Voodoo economics

I was a little troubled after watcing Frontline's documentary on China and Wal-Mart on PBS last night. There wasn't anything in their that I didn't already know: the manufacturing of virtually all consumer goods has been exported to China. Prices for consumer goods in the US have decreased. Inflation is kept in check. Wages have decreased. Cities dependent on manufacturing have become veritable ghost towns. The United States exports nothing to China because its people, mostly earning between 2 and 8 dollars a day, couldn't afford to buy anything we make.

So, reading through a couple of columns on Yahoo Finance, I came across three interesting articles.

The first, by Ben Stein, tows the line of conservative economic dogma. Lower prices mean more available money for the consumer. The availability of the extra money is a benefit to the economy. Many jobs are being exported, but, somehow, somewhere jobs are being created that make up for it. Trust me, life is only getting better. Yadda yadda.

As a bleeding heart leftie, my problem is this... Our government conspires in a system that helps jobs be exported and cost-cutting consumer goods be imported. The same government demonizes those who have lost their jobs as a result of these policies. And if these same people need to rely temporarily on programs such as food stamps or welfare, they are excoriated. The government needs to recognize that if they are complicit in the destruction of local jobs for the greater economic good, those who have lost their jobs cannot all be lazy welfare queens, and it is the responsibility of government to help with retraining and to provide temporary cushions to protect those in need.

The second, by Charles Wheelan, says something I think is more intellectually honest. He notes that many jobs don't provide a living wage, but having some money is better than nothing. He believes in the value of the earned income tax credit to help protect those that do work but can't afford to live on what they have earned.

The third, by Robert Kiyosaki, is the most interesting. He frames the debate with respect to China in terms of the cost of assets instead of the cost of consumer goods. While the cost of consumer goods have gone down, freeing up dollars to buy more goods, the value of the dollar with respect to assets -- land, gold, stock, gas -- is worth less and less. Holding onto dollars at a time when the price of assets is increasing is essentially just letting money evaporate.

So, while the system is rigged so that the price of a TV compared to the average wage is holding steady, the cost to buy those things that help build wealth -- property, stocks, gold -- continues in increase.