Outsourcing Prosperity 

When the middle class is gone, who'll shop at Wal-Mart?

The last time I was in an economics class, America was only a dozen or so years removed from a period of trade surpluses and virtual isolation. German and Japanese compact cars had made inroads but were still considered a bit of a novelty -- until the real hammer fell in the form of the so-called Arab oil embargo

More than a decade later, about the time Sony bought Columbia Pictures and an investment group including the Mitsubishi family became the owner of Rockefeller Center in New York, Newsweek and The Wall Street Journal were encouraging all of us to learn Japanese -- or else. The Japanese had already crushed the American electronics manufacturers and, as they gathered up all the monies associated with that victory, they were working on the remains of the automakers.

Now China has proven to be an extremely quick study -- to the point where it has become the new bully on the block. It is defining the ground rules and near-invisible profit margins for manufacturers and retailers alike with the help of its new best buddy from Arkansas, Wal-Mart.

Manufacturing -- which largely built America and its middle class, made us a genuine power in the First World War, and saved the freedom of the Western democracies in the Second World War -- is all but dead. And the USA doesn't seem very upset about it. Labor may be reeling a bit from the defeat, but they have become accustomed to diminished and constantly eroding expectations. Capital seems to be doing just fine, thanks.

It would be hard to argue with the obvious conclusion that this is simply the natural result of laissez-faire capitalism. The labor movement of the last century just postponed it for six or eight decades.

Sixty years ago, a lower class kid in Flint, Michigan, knew that he could go to work in the GM plant and, if he showed diligence and aptitude and was patient for 10 or 15 years, he would most certainly be making the kind of money that would push him into the middle class (given the UAW contract at the time, well into the middle class). And his retirement would be provided for as well.

With stock options and so forth, some of those middle-class kids born to plant foremen would find that attending a university might even boost them to the management suites.

There aren't many of those jobs left in the US, and the benefits and guarantees that accrue to those positions are fast becoming a thing of the past.

Working conditions in China and the third world are execrable, but the vast hordes who toil in this human-rights vacuum are going to continue to be in such oversupply that they will literally compete to the death to get a tiny portion of your dollar.

Meanwhile, our increasingly sophisticated manufactured goods will continue to be built by the international low bidder using unregulated labor so desperate that they will barter the lives of their children to provide for your conspicuous consumption. And even as they express gratitude to the local overseer, they will hate you a little more every year for your distant complicity.

This is the definition of capitalism carried out to its logical conclusion: The strong continue to prosper as usual, and the weak must look to the hereafter to inherit what's left of the earth.

When the social burdens of the poor have driven the more capable of the population to seek satisfaction elsewhere, where will our refugees go? Frankly, I don't think Canada can handle it. And most sobering of all: When the middle class is gone and the poor have even less disposable income, who will shop at Wal-Mart?

Dan Johnson is director of computing services for the information technology department of Exel Transportation Services, Inc.

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