Why do we need a depression to heal the U.S economy in the long run?
By Daniel at 2 July, 2009, 1:12 am
What we are experiencing is a mature America, a mature economic entity.
In which I mean in manufacturing, people make X amount of dollars/ hour, of course we all expect raises typically yearly a cost of living raise, which is suppose to allow workers to keep up with interest rates, and taxes etc.
Well each year with a cost of living, with the cost of materials rising, because of taxes and cost of living, the rising cost of medical and so forth, it means that the cost of products rise.
Now, the cost of products is relevant to the workers pay(middle class) in the USA, but not in most other countries. So the US manufacturers start losing sales over seas, thus losing profit.
This is when we started seeing out sourcing to china,taiwan,vietnam and so on.
The products that are made over seas are cheaper and present a profit for the company, especially when these parts are sold at closely the same cost of being made here, or extremely cheap.
This affects the workers as out outsourcing causes loss of jobs here in the USA. And so on and so forth, the vicious cycle continues to spiral downward.
Now, 90 % of manufacturing and customer service will not be able to revived.
And it continues to worsen as more and more American companies consider moving shop over seas.
In a dreary outlook for America, we need to ‘reset’ as a country. In which I mean the wages in this country need to fall to 30;s and 40’s wages to compete with over sea companies.
And the only possible way for this to happen is a depression, in which most Americans loose their jobs, and companies can higher people at a lower wage, thus allowing them to be competitive in the world market.
The real grim part of this is, Americans will suffer for many of years, maybe 10,15, or possibly 20 years.
In a nutshell, companies cannot afford to hire, Americans cannot afford to be out of work, you can fill in the rest.
We, as Americans need to take our medicine and gut it out now, or else we will never survive long-term as a viable country. I’m afraid the short-term gratification “Me” thinking in the US will not allow this, though, so we will drive ourselves right off the cliff. Things are very bleak indeed.
Taban
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