Politicians Can't Stop World Economic Equalization
Political leaders prefer their voters unaware of the economic law presently reshaping the world. That's because, though very simple, none can stop it, and too much suffering accompanies it. Politicians have battened upon promising to improve the lives of their suckers; they fear having to face voters who've discovered the hard way that it's all been a scam. Politicians can't make economic magic; they just take credit for counterfeit good times, ignoring the resulting costs. In bad times, they're helpless, and they generally worsen things by trying to "do something" when the problem follows what they've done already.
Consider: big business isn't American, European, or Chinese anymore. When factories leave the U.S. for China, their customers remain in America. The entire world is now a single market, created by technology and capital originating from industrialized Western civilization. In a single economy, everyone buys from and sells to everyone else. Everyone competes with everyone else. Both inevitable and fair, right? And the U.S. and the EU have made the world a single economy and are now forced to pay for that. You may decide that this proves that no good deed goes unpunished, a Republican sort of view, or that colonialism carries its own retribution, as President Obama likely sees things. Economics doesn't care either way...
Let's think of a small, remote town with but one furniture store, located a long way from the nearest city. Locals buy from the owner though it's more expensive than the city, because they'd have to go a distance and pay for shipping otherwise. Our owner expands into wood furniture made in a local barn by local craftsmen; that catches on; his sales expand outside town via catalog and internet. He buys from local businesses and employs local folk at better wages than they receive from local farms, with whom he competes for labor. He does well. Everyone is happy, save a few hard-to-please folk who want things he doesn't sell.
Then one day some new people come to town, open a furniture store, and hire away the foreman from the wooden furniture factory. The new people are investing their life savings and living in a trailer behind their store; their kids supply most of the labor. They immediately set prices lower than those of the original store. Both stores now share the local business. So we have a bare-bones, low-cost operation run by people with minimum living expenses competing with a higher-cost seller run by people who have worked and arrived at a higher, and therefore more expensive, living standard. Obviously, the newcomers will improve their living, and the original storeowner will have to cut back, having lost half his business. And that is the (simplified) story of planet earth. Europe and America will cut back, no matter what the politicians promise. If your competitor has cheaper labor, you must replace expensive labor with cheaper methods, look for different things to sell, or pay your labor less, too. Government policy pushes that third choice.
In the EU to date, when the politicians have talked of "austerity" -- i.e., cutting back -- the voters have reacted with riots. As their leaders have bankrupted their countries and foreclosed the next generation of production, one wonders where the voters think money can be found.
The U.S. politicians face an election; cutting back is ignored. But Congress has provided prison camps, laid in ammo, started training the military for policing, and passed a law authorizing the armed services to seize and imprison citizens indefinitely without charge or oversight. While a federal judge has held up that last for the moment, what Congress expects after the election is obvious.
In this newly competitive world, average labor is cheaper than Americans and Europeans expect, and that trend is only starting. Labor in China, India, Brazil, Poland, and other places is becoming more expensive; family incomes are rising as those in America and the EU decline. They're going to meet, to equalize, at some point. That's pretty cheerful for a Chinese, but it explains why economics is the "dismal science" if you're French or American. And it emphasizes the self-centered and destructive incompetence of the political "leaders" who refuse to put it all on the table before the public while dishonestly pursuing policies that exacerbate the condition, pretending otherwise.
Thomas Malthus claimed that food production couldn't keep up with population growth, so human reproduction had to be limited; he was wrong, as the "green revolution" and genetic engineering have demonstrated conclusively, but current federal policy blindly follows a similar path. Government is mandating "environmental protection" that raises costs and puts producers out of business, though a federal court recently slowed the progression. From national to local levels, government is trying to force citizens into higher-density housing; smaller cars; dimmer lights; less water, cooling, and heating; and, apparently, toward prescribed diets that will reduce waistlines. U.S. and E. business costs are already uncompetitive, hence globalization in the first place. The net effect of government constriction of both business and living standards is an acceleration of the pressures already coming from foreign economic competition. Rather than helping, government is adding its might to the forces reducing the Western standard of living.
Policies that could help face foreign competition instead of reinforcing it threaten the status quo upon which politicians depend for funding. The banks and international businessmen fund politicians to keep things the way they are; they're invested in foreign production themselves. Cherchez le $$$$!
Anti-colonialists such as our president seems and folk who drink at the global warming trough as candidate Romney appears to do are unlikely to turn American industry loose enough to compete on its own terms again; they've worked hard and long to get to the present, and they'd lose too many fat-cat friends in the process. But nothing else will prevent or even appreciably slow the ongoing decline of the American economy.