Telling it like it is....

I read an interesting report from Marketwatch today. Now...I'm no economist (matter of fact, I'm about as far from an economist as one can get...but that's beside the point). But I DO have an eye and an ear for history. From that perspective, I find the blunt message, buried in the midst of another review of jobs data, quite interesting:

What might the markets be seeing that most of the rest of us, at least consciously, are overlooking? Richard Russell, editor of Dow Theory Letters, believes at least part of the answer traces ultimately to the disparity between wages in this country and what is paid to workers elsewhere in the world.

"China, India and Asia have suddenly entered the global economy, and they confront us with a huge disparity in wages, an enormous, willing work force, and steadily rising skills and technical know-how. Plus, I should add, a fierce work ethic almost unknown in the US and Europe today. Asians don't work for the good life or for luxuries. At this stage of history, Asians (China, India, Asia) work for three meals a day to survive."

As a result, Russell is sure that "the standard of living in the West will decline, while the standard of living in Asia will rise. There's going to be what I call 'the great equalization.' At first it may be subtle, almost invisible, but in due time it's going to burst out into the open. It has to. To my mind, what I say in this paragraph is as sure as two and two equals four."

Hey...there are people out there who have not gained from the wealth generated by Western nations since the colonial period of European history. Now, the playing field is leveling and the natural effect is obvious: talented people who are willing to work hard are rising to the top. If they also happen to consider $3000 per year a great salary (as opposed to $30,000), then the work is going to go there. With time, wages will continue to rise - as wages begin to stagnate in the richer nations. So is the answer economic nationalism? An attempt to dig in and prevent wages from rising in those countries? I think not. In the end, that's not much of a choice anymore anyway. Globalization has tied to economies of too many countries too tightly together for nations to begin erecting high trading barriers. Of course, now we move out of the realm of spotting historical trends and into the realm of presenting approaches designed to deal as best we can with this levelling. I imagine I'll have to leave that to the economists....