Globalization and Our Economy

[nacdemocrat18]

In the new Global economy, the United States has found itself in a familiar position. We have falling wages, increasing prices, and children raising each other. What is happening now is tame compared to the last time our country faced similar circumstances. When the industrial revolution happened in America, there was no minimum wage or child labor laws. Entire families were working in textile factories for a pittance. Working conditions were harsh and people were being exploited.
Captains of industry controlled powerful monopolies while the working class struggled to find any semblance of the American Dream.

Today we face similar challenges. Laws were put in place to stop child labor and mandate a minimum wage. Captains of industry have been replaced by large multi-national corporations. Good and services can now travel to the four corners of the globe with relative ease and safety. In America, we have abandoned manufacturing in favor of a service based economy. Service jobs are low skilled and low paying. Wages for the average American have not increased at the rate of inflation. If the minimum wage had just kept up with inflation from 1960 to 2004, in 2004 it would have been $16.50/hr.

Professional wages have suffered the same effect. The economy can only grow as fast as its consumers have the ability to consume. The current housing crunch has three causes: 1) Wages have not increased at a rate that supports the appreciation of real estate 2)Predatory Lending 3)People making poor mortgage choices.

Proper wage adjustments would help our next generation compete in the global economy. If families could function on one income or 1 1/2 incomes (rather than 2 or 3), parents would have time to be parents and instill proper values in their children. Educational performance would increase and crime and drug addiction would decrease. Incarceration rates should also decrease.

Finally, Globalization is being treated incorrectly by this country. Globalization is seen by industry as a plethora of cheap labor abroad. This has potentially disastrous effects. If a country reaches a point where they buy everything and make nothing, their labor force will cease to be consumers because their wages will no longer support the economy. Each country that chooses to participate in the Global Economy must be self sufficient to a point. That point is defined a the production level of GDP required to sustain wage structure that promotes trade for the goods and services that and not produced by that country.

In conclusion, we as a nation should learn from the past. Let us not repeat the tragedy of the late 19th and early 20th century. Let us not repeat the Great Depression. The work ethic in innovation level of the United States is unmatched in the world and having our talented work force giving haircuts and bagging groceries for a pittance is well on the road to repeating history.

[Lasher]

1. And government GDP reporting is bogus.

Top government statisticians now acknowledge that a 'Phantom GDP' problem exists, and say it could prove to be significant.

The short explanation is that the growth of domestic manufacturing has been substantially overstated in recent years. That means productivity gains and overall economic growth have been overstated as well. And that raises questions about U.S. competitiveness and "helps explain why wage growth for most American workers has been weak," says Susan N. Houseman, an economist at the W.E. Upjohn Institute for Employment Research who identifies the distorting effects of offshoring in a soon-to-be-published paper.

http://www.businessweek.com/magazine/content/07_25/b4039001.htm?chan=top+news_top+news+index_businessweek+exclusives

BTW, Government inflation reporting is distorted too, and GDP is inflation-adjusted.