products and services associated with American corporations will flow out of the factories of China or the large IT service firms of India, not to mention the medical services, banking, accounting and legal firms and support services sprouting in India. The pain we will feel will spread from what was essentially a blue collar phenomenon to the vast middle class encompassing professionals.I am even of the opinion that our universities will not remain unscathed because there are now fine universities overseas where one can get a first rate education at the undergraduate and graduate levels at a fraction of our costs.
The distress of our carmakers reminds me of the time when US Steel’s inexorable decline began in the 70’s and by the mid 80’s it was a shadow of its former self. GM, Ford and their supply chains may be headed in the same direction.
When the pain hits the professional classes, as it is bound to, is when we will see people questioning the entire premise of the Republican mindset.They have the belief that the Republicans do not owe anything to the American taxpayers.That each of us is on our own and no community or national economic interests can be allowed to trump ideological purity.
Maybe the professional classes will go find work in China and India.
at 30% of what they currently earn today.
In other words, whats happening to the working class today will eventually cause similar pain to the professional classes? I wonder if they will be voting red then?
Sitting Bull was a smart dude. Excellent tagline.
What I am afraid of is that we are going the way of many Banana Republics we used to make fun of in Latin America and elsewhere. The wealthirer classes who are well invested in the markets are going to reap enormous benefits from the increased profitability of our corporations in the coming years while those at the bottom of the barrel are going to be scrambling to stay in the game. It wouldn’t surprise me one bit that the American Dream will be kept alive in India and China and our glory days will be behind us with no prospect of it ever coming back.
The American Dream for everyone but Americans.If that is not a painful historic irony, I don’t know what is.
(Sorry, couldn’t help it.)
The fact of the 21st Century is the wage rate disparity between the Developed and Developing economies. There are plenty (like, 4,000,000,000) of people living in the Developing countries who are estatic to get a job paying $10,000 a year. They do just a good a job as a person in the Developed countries making $40,000/year.
No matter what you, or I, do there is a plethora of people who can and will do it for much cheaper.
We can:
Up till now people have been hoping the ‘Great Hoo-Hoo in the Sky’ (God, scientific breakthrough, technological advancement, invisible hand, proletariate revolution, a sudden outbreak of sanity … whatever) would come down, wave a magic wand, and fix everything – so they won’t have to bestir their lazy butts.
T’ain’t gonna happen.
My firm and considered intellectual position is: I don’t have a clue as to what is going to happen but whatever it is isn’t going to be much like the lifestyle we currently live.
I love the play on words and reference to my favorite Sci-Fi movie of all time!
The productivity gains we are seeking to stem the tide of cheaper and more numerous bodies in India and China will either be unattainable within the advanced countries or will be incorporated so fast by these countries that they will become redundant.
In a more slower time, productivity gains could be confined to within our borders.That, it is obvious, can no longer hold.The other aspect of this problem is that people in India and China are now adopting Western style technology and management practices with an ever increasing educated workforce that is going to negate our previous lead in just such expertise.
All this bodes ill for those who think technology will solve our problems.Nothing short of a reduction in our living standards along with a rise in the living standards of these Asian giants is going to help,IMHO.
‘Tis mine too. One of the few SF movies that isn’t totally brain-dead.
“Michael Rene was ill
the Day the Earth Stood Still
but he told us where we stand.”
(A friend of mine has first impression LP’s of the original London, the Australian, Roxy (with Tim Curry), German, and Norwegian Casts of “The Rocky Horror Picture Show” – the bastard.)
There are two imponderables that will play-out over the next 10 years, or so, that keep me from dogmatism. One is the potential for Avian Flu (H5N1) to go pandemic; if it does that will deeply impact the demographics of the Developing Countries. The second is Climatic Change initiated by Global Warming; if the Greenland Ice Sheet goes we can kiss most of the major cities in the world good-bye. If both happens … well, then we are into interesting times (Read: aaaahhhhhhYYYYEEEEEEE!!!)
There will still be an American dream, it will just be matched by an Asian dream. Is that bad for the world, long term?
My wife is Korean and so I have gotten to know quite well a large group of first and second generation immigrants: they tend to be very conformist and strongly patriarchal (my wife excluded–actually my wife tells me the men are only in charge in public. Behind the scenes the women control everything–just like in the rest of the world). They are very good at building things. They produce a large number of scientists and engineers.
Americans tend to be nonconformist and especially at the higher income levels, non conformity tends to be the norm, at least non conformity with the middle classes. Becoming wealthy is generally rooted in thinking “outside the box,” as the cliche goes in the bidness world. Going against the norm.
Americans tend to be talkers and writers. Marketers, advertisers, deal makers and distributors, Sitting Bull’s comment notwithstanding. Bullshit artists. Dreamers. Creators. Invenotrs. (Bad) filmmakers. Struggling to be seen as going against the norm.
The reality is that these traits or characteristics (and I know its a huge generalization, but go with me for a moment)of the Asian immigrant complements and thrives in America, in a capitalist society, and depends upon a lot of American “know-how” to succeed.
Think of the success of Toyota, etc. Great cars, but it was Americans who created the market in America (under Japanese supervision).
Toyota is building a new truck plant in San Antonio. Its the biggest news since they invented the river walk. And the plant is on the south side of town which truly benefits from the economic bump in the area.
Construction jobs, retail opportunities, its amazing to sit and read the list of ancillary economic activity spun off from the core project.
But thats the easy example. Look at all the goods imported from China. A bad thing? Surely for some, but not others. Somebody has to package and distribute those goods in America.
Wal-Mart, the evil corporation with the cheapest prices, got so big because they mastered internal distribution and cut out an entire level of middlemen.
A lot of not so poor people have been displaced from good jobs at a lot of companies brought down through Wal-Mart’s system.
So whats my point?
I dont know actually. Except stay in school, learn to think clearly and ascertain the truth in each situation, if possible, and don’t ever stop letting your kids hang out with their friends and bullshitting each other. They may not be wasting any more time there than they are in a high school or college class.
People are so busy taking their kids around to all these different activities, that they are in danger of killing off the few resources of true value left in this country:
Personal freedom>Nonconformity>Rebellion>Creativity>Invention>Destruction.
This morning, Paul Craig Roberts has an excellent post on the decline and fall of even our emerging industries such as Nanotechnology and Bioengineering.
http://www.counterpunch.com/roberts07272005.html
Even when our scientists make great advances, the manufacturing of products will occur in India or China because these countries offer a better educated workforce and are willing to work at lower wages, their governments are eager to attract investments in these emerging technologies.What is worse is that our fundamentalists are putting up obstructions to biomedical advances like Stem Cell research when China and India see these fields as the stepping stones to their future. Just this morning I saw that scientists in Singapore have isolated a protein that they think is linked to schizphrenia.
Religious dogmas ( an analog of Lysenkoism) and our total infatuation with things military have blinded us to the possibilities inherent in these technologies.If other countries capitalize on our failure to invest in our future, no one can be blamed but ourselves. Paul Craig Roberts is another voice in the wilderness.His being a Republican of the old school apparently does not carry any weight with the idol worshippers of ideology.
I’ve been convinced of this for several years, especially the last several years. I don’t think it takes an economic genius to see that big corporations are killing this country with their greed-from CEO salaries, to corporate welfare, to off shore accounts, to shipping jobs overseas and so on.
This country will be a giant McDonald land casino…and we all know how well paying those jobs will be and the attendant hotels etc that are next to casinos are also all low paying jobs. A downward spiral as low paying jobs with no insurance means less money to be taxed, less paid into SS, no money to spend. Low paying jobs also means less chance to save/get an education which means public becomes less/less educated and the downward spiral continues.
Can’t find the article right now but read in the last few days that US companies in June laid off a little over 110,000 workers. Add to that fact that HPackard will be laying off some 15,000 jobs, Kodack-10,000 and that Ford will be cutting even more jobs-up to 30% of their workforce. The interesting thing on that is that this will be white collar workers/salaried people. Head of Ford is calling it ‘involuntary separation’. God, I hate euphemistic phrases like that. And Phizer is downsizing to the tune of some 8,500 jobs and this list could go on/on/on.
We are definitely falling behind or are behind in technology. Speaking of stem cells I believe it was in S.Korea that a woman with spinal injury like Christopher Reeve had not walked in 20 years is now walking-due to their progress into stem cell research.