When globalisation was just getting going it was a great thing for the rich countries. They could outsource manufacturing and other labour-intensive industries. Even at home, they could import – or let sneak across the border – millions of foreigners to do the dirty work. Profit margins rose as labour costs fell. And even though the price of raw materials was edging up, the lower labour expenses more than made up for it.
But that darned planet…it just keeps turning! Now, the Asians have a little change in their pockets and they’re getting uppity. They want to buy OUR oil…our wheat…our nickel…our copper…and our beef. So prices are rising – OUR prices.
And now, get this, Chinese producers say their labour costs are rising too. “This development,” reports the IHT , “a long-time coming in China, has picked up as coastal regions full of cheap workers begin to experience labour shortages.”
Yes, those millions of Asian schleppers and bussers…whom we were nice enough to employ in unheated sweatshops at US$1 an hour…now want more money! The cheek.
The ingrates! If it weren’t for our willingness to impoverish ourselves by buying things we couldn’t afford and didn’t really need anyway, with money we needn’t have, they’d still be working in the rice paddies with wooden sticks.
But that is the way things go, dear reader.
The dollar is going down…along with the value of almost all US-centric, domestic, dollar-priced assets. Stocks. Bonds. Wages. Houses. That’s where the ‘de’ in deflation comes from.
But it could be worse. In fact, it is worse. There’s the other kind of ‘flation’ too. Now, Americans will have to pay more for everything – energy, food, housing…and all those stupid gadgets from Asia.
Markets and Money