Quote:
Originally Posted by WI wide body
What you are basically saying is that if our economy drops to the level of China then we will be just as competitive as they. Not sure how that will play with Joe Sixpack when he discovers that he might have to work for $0.81 cents per hour.  |
Actually, I think it works slightly differently. As the Chinese economy grows and matures, all of the billions of Chinese who have moved off the farm and to work in the cities will...
- Want the latest cell phone
- Want a huge HTDV
- Want a nice Audi sedan that's bigger then their neighbor's
- Want to travel more and see the world
- Want to be paid more so that they can have all of those things
- Not want to work 60 or 80 hours a week, since they'll have no time to enjoy all of the above
- Want a bigger apartment or even a detached house
- etc, etc, etc
Suddenly...
-- their labor rates aren't so cheap any more!
-- their raw materials are not so easy to get, and have to be transported further.
-- Their population ages as they have fewer kids
-- Their medical costs go up due to pollution
-- etc. etc. etc.
When that happens -- do you know what will separate them from the US (and some economies in Europe)? Innovation. It won't be good enough to be able to just make the same old widgets cheaper then before. The production of widgets will no longer be a high value added activity since the people in India/Africa/Newfoundland will be willing to get paid less since they have a lower cost of living. The key will be innovation. Who can come up with new ideas -- whether they be technology, web content or artistic content, it's the new ideas that will ultimately separate the winners from the losers. If you can come up with a new idea that people want -- you'll be paid well. If you want to follow-the-leader, then fight the pack.
Getting back to the point -- the value of the dollar. Much like individual stocks and the markets -- it will go up and it will go down. Don't sweat the noise -- look at the fundamentals and the innovation.
('Sorry for unloading like that!)