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Has America Lost its Edge?

From MSN Money. Corporate woes, flat wages and high unemployment stoke fears that the US economy won't be able to keep up in the age of globalization. Here's why that assessment is wrong.

"He wants to get the word out: All's not gone wrong with America. He also knows globalization has negative connotations for many, grouped with words such as "outsourcing" and "downsizing" -- even though by many measures, the U.S. has not lost ground economically. Plus, Americans have benefited big time from cheap goods produced in emerging markets.

Sullivan believes U.S. export competitiveness should be considered from three viewpoints."

1. Specialization

"The takeaway here is the United States is improving in areas that have the highest profit margins while ceding lower-margin industries to cheap-labor countries like China. Contrary to popular belief, the U.S. still makes a lot of stuff other than the financial creations of Wall Street. Companies such as Paccar and Oshkosh continue to depend on their American factories. In fact, U.S. factories are now operating at more than 74% of capacity -- up from a low of 68% last year and returning to levels last seen in early 2008."

2. Market share

"...as of 2008, the United States retained top-three status in eight of the 14 categories. And we remained the world's breadbasket, retaining No. 1 status in fresh foods. (That's the most recent date for which numbers are available.)"

3. Export prices

"The idea here is that if the country is producing what others are demanding, and we're doing it better than places like China, then companies will be able to raise prices. This is a sign of strength."

...

"For the most part, the U.S. has been able to raise its prices in industries in which it competes."

Not just to foreign customers, either--it's happening to US as well. Every end product gets it's price raised.

"Overall, the data suggest that the U.S. economy is more than holding its own against its rivals. It is flexible, efficient and nimble.

So why are so many people so worried? Why aren't we raving wildly about the benefits of free trade and global competitiveness instead of protesting globalization in the streets?

It's because corporations have enjoyed the majority of the benefits, without much trickling down to workers or shareholders."

Productivity has risen faster than unit labor costs...well, that's going to change when the new health care law kicks in!

Prediction for 2050 (the World Economic Form's, not mine): "job creation is just over the horizon. And over the long term, a drop in global fertility rates and a global scarcity of labor will result in a reversal of fortunes for workers. It's simple supply and demand."

This I agree with--I just hope it doesn't take as long as 2050 to get here. I might be gone by then, and won't get to see it.

Posted by Cute at 7:19 PM

Labels: economy, financial (non-tax), politics