He said he won 1 million USD in profit in one year.

At 5.25% (risk free rate), it's 52k per year.

There's no such thing as a "National" economy anymore -- even accepting the dubious proposition there ever was such a beastie.  When the Federal Reserve started paying banks to borrow money after 9/11 the borrowers took that money and built factories in China.  This means the money was used to create jobs in China not in the US.  The follow-on was a loss of income and the necessity of (1) lowering consumpution - defeating the purpose of monetary expansion - or (2) borrowing to consume.  

We all know what was chosen.

Eventually, tho', consumption must follow income.  If the consumers in a geographical area cannot earn they cannot buy.  The industries moving their factories will, eventually, find their profits are directly linked to wages.  

One 'gotcha' is a $50k consumer needs 5 $10k consumers to pick-up the slack but it costs 5 times as much to get those 5 consumers.  As the firms move into new territory they have no established customer base and establishing a market presence costs, as well.  And these firms will be running against Chinese (to pick an example) firms that do not have bloated fixed expenses (e.g., $100 million CEO salaries) and capital costs.  The 'Chinese' firms can provide the exact goods and services at much lower consumer cost.

Together, the firms moving their production to lower-cost countries are putting themselves out of business.


Och nu den svenska kocken bakar en Alaskan älg jägare. Bonk! Bonk! Bonk!

This is lovely: outsourcing local news:

The job posting was a head-scratcher: "We seek a newspaper journalist based in India to report on the city government and political scene of Pasadena, California, USA."

A reporter half a world away covering local street-light contracts and sewer repairs? A reporter who has never gotten closer to Pasadena than the telecast of the Rose Bowl parade?

Outsourcing first claimed manufacturing jobs, then hit services such as technical support, airline reservations and tax preparation. Now comes the next frontier: local journalism.

James Macpherson, editor and publisher of the two-year-old Web site pasadenanow.com, acknowledged it sounds strange to have journalists in India cover news in this wealthy city just outside Los Angeles.

But he said it can be done from afar now that weekly Pasadena City Council meetings can be watched over the Internet. And he said the idea makes business sense because of India's lower labor costs.

"I think it could be a significant way to increase the quality of journalism on the local level without the expense that is a major problem for local publications," said the 51-year-old Pasadena native. "Whether you're at a desk in Pasadena or a desk in Mumbai, you're still just a phone call or e-mail away from the interview."

I don't like where it's all going. From the articel of the diary:

Our real problem came from our customers, the publishers. We offered to charge them as little as the Indian firms did, but most of them wouldn't even let us bid, preferring to squeeze as much profit as possible out of typesetting.

In the '90s, publishers had merged and merged and then merged some more. What had been hundreds of educational publishers was now just a few. Harcourt bought Mosby, Saunders, Academic Press and the Psychological Corp. Then Reed Elsevier bought Harcourt. The three top companies represented about 80 percent of our business and the pressures on us to maintain those customers were terrible. If Reed said, "Put an employee on site in our office in Texas," we did it, even though it cost us $100,000 a year, which was just about all of our profits on that account. If we said no, we'd have no business at all. It would have been like saying no to Wal-Mart. And just as it is at Wal-Mart, the mantra of our newly merged customers was: "Lower your prices."

From there, the roller-coaster down was very predictable, with or without any proofs of nearing "collapse".

For me, the crucial facet is this:

If the government wants to help small business and the American worker, it could do something to slow the pace of change. It is the speed of outsourcing, more than anything, that dislocates tens of thousands of workers a year and causes shock waves through the economy. The government could slow things down by granting subsidies to American firms to help compete with overseas companies. It could provide them incentives to buy locally. But, in the end, it can't stop the flow of work and money from traveling around the world.

Immense speed of change makes adoptation indeed very difficult, downright impossible for the most subjects. (As a clear example, the modern human impact on the environment is depressingly huge and further escalating, pushin numerous species to extinction.) This might be a loose capitalism: the increasing speed of change makes it increasingly impossible for most individuals, companies and "invisible hands" to adopt. Capitalism is turning against itself - it will hold on "fully" well while it can, and then collapse without any prior "proof".

This brings my disagreement with the author: the subsidy measures to slow down the pace would not really work. To slow the tidal wave, the government would have to throw in increasingly more and more money, with the unbearable pace coming anyway pretty soon. It is socialism at its worst: stupendously expensive, and undermining the whole idea of "fair competition". My serious suggestion would be not to escalate the pace of globalization. Whether the modern free trade policies were making the world more fair or not, the policies of 10-20 years ago were not stupidly unfair and were working out pretty well - no worse (to put it mildly) than the world used to be in centuries. Now we are heading full speed to some "perfect" world we had never known yet. The benefits all globalization are all fine, but we did not have to embrace them so suddenly and blindly forgetting everything else.

great comment, dm.

i had a vision of capitalism-globalisation as a giant machine, hotwired to bypass all human prudence governance, driven insane by the inhuman premise that corporations and their hench-shareholders' needs trump any other consideration...

like tying a brick to the gas pedal just to watch it go off a cliff, with us all aboard.

gravity?

nah...it's a liberal science stratagem to undermine our exceptional wing (nut) power...

Peace is not the absence of war -- peace is the absence of fear. Ursula Franklin