What impresses me the most in capitalism is how the market regulates itself. It is like a Phoenix that resurrects from ashes – it's not just the market that heals disproportions, but disproportions themselves are so organic and logical that I'm tempted to call them "the beauty of disproportions".

The motto du jour is "cheap labor conservative". What I see is not the malice of a secret "skull and bone" group that plans to make U.S. labor much cheaper, but His Majesty The Market is making it cheaper and there is no way around. The world is getting more round and there is no other way to feed 7 billion of people but to have the economy to be more efficient.

The efficient economy leads to globalization and globalization means the constant quest for more efficient labor. The more complicated jobs are constantly moving to the areas where people are most productive and simple jobs are constantly passed to areas where the labor is cheaper. But that also evens the labor contracts around the globe. If once upon a time the Chinese worker was paid 1,000 times less than U.S. worker, one day he will earn only 10 times less, probably after American worker will become 10 times cheaper and Chinese worker will get 10 times more.

The latest developments in real estate market show me how the American worker will eventually earn much less than in the year 2000. The magic trick is very simple, it is called real estate bubble. Those of us who were not smart enough (i.e. they are candidates to became that "cheap labor") are in the debt up to the eyeballs. Up to now it was fueled by real estate bubble. Not anymore. This article is very well describing the scenario of long struggle against the declining market:

If history is any guide, however, home prices won't peak for a while, said Edward E. Leamer, director of the UCLA Anderson Forecast. When the end of the Cold War caused consolidation of the defense industry, the number of home sales in the Los Angeles area peaked in November 1988 — but home prices didn't top out for nearly 2 1/2 years. “Then the prices began this gradual, painful, slow deterioration'' of about 5 percent a year, Leamer said.

“It's really slow, not enough to drive you totally crazy,'' Leamer said. “It's a little bit of pain every year. If you try to sell, you can't find anybody to buy, and the price is eating into your equity little by little. That's the kind of adjustment we expect to see.''

The families protecting their homes from foreclosure will work hard, for any pay, without strikes and labor unions, without healthcare and retirements. Like Chinese do.

Advertisements