The natural state of life on earth is to compete for scarce resources. Food, shelter, a mate, for starters. The United States and its western allies have had enormous advantage and success in acquiring and converting all manner of resources for the the benefit of its citizens over the past 60 years.
We all want and expect the standards of living we have worked hard to achieve to continue to improve for us and our children. To be successful in this regard, we must be able to continue to create and sell the goods and services we all work to produce at a price sufficient to cover the costs of production (the resources of labor, materials and energy) and return a profit in order for the our standards to improve. Pretty straight forward.
Unfortunately, I believe achieving this outcome has become much more difficult for this country to accomplish and is going to become increasingly more difficult to sustain. The current real estate collapse and financing scandal is, in my mind, simply one more symptom of a larger threat. That threat is growing world economic competition. My frustration is the lack of national leadership that is willing or able to describe a strategic vision for our country that, as painful as it may be, could allow us the opportunity to take steps to ensure our ongoing success. I feel very strongly that, without that kind of leadership and national commitment, we face a growing probability of a reduction in our national standard of living.
Here are some of the elements of the puzzle I see that lead me to my perception
(I would enjoy hearing others contrary logic...I like to think of myself as a positive, upbeat person thus a compelling alternative might right my boat!):
1. The world population is growing rapidly.
2. These populations are becoming consumers with growing appetites for goods and services.
3. These consumers' governments are moving inexorably (and painfully at times) toward
free market econonmics - China and India are the best recognized examples of items 1-3.
4. Low 'standard of living' consumers like those in India and China can't yet afford US pricing. US goods and services can't be priced below our cost of labor, materials and energy. We are effectively locked out of these huge markets. I believe our economic growth will depend on selling in these markets.
5. The growing demand for goods and services in developing countries requires more raw materials which causes an increase in the competition for resources and their prices rise.
6. In the US, historically, we could afford higher & higher labor costs because raw materials and energy costs remained so low. Emerging nations can still offset increased materials and energy costs due to their low labor cost and low standards of living.
7. Going forward, increasing our labor costs in the face of rising raw material and energy costs will continue to erode our international competitiveness.
8. Add to this a new (but likely very expensive) cost associated with the affects of global warming (exacerbated by the growing world population) further limit our flexibility to remain competitive.
9. Now add in our national issues - huge deficit spending by our government, failure to deal with looming financial issues like Social Security and health care, an education system that is failing to deliver 'workers' with the knowledge, skills and experience required to 'own' the top tier (most profitable) high technology industries where our life styles could be sustained and the sum of this mans fears paint a picture that could turn out far more difficult to withstand than the current real estate problems we are chatting about.
For me, its only a matter of time - how long can current political behavior avoid paying the piper?
Thanks for listening
The housing crunch is simply one example of us all scrambling to get to higher ground before things begin to crumble and large numbers of us getting caught on the slippery slope...