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When A "Made in China" Label Means You Can't Afford It

Friday, January 27, 2006

I was reading an article about globalization and outsourcing when I had an image flash in my mind that we're headed for a great big flop in our economy. The picture in my mind is clear, but lets see if I can flesh it out in words. Let's say you have a man, John Doe, who builds cars at Ford for a living. He's been working on their assembly lines for over twenty years. This job is all he knows. Ford, not being bound by borders, looks out onto the sea of workers in our new, globalized economy and sees a vast army of workers "over there" who are willing to make the exact same car that John Doe is building. Here's the catch: That army of workers "over there" will build it for half the wages.
A question pops to mind: "Will Ford sell that vehicle in the United States for a reduced price since they were able to reduce their manufacturing costs?" The answer is most likely, no. John Doe has lost his job at the Ford plant and will have to find an unskilled job at Wal-Mart because all the other auto plants have followed suit. John Doe's income is reduced by half, if not more. This scenario is not isolated to the auto industry. We see it happening to all areas of employment. What drives it is simply the fact that the cost of living "over there" is less than here. Therefore, workers can accept less per hour and still survive a comfortable existence. However, our worker in the United States is surrounded by products that are priced to sell to auto manufacturers, not Wal-Mart employees. Unless John Doe can quickly adjust his living standards, he will spend himself into a mess of debt.
Here's my question for you: How can people making minimum, or just above minimum wage, afford to purchase products that they used to produce? We are quickly becoming a nation of consumers. But, how can we continue to consume goods while no one is generating wealth through production? Eventually, the wealth will run out and our nation will be bankrupt.


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