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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (65361)	7/6/2006 11:33:12 AM
From: GraceZ	Read Replies (2) \| Respond to of 110194

Globalization is one of the prime reasons that individuals with very low incomes on the US scale have such a high standard of living on a global scale. It does hold down wages for low productivity jobs which in turn also holds down price inflation but this encourages individuals to train for the skills they will need for the higher productivity work they need. People don't reach when they have money, they reach when they are trying to get money. Lower wages for low skill jobs decrease the opportunity cost of training and education for professions that have long educational requirements. It took about 15 years of working as a doctor for my husband's best friend to catch up to him (in accumulated earnings) after medical school. My husband is a drywall hanger who skipped college. nor can rising asset prices bail us out. Asset prices don't generate wealth. This was my earlier point that you missed when I was talking about the value of my house quadrupling and then getting cut in half. All while the price changes, the value changes very little. Increasing productivity and wealth on a macro level means not doing jobs that can be done more efficiently elsewhere. The reason this is so because things not only have a price but they have a cost. The price of buying a part from China is one figure, but the cost might be a lot higher if it was produced here (and not just because we are paid more). "Cost", in economic terms, is what you could have done with the resources if your chose an alternative use. The labor, knowledge and materials used to make a simple TV part here in the US might yield far greater returns making a part for an artificial heart for example.

To: mishedlo who wrote (65361)	7/6/2006 11:53:21 AM
From: GST	Read Replies (1) \| Respond to of 110194

<globalization is going to continue to reduce wages> That depends in no small part on what it does for productivity. People in other countries are human beings just like you and me. By expanding the global economy and mobilizing resources we have growth. But growth from adding more resources is not the same as growth from improved productivity. At he point where productivity rises, then world living standards can rise on a more sustainable basis. US living standards, to the extent they are based on protectionist measures, can be artificially raised, but only by income transfers within the US and lower overall productivity. The trick in a global economy is to be productive. To be productive, you need an education. The US will be as wealthy as our educational institutions make possible, and as our population makes use of these institutions. There is no free lunch, but nor is there any foundation to the notion that we are necessarily worse off in a global economy -- quite the contrary.