Steve Owen wrote:Contrary to the opinion of the UAW, we have to learn to compete on an international basis. If something can be done better and cheaper somewhere else, then we must do what we can do better and sell them our product and buy from them theirs.
I certainly agree here, and it is a basic principle of free market economics. The way to create wealth is to produce domestically those items that are more efficiently produced domestically and purchase from abroad those items which are produced abroad more efficiently.
The system is not "perfect" (no system is) but does allocate production to those who can maximize efficiency (i.e., profits). What we are seeing in the US' current political climate is a step toward fascism where the means of production remain in the hands of private parties but what is produced (what, how and sold at what price) is dictated by the government. A perfect real estate example is rent control.
Edd- to your question about the effect on real estate and wage earnings, the simple answer is that a "re-set" of pricing has to occur. This may mean that some consumables go up in price and some go down. Housing is becoming more affordable as housing prices drop. Housing prices went up due to poor regulatory oversight and artificially low rates for borrowing money. I'd argue that even without better regulatory oversight, had the cost of money reflected the fair market price (no exotic lending gimmicks), we would not have experienced the real estate collapse to the extent we did and the regulatory shortfalls would have been manageable.
Most economists agree that it was the consumer's ability to draw on home equity which spurred consumer spending to the level we achieved in 2004-2007. If the equity was based on artificially low borrowing costs, that equity would get reset once the borrowing costs were reset to reflect actual market costs. Once the price of purchasing a house are re-aligned with the true costs of financing the house, the real estate market will pick-up (and rightly so based on sustainable economic activity and not artificial economic stimulus).
If we want to create a competitive economy in a global arena, then we are going to have to become good or better than others at producing goods. "Goods" include tangible manufactured goods and less-tangible service goods. I don't think we can mass produce a low-cost car in this country cheaper than the Chinese, Koreans, or Mexicans. So why should we compete in that product line? Let them build the cheaper car and let us benefit from a lower price. I do think we can produce better intellectual property and services than the Chinese (for now), Koreans and Mexicans, so we should compete in that arena (and others). The world is changing fast: we should be looking forward to capture the markets of the future rather than looking backward to salvage those markets that are in a decline (and we cannot be competitive in anyway).
Focusing our resources on those products/services where we have a competitive edge will also provide a sufficient level of auxiliary wage-positions for support/service positions. There is no entitlement to a $100k salary in this country. All that should be available is the opportunity to compete and succeed.
Once Lorena Bobbit's thoughts get translated into Arabic and Farsi, the blood will flow!
ding by militant Muslim feminists