Global Competitiveness Speculation

Arguably, not the most apropos picture, but I thought it was cool.

Originally posted on my private blog March 31st, 2009.

I was thinking about globalization today and instead of going in the anti-consumer economy direction as usual, I decided to confine myself to the existing framework. What can be done to keep enough jobs here in America long term?

1) Create jobs that Americans are uniquely qualified to fill that can't be automated

Other than tasks that require actual proximity to something in America (like caring for aging baby boomers, although in theory (if not likely) the elderly themselves could be cared for abroad), I'm not sure how one could follow through on this one. Service jobs that just involve one citizen selling to another don't add much value and couldn't be significantly expanded. Perhaps an expansion of social support, such as state sponsored financial planning advice or more widespread preventative mental health therapy would be viable. This is definitely an area that is currently under served and could theoretically yield great returns. These jobs could possibly be outsourced via improved teleconferencing, but language and cultural knowledge barriers in addition to the slightly impersonal feel such remote communication adds (a perception that will likely decline with more widespread usage) will give local labor somewhat of an edge.

2) Increase the education level of American workers.

Could work if enough jobs higher up the economic food chain can be produced. That's the path nations are supposed to follow as they develop. Unfortunately, other nations can improve their education as well, so short of employing a time machine to go back and correct all the educational mistakes we made that squandered our significant lead I think we'll have a tough time catching up, let alone surpassing them.

3) Make American labor more cost competitive.

Difficulties in coordination, bureaucracy, language, and transportation do add some overhead to outsourcing. This gives a slight edge to domestic workers, although many of these additional costs will almost certainly decline with time, and presuppose that foreign firms won't eclipse American ones, which is hardly a given. Transportation costs, while destined to grow in expense in energy terms will shift as foreign markets gain in importance and America isn't the dominant destination any longer. To really be cost competitive, Americans are going to have to work for lower wages at some point. We have experienced a very long period of inflation in everyday essentials, where high salaries have allowed higher prices, requiring higher salaries, and so on. As wages in foreign countries have been rising, especially among more skilled workers (making approach #2 even more important), what needs to happen is for our wages and foreign ones to come to an equilibrium somewhere in the middle. That means greater efficiency and less wasteful discretionary spending on our end, and an improved standard of living on theirs. Ideally, someone doing the same work should earn the same wage regardless of where they live.

4) Create enough jobs to give everybody work, worldwide.

With the ever increasing capability of automation, mounting resource competition, and pollution concerns, growing the pie that much isn't likely to be a serious option.

Well, that's about all I've been able to come up with for how to keep American workers competitive and all three of the serious options could be seen to involve shifts in the post consumption direction. If anybody has any other suggestions, please pitch in!