Economic Tradeoffs--Where do we need to head?
Over the past 30 years, the United States has made it a national policy to hold inflation down. We have achieved it through foreign labor and cheaper materials. We, the consumers, have demanded it. We, the investors, demanded it from our publically traded companies. For years it worked. The amount of consumer goods available for the average American would boggle the mind of someone transported from 1970. Today’s home has a panoply of gadgets, even a house below the poverty level. How do most houses afford these gadgets? They have been made inexpensive and available by being sourced overseas in a cheaper labor market. The cost of this free and easy access to consumer goods and cheaper prices has come with a tradeoff, however. That trade off is the dismantling of manufacturing in the United States. Now, the landscape is changing.
US Governmental spending and borrowing has injected an excess of dollars into the world economy. This large infusion of currency has begun to destabilize the US currency. The evidence of this is the move away from the dollar as the reserve currency of choice and the significant posturing of lender nations such as China and Japan against our out of control spending. Our inflation resistant times are coming to an end. The cheap goods produced overseas will now be more expensive. This is happening without currency translation as well as the Chinese begin to gain higher wages. China is ceding the low cost producer title to India soon. We are at a cross roads. We are ceasing to become an economic dynamo.
Where shall we go? China is in the process of commandeering the production and supplies of many industrial metals that are crucial to a modern economy. There are incredible barriers to penetration of American products in many countries that are competing with us. Free trade has not ever been free and unencumbered. Free trade has also bled manufacturing away from the US in the zeal to reduce inflationary pressures. We are under considerable cultural pressure to reduce our consumption, reduce our energy expenditures, decrease our wealth. We live in a resource constrained world. Most of the world is playing the economic game for keeps. It is time for us to do so as well.
This is getting long and I can comment after this. I feel that we need to look at the trade offs. Our economy is truly based upon what is grown under the sun and what is mined, cut, processed, and manufactured into useful products that our people use. We need to look at rebuilding our manufacturing base. That may mean higher priced goods that are locally produced. It may mean less stuff in our houses. It may mean rational choices. What do you think?
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