It is an issue not easily resolved. The trick is that each country has to be good at certain things. Since we can't compete on labor cost, we have to focus on things that have high cost but minimal labor to build it. Cheap goods like clothing is hard to compete with since they're also labor intensive. Building jet planes and high cost instrumentation are examples where we can compete.
But it's getting harder and harder. Frankly, I think what's happened is that overall, a lot of countries can now compete with us in more areas than ever before. After WWII, there were few. But things have changed over the years. We may have to accept a lower standard of living for the middle class especially. The other issue is that China has stolen most of our military and commercial secrets and design and just copied them. It's estimate that it's between US$300-$500 billion a year that America loses. How much if you include Europe and other countries, who knows?
Hi Alan,
Indeed, a race for cheap labor cannot be won by 'developed' countries in the West if compared to 'developing' countries, it would amount to a race to the bottom, and to collapse. So that's why I mentioned Better products for Better prices. Just use the cheaper products from elsewhere to improve/leverage local productivity, rather than simply consuming those foreign products.
'Better' could mean 'more environmentally friendly', but alas, your current government declared war on that prospect. Maybe your industry visionaries are more clever than the leadership of your nation before international Carbon taxes become a fact of life.
'Better' could also mean 'more innovative' since such products in the early stages of their product life cycle have better prices (to recoup R&D cost, but also generate profit to fund new R&D). Unfortunately, US education quality is apparently poor enough that foreign workers need to be employed, which is even made more difficult by the current government.
Reducing the level of manufactured, in favor of augmented/assembled 'Raw' products from other sources, can also prove to be profitable.
Increasing the purchasing power of the dwindling middle-class incomes helps to boost the economy. Also, anticipating on the development of the demographic profile of the nation and technology advances can help to focus on opportunities ahead of time instead of in the past (like focusing on e.g. coal mining jobs that have already been replaced by automation and different (surface excavation) technologies). Making better use of the skills of the baby-boom generation, and anticipating on the reduced workforce numbers in a decade (or two/three), reducing cost involve in Medical needs, etc., all normal things a government should be working on (instead spending most of its efforts on getting re-elected), etc., etc.
The list goes on but falls on deaf man's ears, since the current government seems more interested in destructing the prior government's 'achievements' rather than building on them and/or improving them. It also seems to prefer to disrupt international connections, instead of using them wisely.
Cheers,
Bart
