6-28-05Places like India and China are still just barely on the rise; the vast majority of their people are still horribly impoverished and uneducated, but even the beginning of them moving from 3rd world to 1st world is causing major ripples in America. Eventually it seems that more and more of the world will rise and the playing field will level. What is the long term result of this? America's monopoly on education and skills and industrialization will disappear. The world economy will work to equalize pay and costs across the globe. Currently a decent blue collar job in America pays around $40k a year. A similar job in China pays $400 a year. There are far far more people in the 3rd world than in the 1st world. What happens when those numbers equalize? The average will be around perhaps $4000 a year (it might be even lower, but costs will also drop). Basically the result is the complete impoverishment of everyone but the super elite. The "middle class" will be way below current poverty conditions. The only way to prevent this is with A) severe protectionism or B) heavy taxes on the rich & redistribution to the poor.
Kim rightly points out that it's perhaps not so bad as I imply. As the whole world moves into the information age, the total product of the world economy will greatly increase, which will raise the the average standard of living far above the current level. The point remains that it will equalize. Also point (B) relies on the fact that the super-rich in America will retain an advantage over the rest of the world. Basically economic advantage is obtained by controlling things which the world needs which are not available to all. Historically everyone in America has benefitted from this - simply living in America, with good education, infrastructure, etc. gave everyone an advantage which gave us good quality of life. In the future only the super-rich will have this control - control of natural resources, markets, networks, cash, entertainment.