In general, I tend to agree with you but I don't see much that can be done about it in the current US structure. Perhaps in another 20 years public pressure will bring about real change. In India some villages have examination rooms where a technician, a cheap PC, and video conference to a city doctor examine a patient remotely. When this process matures and becomes a common practice everywhere, we may very well choose to be examined (or at least get a second opinion) by some top notch medical center around the world than at our local physician's. Already we see something along this line with X-Ray examinations.
During the Internut days, I was approached by a start up company funded by a Taiwanese cartel. When they heard my salary requirements, they nearly choked. Their board is on the record saying they did not pay that much even to their plant General Manager. The American CEO had to explain to the board that salary structures are different here and that I was not asking for anything unusual given my level and the market. At the time it occurred to me that if I was a Taiwanese capitalist, I would not be investing in America.
What you are seeing is the effect of mobility of labor and capital. As the differences in skilled workers and the infrastructure is reduced, it makes no sense to produce in the US. Production for US however will continue so long as we maintain a substantial wealth. The situation is not unlike physics of fluid dynamics where the level in one container will rise and the other one will fall until some equilibrium.
There are as in the physical world, the way to maintain the fluid differential is through barriers. The barriers can be artificial, as in through various regulations, trade barriers, and tax credits. Or they may be natural as in transportation costs and the rate of innovations. I do not believe the innovation angle can raise the level here fast enough to radically offset the outflow.
In the end, however, we can only buy as much as we can sell. This is both our savior and our destroyer. The capital markets compensate for the net flow of production/consumption and the fall of USD is, imo, one manifestation of this dynamic and very significant one at that. If USD was to drop by say 65% (and I think eventually it will), I am sure most of the job flow problems would be solved. |
