Commander,
My guess is we will never have cheaper labor costs than China or India (well, we shouldn't say never, but with 2.5 billion people there and about 1.5 billion of those still in poverty . . .).
Neither can we nor any of the other developed countries of the world go backwards to try to get low paying manufacturing jobs, anymore than we could go back and try to get agricultural jobs involving hand powered scythes and sicles. We are a cutting edge, information based, intangible property owning and exploiting economy and that is what will propel us forward, along with a large consumer society to help keep all the local service providers (food, shelter, entertainment, travel, banking etc.).
Our best chance is globalization, and being the global developers, owners, promoters and exploiters of valuable intangible property such as software (MSFT, ORCL), brands (NKE, Pizza Hut), financial markets and methodologies (Wall Street), and raw information.
Any commodities we can own or control will do well for us, at least into the near term, as well as the tools and technologies for extraction, processing and use of the commodities.
In a global world cheap labor constantly displaces yesterday's cheap labor (Korea and Taiwan displaced Japan and are now displaced by China and India) and those nations have to fight their way up the food chain. Our only hope is to keep moving forward into a world of innovation and increased competition. We have certain advantages such as the English language, status as the one superpower, a large and resilient domestic market and current competition (the Europeans) who can't really compete with us (quick name a European software company, an internet innovator, a big brand competitor such as KO or McDonald's--there are some, of course, SAP and Nestle come to mind, but it takes a while), but that will fade over time if the Chinese can rev up on more than just the manufacturing cylinder. Although we used to fear the Japanese industrial model in the 1980s, I think the Chinese in the 2020s will be much more formidable competitors.
Kb |
