americandream wrote:The point being made is that the drivers of American capital determine where it goes. Currency valuation has never really featured in the relentless offshoring of employment costs which started way back Raegan's days. The imported deflation that offshoring American labour costs brings about has mitigated currency volatility ensuring that dissatisfaction is minimised and will continue to be minimised.
I'm talking about currency valuation in terms of $'s per hour of moderately skilled labor. Not the exchange rate. My hunch is that the disparity will be decreasing, as US wages start to freefall (too many people chasing too few jobs, qed, wage decline) and overseas wages modestly improve, free flow of data allows the Indian freelance programmer to write code for Bob's Quicky Mart HQ; so smaller companies can access overseas labor, but the overseas labor guy can push for better individual rates since there isn't a managerial unit between him and his customer. This factor can apply to a very large number of desk/ip type jobs. Back in the US, the freewheeling guy in Lubbock, TX who played hard in silicon valley during the bubble, may have priced himself out of the regular market, but he can, if he chose, pick up freelance contracts, and not just US contracts; but same deal as the Indian fellow.
I think we're going to where globalization was really meant to be, where labor is more closely compensated based upon task instead of nationality; and this is why I suspect that by the close of this decade $xodd will buy basically the same amount of labor, whether the worker is in Bangkok or NY City. This will, unfortunately, suck for a great many people who are still attached to mortgages and property values that could only happen at the peak of back to back bubbles.
That's what I am referring to when I reference disparities in currency valuation and coming corrections. Exchange rate is part of it, but not the sole source.
About the only labor that would initially be immune would be physical service work requiring hands on, with insurance and bonding. But even then, those wages can not hold when surrounded by too many wanna-be laborers, and communities filled with people making substantially less value in currency. (I don't pretend to know whether they'll inflate to keep the number steady while reducing value; long bond traders don't think so though.)
should be evident to all but the wilfully denialist that working Americans will have to prepare themselves for a future of indifferent employment.
I'm not sure how this can work out cleanly though.. With falling incomes and sales; state and local governments will have no choice but to turn to property taxes for revenue; but property taxes don't really care whether the owner is local, or in Paris; failure to pay results in the property being auctioned. If property taxes climb to make up the drop in revenue, foreign ownership of real plant and equipment becomes very costly... And all kinds of nasty follows down that rabbit hole..
It'd be a weird consumer economy, if it really became a simple service assist, with everyone having the equivalent of a food stamp card, government taxing the movement of goods, depositing the magical dollars on the cards, people using the cards to buy the goods, completely the currency circle.
Maybe grain figures more heavily in this picture than people imagine. Price of grain is real cheap right now, even given that we cook a bunch of it into ethanol. What if supply collapses further, but the government mandates 20% ethanol content for road fuel? Does that provide the price spike in food goods to equalize the value of an American wage earners take compared to the foreign workers take valued in locally subsidized food?
2010's are gonna be a heck of a study project for some economist grad student in the future.
