Globalisation is destroying cities
Unfortunately, the Americans don't understand what the root cause for this trouble is. People point to the housing market as the problem -- and that, obviously, has been a factor -- but what really caused the problems . . . greed? Oil prices?
My analysis is that it is globalisation itself that is about to destroy the US economy.
Globalisation is the process whereby the entire developed world is going to compete itself to death by looking for the lowest labour costs. If the US does it, then Japan needs to do it and Europe needs to do it, etc, in order to remain competitive. It's a very clear set of economic incentives and likely outcomes.
Massive numbers of jobs in the computer industry are being outsourced to the Third World and the cost of computer technology is still decreasing in price at about 50pc per year.
Where are all of the smart economists who are looking at the impact of this extraodin-ary economic phenomenon?
Computer/internet technology/outsourcing is undermining the very basis of the US economy through its impact on the labour market. It also affects the need for cities -- where most people go for work every day and where the most and highest-priced housing is found.
Jobs can be outsourced to low-cost foreign countries and rural areas (via telecommuting), making cities (and their associated real estate) less valuable.
Bailing out the stock market one time won't solve the underlying problem. And the US won't be the only developed country that is affected.
Unless the G8/developed countries get together and decide to limit competition based on labour cost and outsourcing we're headed (I'm afraid) towards the biggest economic death spiral that anyone has ever seen.
NAME AND ADDRESS WITH EDITOR
