Are We Doomed to Get Poorer?

This started as something fairly simple. My thoughts on this started in regards to a comment I’ve seen on almost every social platform, even Youtube and that is the idea that in some small way, American is doomed to get poorer as our standard of living and our incomes level with the rest of the world. It is no secret that the American standard of living is in the top 5% of the world, only Australia had a higher standard of living that we do. However, thanks to the modern global economy I posit this single idea: Americans are doomed to get poorer because there is a great leveling happening worldwide.

Globalization

Thanks to globalization, the economy has gone global and is very interdependent. Economics can only be thought of in a global sense. Companies now do business all over the globe. Even small companies end up buying products that are produced elsewhere. Suppliers source parts made elsewhere. Everything comes from somewhere and more often than not, the “elsewhere” is far away. Capital always gravitates towards the place of greatest return and in our modern economic environment, labor is one of the few places where companies can cut costs. Commodities are fairly fixed in price meaning that inputs will be priced in a way that most companies can only control through futures. Most companies that supply parts that go into making real goods buy from suppliers of raw inputs that in turn buy from the companies producing those commodities. Most companies don’t own their own mines or their own steel mills. That represents a huge…