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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: Amy J who wrote (17741)2/24/2004 6:59:50 AM
From: Wyätt GwyönRead Replies (4) of 306849
 
Amy, the ultimate problem is that there is no legal difference between sending blue collar jobs and white collar jobs overseas--since the US has been happily screwing blue collar workers for many years, there is no excuse other than prejudice for not subjecting white collar workers to the same global market forces. basically, people are upset because they thought there was a guarantee that they would always be overpaid compared to the ROW as long as they got an engineering degree. now they wake up and smell the coffee that their blue collar brethren have been drinking for 40 years.

this will be good because fewer overpaid white collar workers means companies can pass on (indeed, will be forced to pass on) cost savings to consumers--there will be service sector disinflation if not outright deflation in the years ahead. this deflation will eventually permeate all service sectors, as capable laid-off workers take jobs from remaining service sector workers of lower capabilities. eventually, even health care will encounter deflation.

these are the ways that overseas workers will actually help the US, as N. Gregory Mankiw pointed out (much to his chagrin).

the problem is, there is no "upsale" to higher level jobs for the laid-off workers, because there are no knowledge jobs which US workers can do which cannot be done at least as well by Indian counterparts. only geographically isolated knowledge jobs will be protected--but even these will encounter deflationary pressures as greater numbers of skilled workers compete for them.

the bigger problem is that US engineers, while bright in engineering, are dumb in the area of finance and thus have high debt burdens like the rest of the profligate US consumerocracy. so when they get laid off from IBM and have to work at Home Depot or wherever, they may find that their cash flow cannot cover their debt-service nut.

this will result in many bankruptcies, ultimately leading to a debt deflation which the US needs very much to bring asset prices down to a level affordable to the lower incomes which will prevail in the future.
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