Competition comes in many forms for Americans
I recently read a book called The World is Flat by Thomas L. Friedman, and it scared the heck out of me.
You should read it too, because what it points out is important to every American is that the world is no longer a dominion of the United State's economic powerhouse, but is being fueled by emerging economies that themselves are gaining in stature daily.
While Americans have thought of themselves as a front runner country for more than 140 years, the idea that we rule the entire world economically has really been a product of the last 60 years. World War II had devastated almost all the economies in the world, with the exception of those in North America. Basically all the United States major competitors in heavy industry had been bombed flat, and in 1946 we had our hand on the economic tiller of this big ship we call the earth.
However that has now changed. I recently wrote a column about General Motors and Ford's woes, and the truth is that many American industries are in similar trouble.
The foreign influence in our country is obvious, as I just observed driving down I-15 this past weekend in Utah and Salt Lake Counties. For about 15 miles of the drive I looked around to see what kinds of cars were passing me on the freeway, and by my calculations about 80 percent were of Japanese or German manufacture.
For the average citizen, this may seem fine, because the competition with foreign industries has resulted in higher quality products, much better than much of the junk American manufacturers put out during the 1950's and 60's. It has also resulted in lower prices for the consumer (taking inflation into account). But low prices and foreign manufacture are a double edged sword that cuts both ways. True we benefit from the lower cost for things, but it also means fewer good jobs for Americans.
I know I am singing an old tune here. I have heard many people say that if American industry can't get it right at a competitive price, those companies should go down the tube and the workers who aren't productive should lose their jobs. But when companies go down the tubes, the loss of those good jobs effects everyone, not just the displaced workers. Eventually the dominos that are set in action catch up with the general populace in terms of taxes paid and money put into the economy.
Friedman's book is largely about outsourcing, and how it is affecting our economy, and largely our younger workers. Right now jobs at fast food restaurants are what most people consider to be entry level positions for those who are not moving on with their educations past high school. But based on what is happening to other jobs that these kinds of worker have to pick from, those jobs may be the best any of them can get in a few years, only because someone in India or China can't serve up a hot hamburger to someone living in Price, Utah.
The fact is, for young people without an education, and in the near future, an advanced education, the choices have always been limited. Those individuals could always "work at the plant" or "work at the mine" like dad did. Those options are going to close as resources are depleted and major manufacturing moves overseas.
We as human beings can be very short sighted. We often look at the future with rose colored glasses thinking things will just go on the way they always have. If darkness looms there, we tend to ignore it, hoping it will go away, rather than confront it head on.
Business will always go where it can make the most profit. We can complain all we want about call centers in New Delhi and that our latest new electronic device was manufactured in Beijing, but we, after all are the ones that wanted the lowest price.
We also want the most for our investments and if you look at your pension funds, the international stocks are the ones that have been doing the best as of late, so most of us have money managers that are pouring more and more money into those funds, taking it away from American companies.
I remember about 20 years ago a very intelligent good friend of mine told me "This low price mentality that is affecting the nation will be our downfall."
He hasn't been proven right yet, but everyday, I think his hypothesis is coming closer to being correct.