What kind of economy are we creating?

[Zalatix]

29. I know you have no answer for this but what the hell.

The reason why we're in this economic mess is not because the rest of the world "caught up" with us. The reason is because the rest of the world offers cheaper labor than we do. America is far more productive per capita than China or India but their labor costs are what attracts corporations to move American jobs there.

The only way you can beat China is not to bomb them - it's to have lower wages than they have, or to devalue your currency against theirs. And we're doing both. THAT is why manufacturing jobs are coming back to America.

http://blogs.cisco.com/manufacturing/made-in-the-usa-again/

-- Wage and benefit increases of 15-20% per year at the average Chinese factory will slash China’s labor-cost advantage, reducing the savings gained from outsourcing will drop to single digits for many products.

-- Transportation, duties, supply chain risks, industrial real estate and other expenses will minimize cost savings of manufacturing in China compared to the US.

-- Automation and other productivity improvements in China will further undercut the primary attraction of outsourcing to China: access to low-cost labor.

-- Rising income levels in China will create greater demand for goods in the domestic Chinese market, driving production work for the North American market back to the US.

-- Because of rising Chinese labor costs, manufacturing of some goods will shift to other low-labor cost countries. However, compared to the US, those countries do not have the infrastructure, IP protection or political stability that is necessary to mitigate risk, which will encourage manufacturers to return to the US.

Manufacturing jobs coming back to America:
http://www.washingtonpost.com/politics/us-manufacturing-expands-at-fastest-pace-in-10-months-as-orders-hiring-and-production-rise/2012/05/01/gIQAs4R2tT_story.html

The Institute for Supply Management, a trade group of purchasing managers, said Tuesday that its index of manufacturing activity reached 54.8 in April. That’s the highest level since June and up from 53.4 the previous month. Readings above 50 indicate expansion.

The report, which exceeded analysts’ expectations, led investors to shift money out of bonds and into stocks. The flurry of stock buying put the Dow Jones industrial average on track for its highest close in more than four years.

.............

A measure of employment in the ISM’s survey rose to a 10-month high. This showed that factories are still hiring at a solid pace.