Current USA thinking has it that guys like Adam Smith said that each nation would capitalize on intensive use of its best resources and skills. As a result, there was an idea that the economic world would become optimized. This idea has been viewed as "scientific."

Now, however, China and India are able to "flaunt" their great wealth of cheap labor resources. As a result, they can turn the capitalist globalist theory against the working class of America. They are doing this, thereby pushing down American "labor's" wages and bidding up prices of commodities, including food and especially energy.

Few economists express this viewpoint, perhaps because their approach is based on obsolete assumptions and analytic methods.

In the 2008 election, all candidates are Globalists, oblivious to the powerfully deep process I've outlined here.

As USA living standards sink more rapidly than since 1976, the USA electorate COULD notice the problem and do another "Boston Tea Party.

Things COULD change drastically. But I'd guess that the working class is too docile.

We're in for it.

Your comments on "IT" would seem called for. What's your prediction?

I can comment on a couple of points you have brought up:

First, Adam Smith's views are somewhat misleading since they refer to nations as economic units which will have some optimal product. It is obvious that the real units, in this regard, are geographic areas which might be extranational, such as the oil fields of the Middle East, or subdivisions of a single country. Obviously, although California, Arizona, and bordering states are efficient producers of citrus crops, Maine or North Dakota would fail miserably at producing oranges. In the days of kings, there was probably such an overwhelming overlay of nationalism, along with relatively unchanging environment in the small countries of the era that his conclusions were justified. If nothing else invalidates the viewpoint, it is the periodic shifting of national borders.

Secondly, the ascendency of machines over labor in an increasing number of functions point to a time when even the most committed supporters of capitalism as it is will have to acknowledge that, without diffuse ownership of the machines, most of the population will be of no economic use, except as consumers - a position they will not be able to fill if they have no income. If nothing changes, then the portion of the population without a reason, or a capability, to survive will die off, leaving finally a planet inhabited only by a small circle of extremely privileged families and their universal machines.

it just hasn't been foreseen that the world would reach a point when population and resources hit the wall.

Until recently, such ideas have been ridiculed, esp by Republicans and optimists and believers in God's benevolence and large families.

Few people have realized that Asia's abundance of labor could be their great resource, making Asia the world's leading source of goods "containing" labor. And it certainly hasn't been realized that the result would cause unemployment, class-warfare, and currency problems in America.

Europe seems to have avoided most of this difficulty so far.

I'm not sure Europe has avoided it to any great extent. I remember riots in, at least, Germany when they sought to send no longer needed immigrant labor back to their nations of origin. It seems to me that similar events are occuring in England. It's a little different from what you address in that the workers, rather than the work products have been imported, but it has the same overall effect in the end.

has appeared for economists to reopen their Marx tomes. That (Reserve Army) concept led to Marx's being disregarded as a crank, until perhaps now.

Malthus too.

Just think:

Unemployment
Class Warfare
Currency Problems.

All hallmarks of Marx, whose disciples are in China (and maybe Russia). Could they have been playing chess?

I think it is too late for Russia to rethink the problem. However, China is still in a position to go in whatever direction they think best. I think they will eventually raise their export prices by quite a bit. This will both relieve some of the unemployment pressure in their clients and allow them to dedicate more product internally.

We do not live in the 'borderless world' that some pundits were prognosticating a few years back. For evidence on how much national borders still matter, simply take a gander at the Rio Grande and how much significance it has. Or take a look at the one national boundary that can be clearly seen from space: the border between Haiti (almost completely deforested) and the Dominican Republic (still with healthy forest cover). Jared Diamond has an excellent little chapter on the very divergent histories of these two nations in his recent book "Collapse". The Dominican Republic is still poor; but its real GDP per capita is almost three times as much as the impoverished citizens of Haiti, now reduced to eating 'mud cookies', 'enjoy'.

Perhaps even more important than the boundaries between nations are the boundaries between CIVILIZATIONS. The very tense border between Hindu India and Muslim Pakistan being a case in point. A possible flashpoint for nuclear war, right there. And, if you buy Huntington's argument that Latin America is really a separate civilization from Western Civilization, then the Rio Grande is not just a national border, but a civilizational one.

By having fewer children.

Sovereign: Now, however, China and India are able to "flaunt" their great wealth of cheap labor resources. As a result, they can turn the capitalist globalist theory against the working class of America. They are doing this, thereby pushing down American "labor's" wages and bidding up prices of commodities, including food and especially energy.

Few economists express this viewpoint, perhaps because their approach is based on obsolete assumptions and analytic methods.

LeRoy: The sudden 'arrival' or 'appearance' of roughly two billion Indian and Chinese workers and/or entrepreneurs into the world economy was and is the most important change that has occurred in the world over the past two decades; more important, certainly, than the end of the Cold War. It has received a huge amount of discussion by both economists and geopolitical theorists. You can't even pick up a single issue of 'Foreign Affairs' or 'The Economist' without finding some debate and/or discussion of these trends. For a while, back in the 1990s, most economists did not think that trade with China was causing very much of the observed downward pressure on the wages for unskilled and semi-skilled labor in America; but that view seems to be changing today. [Krugman had a recent column on this.]

Some of us (like me) saw this coming, and for a long time were urgently recommending that America make an urgent mission of upgrading the skill levels of our work force, as what makes a nation really competitive is the skill levels of its AVERAGE workers. [You can't rely on just a few hundred geniuses.] I also foresaw that America would blithely ignore such recommendations, in favor of catching up on the latest antics of Britney Spears and Paris Hilton, etc., etc.

Now, believing that it is too late for such urgent measures, my recommendations have changed.

I am now recommending that America resign itself to rapidly becoming a Third-World economy.

Sort of like a nuclear-armed Brazil.

Sov:

"Now, however, China and India are able to "flaunt" their great wealth of cheap labor resources. As a result, they can turn the capitalist globalist theory against the working class of America. They are doing this, thereby pushing down American "labor's" wages and bidding up prices of commodities, including food and especially energy."

W4B:

China and India didn't 'do' anything, except allow Capitalist investment in their countries, where labor is cheap. It's important to understand who is doing what if you're going to explain what's happening.

It's the actions of capitalists that are pushing down America's wages, and driving up prices. Prior to being paid by Multi-National Corporations for manufacturing goods previously made in America, China and India had no real economic might.

Since Multi-Nationals have enriched China and India to our detriment, it is they who should be blamed for wrecking our economy and extinguishing the middle-class.

We've been taught to worship the corporations and hate government regulation of their activities. We are now beginning to understand that government regulation is necessary to stop the periodic self-destruction inherent in the capitalist system.

China and India didn't make the rules, but when they found out how beneficial it was to allow foreign capital to flow into their under-leveraged markets, they were smart enough to cooperate.

It was really the Multi-Nationals that turned against America's working class. The investment class thinks we had it coming, and has worked day and night for the last forty years to blame our wages and benefits, while the working class thought the American dream was impossible to stop.

The American dream is not impossible to stop, if unbridled greed is allowed to control every aspect of our economy.

A Chinese machinist would make around $1 an hour. An American machinist around $30 plus $12 in benefits.

Similar for computer fabricators or steel workers.

It would be nice if more Americans could find points of inflection, but that's not the point here, which centers around the expulsion of Americans from creating goods (having average jobs) in world commerce. Globalism and capitalism are happy to throw them overboard. Engineers too! (Even engineers who know differential equations AND physical chemistry).

Assuming you are right that skills simply don't matter in the modern world, we are wasting a massive amount of resources in sending so many kids off to college. We should just cancel all college classes, starting tomorrow. [Those college professors can all go see if they can get work at Wal-Mart.]

In fact, why not cancel high school, too? Most of our teenagers don't learn much of anything in high school, anyway, other than, maybe, how to 'analyze' gang rapsta poetry. An anonymous article in the new Atlantic Monthly (by 'Professor X'] says we are sending huge numbers of students off to college who don't belong in college to begin with, as they don't have the faintest idea of how to construct a coherent sentence.

You are surely right that it is all hopeless, and pointless, to try to educate this generation of American youth. In fact, the last generation was probably hopeless, too, and we just didn't realize it. Just think of the overwhelming amount of resources that could be saved from simply canceling all college and high school classes, shutting the buildings down, and using them for some other purpose (like housing the homeless, maybe?)!

When kids reach the age of 12, and have learned their ABC's, we should put them to work out in the tomato fields, in place of all those illegal immigrants, or start preparing them to be cannon fodder in the upcoming war with Iran.

Come to think of it, I can't really think of any good reason why they need to know their ABCs. Back in the day, they used to put kids to work in the fields when they got to be 8 or so. Why shouldn't we do that? Maybe literacy and numeracy should be reserved for an elite priestly class, and discouraged for the peasantry. I certainly want to be part of the elite priestly class, since I don't much like the idea of working out in the fields at my age. And since I am already highly literate, I should be a prime candidate for at least one of the local high priesthoods, supervising the lesser priests.

I have to admit, I find your ideas more and more attractive.

I suppose USA still needs lot of educated people, as in medicine, building, and other areas requiring mostly local practice. But you have to face the globalist music playing for industry and manufacturing.

I did read that a Pennsylvania farmer is abandoning his (tomato) crops because he can't hire pickers any more due to new restrictions on immigrant hiring.

Then there are complaints from grads that there are no jobs for them.

A lot of hiring specs are artificial anyway. I remember a claims guy who required "English majors" because he had been one and was pissed that grads from other majors often couldn't write a sentence or spell.

But you put too much blame on the lack of education when the global corps won't hire Americans for jobs that they sent overseas. If there were a lot more industrial jobs, more students would be motivated to prepare for them.

Watt4Bob said it well.

Is that some kind of Chinese talk? Now even yer doin' it, talkin' like some durned furriner!

Uh, more seriously, Sovereign says: I suppose USA still needs lot of educated people, as in medicine, building, and other areas requiring mostly local practice. But you have to face the globalist music playing for industry and manufacturing.

LeRoy: We also need highly educated people for the aerospace industry, the biotechnology industry, the computer chip industry, the software industry, and, well, I could go on. All those industries, I might add, are vital to U.S. national security, as well as U.S. prosperity. Or did you think that the China of circa 2020 AD is going to be willing to sell us all the advanced weapons systems we might just want?

Sovereign:

I did read that a Pennsylvania farmer is abandoning his (tomato) crops because he can't hire pickers any more due to new restrictions on immigrant hiring.

LeRoy: Gosh, he might have to raise his wages! What a radical concept! Know what? I bet he never even thought of that!

Sovereign:

Then there are complaints from grads that there are no jobs for them.

LeRoy: Yeah, especially those medieval French romantic poetry majors. We seem to have a surplus of them. And not much demand. But a former student of mine is graduating this spring with a bachelor's degree in petroleum engineering from the Colorado School of Mines. He's already getting some job offers in the range of $120,000 to $160,000...for the STARTING salary. Plus a hiring bonus of around $30,000 or even a bit more. Had another student who was a year away from getting a degree in Aerospace Engineering from the University of Colorado (one of the top schools in the country in that field). Then, he dropped out of school and ran off to join the rodeo! No foolin'! Aaargh! This state has a lot of aerospace companies. The average age of their employees is in the mid-fifties. They're getting desperate for 'young blood'. If we can't get more young Americans to go into those kind of tough fields, those industries WILL die. And the American future along with them.

Sovereign:
A lot of hiring specs are artificial anyway. I remember a claims guy who required "English majors" because he had been one and was pissed that grads from other majors often couldn't write a sentence or spell.

LeRoy: ALL college graduates should be able to spell and write, not just a coherent sentence, but a persuasive essay. HIGH SCHOOL graduates should be able to write at least a halfway decent essay with correct spelling, punctuation, and grammar--and be able to do at least what we used to consider 8th grade arithmetic. If not, they shouldn't be walking out of anywhere with a diploma. Your point here is simply reinforcing my point: that our schools are not doing their jobs.

Sovereign:
But you put too much blame on the lack of education when the global corps won't hire Americans for jobs that they sent overseas. If there were a lot more industrial jobs, more students would be motivated to prepare for them.

LeRoy: Classic case of putting the cart before the horse. If we had better prepared students, America wouldn't be losing its competitive advantage in one industry after another. You see the same misunderstanding with the issue of teacher salaries: Let's pay teachers dirtbag salaries, and then we'll complain about what lousy teachers we get.

Sovereign:
Watt4Bob said it well.

LeRoy: Watt4Bob blames all of America's economic travails on the depredations of multinational corporations. As is often the case, there is a smidgeon of truth there. I myself have ranted, and I have raved, against the stupidity of the high-tech CEOs in particular: they spend a decade busily outsourcing high-paying knowledge-based jobs, and then they act SHOCKED (and I mean SHOCKED!!!) when it turns out that very few young Americans want to go into those fields anymore. Bright young Americans now want to go off to school and become lawyers: that's where the money is! [And just what America needs: more lawyers!]

Where he is wrong is in his assumption that China (and India) are just being reactive to the multinational corporations, and not being proactive. China, in particular, is being very proactive. Aside from the grotesque environmental mistakes they are making, the Chinese government has been pursuing a very intelligent economic strategy: they are emphasizing science and technology, have ambitions to create '20 Harvards by 2020', and they save like the dickens. America seems to think it can borrow its way into prosperity, has become fervidly anti-intellectual, and anti-science to the point where more than half the country thinks the world was created via magic wand some ten thousand years ago. China in particular, and the East Asians in general, are like sharks in the water: they smell blood.

It's American blood that they're smelling.

This is a science/technology race, we're still in the lead, but we are kind of lolly-gagging along, smiling at the pretty scenery, while those behind are running harder and harder, and catching up fast, and wondering where our mind has drifted off to. Your advice has been, at various times, to either turn around and start throwing haymakers at the racers catching up to us, or to take a few steps off the race-track, lay down in that nice cool grass, and take a nice long nap.

As someone else said, in a different thread, it's time for Americans to wake up and smell the road-apples.

Much of the argument about the desirable level of education in the US (including yours, of course) seems to be based on the effect that varying educational postures are important only in that they effect the country, taken as an entity, to be productive. Somehow, the idea that education should be of personal benefit to the person being educated (a sign of the problem is that the word "trained" is often substituted here) has been lost. It is things like being able to finish a NYT crossword puzzle or understand the wiring diagram of a person's own residence that can bring pride to that person. What is substituted today is the idea that a good education makes you useable to someone else - like a horse or a hammer. Maybe education would be better encouraged by changing the description of what it brings to a person.