It is global openness which will enable the rest of the world to sue for inflationary wage gains. This will squander what has enabled stock prices to be valued at twice their growth rate: cheap foreign labor.
Why would global openness enable the rest of the world to sue for inflationary wage gains? If AMZN can't find enough US programmers demanding $150,000 annual salary, they can turn to India, Russia or China to attract equally qualified and equally intelligent programmers, and AMZN only need to pay 1/4 of the salary to create a new store. Web programming doesn't require programmers to be on site. To me, this sort of activities only lead to wage depressiona and eventually inflation containment. Let alone, most of the US toys and shoes are made in 3rd world countries already. More and more raw materials are being imported abroad. All of that lead to an inflation containment.
The four points are built on productivity gains which come from technology, but that isn't from where gains in productivity come. Technology provides incentive to work harder because people can see they can harness technology to make them wealthier. It is only the extra effort of people that causes productivity to rise. Rising inflation will sap the incentive to work hard faster than technology can add to it.
Internet is the only technology in the last 100 years to fundamentally uproot US economical model. Why wouldn't gains in productivity come from technology as life changing as Internet? In a few years all business to business transaction can be performed via Internet without a single phone call and paper shuffling, let alone a visit from one party to another. Anything that would take weeks or months will now only take seconds. I agree extra effort of people will also increase productivity, but not the only factor. Technology(mainly Internet and E-commerce) will be a much stronger contributor to the productivity than merely working harder. Did you hear working smarter (technology) is better than working harder? So far, I don't see clear logical thinking from your comments.
This was the same scenario at the end of '60s. You're too young to understand any of this and so are the children who wrote that article.
Why now is the same scenario at the end of '60s? Was Internet existent so that distance between nations are shrinking to none? Isn't now a more global economy than that of the 60s? Is China now a big market for US services especially technological services? Cisco and GE are making huge doughs in China alone. Back in 60s, most of US business don't even know China is a possibility. Are there much more ways to invest money now than in the 60s? US savings' rate is low, but a vast majority of people recycled their hard earned money back into the stock market, like myself, probably you. Back in the 60s, stock market trading are not as ubiquitous as it is now. Now is starkly different from 60s. You definitely are refusing to see many things obvious. If you conclude on only a few metrics in drawing your conclusion, you will reach a very wrong conclusion.
The universities have failed at this because they too never knew. Education can destroy as completely as it can create. It only takes that education is dogmatic like the church during the medieval period. The church managed to keep humanity suspended for a 1,000 years.
I thought the universities are teaching the model of the old economy that put inflation as the most important gage to measure the direction of the economy. The university professors are more inclined to agree with your line of thinking than mine, that is, programmed to believe only in inflation, and programmed not to expect ultraprosperity. And anyone preaching that would be deemed as heresy. Of course, there had been many false alarms for saying this time is different. But may be, this time is really different. Can I say that if I were old enough in the 60s to converse with you on the web(web in 60s?) on the same subject. I propose that DOW would reach 10,000 by 1999, you probably won't bother to argue with me because you would think I am crazy. Now, are you so sure this time around it's 60s all over again? |
