I have asked the same question to my professors and I have yet to get an honest answer. They are so into the fact that comparitive advantage works, that the only answer I ever got was the gov't is suppose to retrain displaced workers. Well that's grand and all, but what about the jobs left?

here's my opinion. We've got roughly 330 million people. I would surmise we only need about half that. The middle class is a social engine for control. Everyone hopes to get there and hardly anyone makes it out. There are fewer ways to make it into the middle class and they are being wiped out by inflation and debt. The lower classes are doomed as they are in a global labor arbitrage game they can not win since the costs of living are so much higher.

Meanwhile the middle class is getting squeezed like an orange between looking upper class and servicing the debt to do so. In the meantime they are mostly oblivious to the coming disasters. The upper class will always be this way and they are not worried about labor issues as they are now truly global in that many US companies now derive a majority of their revenues from outside this country.

The only snowball in hell's chance is to gain an edge in information and utilize skills that are locally specific. It's hard to say what will happen but planning for what could happen like reduced globalization but you've got to keep in mind paradigmes are resistance to change and we'll find every way to maintain the status quo.

Shawnott: Not a problem for the companies. The middle class (consumers) are growing rapidly in Chindia. I am always shocked how most Americans are unable to visualize a world economy that is not dependent upon the American middle class consumer.

The one "good" thing I see coming from this is, as the upper middle class and middle class become devalued down closer to lower class, the political majority will swing from corporate / capitalist to liberal / socialist.

I fear the lag time between elections and lag time for americans to realize they are now lower class will be far too long.

Around the Detroit area a popular bumper sticker reads "Out of a job yet? Keep buying foreign".
Incidentally GM's Bob Lutz was on a local show AUTOLINE DETROIT
http://www.autolinedetroit.tv/# (warning long load time)
calling for a "Manhattan type project" to address both fuel economy and global warming. Sounds like he's getting the "word". I wonder if he's read "Twilight" or TOD?

The last time anything at all like this happened - the 1970s - the thrifty people with "money in the bank" were looted by means of both rampant inflation and the Savings and Loan taxpayer bailout, in order to provide a free ride for the "FWO"s of that day. In the end the FWOs weren't - instead, they made out like bandits by eventually paying off their debts in grossly inflated dollars.

Maybe it will be Different This Time Around. But it's not clear how much to bet on it. So far, the discussion seems to center on the government just giving the potential FWOs the houses they never paid for, and balancing the books by yet again looting the thrifty. So precedent and politics, at least since the mid 20^th century, do not particularly endorse thrift. Instead, they say that "money in the bank" is simply flushed down the drain.

The FWO will form the basis for a real fascist government in the USA and Canada too. The Neocon adventure was the American "beer hall putsch" and we should be prepared for the real fascist take over when the FWOs vote them in with a much clearer mandate.

I wish we could afford the life we are living.

"Better-heeled failing home economics too"
As more owners are unable to make higher payments, Deputy Strickland finds himself evicting people in nicer neighborhoods.

http://www.latimes.com/business/la-fi-evict6may06,0,5268127.story

Hell hath no fury like a FWO who has had his SUV repossessed and his McMansion foreclosed upon.

This is my big worry. Someone upthread mused that people might be driven to a more socialistic view of things. I wish I could be so optimistic. How will the middle class react as it crumbles? My fear is that it will sign on to the empire project, saying we need the oil -- let's go get it.

WT,

Have you read "The Millionaire Next Door"? It supports many of your ELP points. In a nutshell it points out that those living within or below their means comprise the majority of millionaires. Having researched it by questionnaire, they report that the guy driving the Ferrari or Mercedes is often basically broke, while the one driving the 15 year old Volvo or Ford is often a millionaire. It was really quite interesting. One of the areas that also really surprised me was an analysis of millionaires by country of background. There were, proportionally, very few English millionaires, very surprising considering the significant impact of Britain and the leadership position of the English on the development of the US. There were a disproportionate number of Scottish millionaires, which actually didn't surprise me that much. I am part Irish and have seen the frugality and conservatism with which this group approaches finance. The group with the greatest percentage of millionaires per capita in the US ... Russians. That surprised me. One might speculate that there is some serious emigration bias going on considering the difficulty of conditions in formerly Soviet Russia, but having embraced capitalism and now loaded for bear with oil and natural gas resources it gives one pause. I guess I had heard the saying somewhere that the Russians are the best horse traders in the world. Putin hasn't dissuaded me of that with his use of ostensibly marketplace issues to let Europe know, -oh by the way you freeze in January without our natural gas.

My belief is the only thing we have left is capable people in the largest companies. From what I've gleened, those in upper management (talked to a few at a luncheon) know about the globalization labor issue. They understand the big picture and they are exploiting it for their companies gain.

I think upper management will close ranks so to speak and once you start chipping at the margins as to WHO in upper mangement could be outsourced, you create a situation where all bets are off so why not move the world HQ out of America? Oh halliburton already is and at some point it will become a serious question. Why stay in America when the rest of the world has caught up and strategies for growth can't be HQ'd in a deflating country.

I will say this. I dont think the exec's have a whole lot to worry about. The capable people rise to the top's of the pile. They find ways because that's WHO they are. The posers will be eliminated and the talent remaining will be superior. 26% of China has a higher IQ than our entire country and 28% of India is higher. Puts things in perspective....no?

Ultimately you end up like the Dutch East Indies Trading Company. Founded in the 17th century, it existed until the 19th century as I recall and was immensely wealthy. But all it was at the end was a holding company for assets of other companies elsewhere around the globe.

Ghawar Is Dying
The greatest shortcoming of the human race is our inability to understand the exponential function. - Dr. Albert Bartlett