A Race to the Bottom

I've been debating economic policy lately with some friends who work in manufacturing. They get the new China Syndrome all right, but only the small picture. They're focused on the bottom-line price as compared to their competitors. They feel boxed-in by manufacturing costs, particularly labor.

And here's the American worker - enjoying the highest standard of living the world has ever known - awash in incredible services, a mostly peaceful existence inside the country, plenty of food, decent work, a safe place to sleep and a warm place to crap.

And boy, is this our Achilles heel.

It's our downfall because all of this "culture" costs money: in order to pay for these things we have to earn enough to do so. That dough comes from wages supplied by employers. But can the US manufacturers compete in the low price arena with such high overhead?

Enter China and Mexico. In particular, China has almost none of the services we have, and therefore their cost of living is very low (particularly when one considers the communist factor where most things are provided by the government, except freedom). So, with few financial pressures, Chinese workers can do rather well making a very slight fraction of what US workers must make to survive. Needing less, Chinese manufacturers can charge less than other developed countries. And so begins our conundrum.

What do we do - compete to see who is the least common denominator? Do we lower our services so that our cost of living is less, government does less, taxes are less, and workers can earn less? In short, reduce our way of life to that of our low-price trading partners? Actually, something like that happened here before, albeit for different reasons. Everyone's standard of living dropped like a wet stone overnight in October of 1929, but no one really liked what happened then.

Or, should we simply stop trading with partners who have such a cost of living imbalance?

My solution is to stop trading with Asian companies, because we need to learn to pay the price for what things actually cost to support this country - you remember, the country that paves your street and puts your kid through school.

Imagine that - local prices based on local reality. What a novel idea...

We gotta do something, before we're all using moldy old recycled chopsticks to eat last week's pet dog killed by his food, him served on lead-painted plates. Yum.