After the Civil War, there had been a great boom in investment in steel and railways. This opened the American West, and facilitated the movement of agricultural products to the East Coast ports. From there, the new, efficient steamships moved the goods to English ports.
This phenomenon was not limited to the US. Railways crossed Canada, Argentina, Australia and other fertile lands, and steamships now plied all the oceans.
Besides allowing the efficient importation of goods, the technologies of steam and steel directly enhanced agricultural productivity. Mr. Deere's steel plow turned the prairies and Mr. McCormick's reaper gathered the harvest with less manpower than before. Manpower itself was plentiful in the new lands, as the ships brought new immigrants with their large families.
Today the United States is in the same position as England was, and we are in for an extended period of economic malaise from which we may not recover. But the problem is not cheap agricultural or manufactured imports -- it is much more serious than that.
Much has been made of our service economy. A major part of the service economy is "information services". Broadly speaking this is any job which relies on telephone, computer, networks, ordinary mail, etc. It is all the clerical jobs which the "pink collar" employees used to do, as well as a large fraction of the "white collar" jobs in programming, engineering, and so forth.
Most of these jobs can be done cheaper off-shore. The office workers of the United States are destined to suffer the fate of the English farmers.
The semiconductor, disk drive and computer industry provides the technology to do these jobs more efficiently, just as did the farm equipment of the late 19th century. It is produced in the new growth centers of Asia, just as the new farm implements were produced in Moline and Waterloo.
The global fiber optic cables are the steamship lines, and the Internet is the railway. The cheap information transport they provide enables the movement of call centers from Omaha to Bangalore. Cisco systems is Baldwin locomotive, and the submarine cable systems makers are the Glasgow shipyards.
Cheap labor is also available in the new growth centers of the world economy. The number of really bright people is directly proportional to the population, and both China and India are well endowed with really bright people. The same information technologies needed to compete with United States information service workers are useful in training these low wage workers to undertake their tasks.
Just as Great Britain became more agressively imperialistic during the last quarter of the 19th century, the United States also is also espousing the virtures of unilateral, interventionist policies.
This is not a sign of strength, but of weakness -- a sign of a decadent society, an uncompetitive economy, and an leadership who see no way out.
Richard W.
Ditto for our output of cars, planes and widgets of every size and description.
And, thanks to modern transportation and communication, a significant portion of the goods we consume are made in countries that can produce these goods more cheaply than we can do so at home.
This has been a boon for the consumer side of the average American. The outsourcing of manufacturing facilities to low wage countries has created hardship for older, less skilled workers in the US. On the whole, those affected have often been given “early retirement” packages that have allowed people to leave the work force well before the traditional retirement age of 65.
We are now seeing the transfer of technology jobs overseas in the form of “call centers” and engineering facilities. It is only natural that this should happen as countries like India have a large pool of educated people who can do these jobs at lower wages than their American counterparts.
This is a bad thing only if you see the world economy as a zero-sum game. The Indian call center operator who spoke with me today has more money than when he was an unemployed student in Delhi. He is helping build the Indian economy. He will be a consumer of American goods and services, even if all that he does is move into an apartment with a few electric appliances because his demand of electrical power will create the need for a new power plant built by Bechtel and using GE turbines financed by a JP Morgan Chase loan.
Other countries have developed social policies to create a social “safety net” under technologically displaced workers. Germany is one such country. The end result is a stagnant economy with an 11% unemployment rate, with “students” in their 30s and 40s and, and employers who are afraid to hire new workers because of the impossibility of reducing their workforces in bad economic times. It is a policy of economic paralysis by good works.
If the US represents 50% of the global economy today, and we can make that economy grow by 50% over the next few decades, then even if our share of that global economy shrinks to 40%, we will still be better off. And so will those middle class Indians.
And, by the way, the British did not become more imperialistic at the close of the 19th century. That was the Germans.