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Yep. There's another problem, though, that I don't see us getting around. The standard of living in the US has been very high, especially compared to what we'd usually refer to as "emerging markets," India and China, especially. A guy in India who is very bright and very competent is working 14 hour days in a fairly high tech field and maybe has a moped.

Post a picture of a Tata, which is a dream car for the average Indian, and you'll get about twenty FR posters laughing at it. Top speed of 60 mph, no A/C, two cylinder 620CC engine (a lot of people here wouldn't have a motorcycle with an engine that small.) It's our joke and their dream. How long can we continue to keep our end of the bathtub full while theirs is empty? Globalization is a reality, and your point that Apple can't build their products here cause they'd cost five times as much is exactly true.

I think we need to factor in that the prosperity we enjoyed as a country, despite the socialism FDR and LBJ put into it was because after World War II, we were the only major world power that was not blown up to one degree or another. Germany was turned to rubble as was Japan. France was occupied and on rubber legs. USSR was beaten up to one degree or another. The UK took her hits, rationing wasn't totally gone until 1954. Italy was a basket case. That left us, being untouched.

We had a good game going from 1945 until a few years ago. Noted libertarian, Robert J. Ringer, said that had it not been for the computer revolution of the late 1970's and early 1980's that spurred on the internet of the 1990's until a few years ago plus adding in Ronald Reagan's economic policies, we would have had our collapse by 1985 or 1990, almost a generation ago. The rest of the world has caught up and/or catching up to us, plus you have Red China and India emerging. They want the same goodies we have.

I think overall, we will have to get used to a less affluent lifestyle. Yes, we will still have our homes, cars, air conditioning and so on, but we might have to get used to a smaller home and buy a car every 7 to 10 years, if not longer. We might have to get used to the lifestyle our parents or grandparents had, we might see multi-generational households that were more common prior to World War II. Maybe the prosperity we enjoyed was a historical aberration.

Little note: I went to the local Hobby Lobby to buy a small set of acrylic paints. They had four different brands which were similar in product quantity, etc. Two were made in the US. One was made in Europe. One was made in China. The US and European sets were over $20. The Chinese one was $5. Back to our original points. If the US is to be competitive, working low end jobs has to become more profitable than welfare, meaning we have to quit paying people not to work. People say they want American products, but are not willing to pay four times the price for a US product. The first products that went overseas were low-skill products, like clothing. Now, emerging markets can produce high tech products better and cheaper than we can, and increasingly, design is moving there also. We've put off the equalization of standard of living by borrowing, but we've reached the end of that road. A lot of people are not going to like what comes next.

Normally if all nations played by the same rules, more or less, 1rudeboy would be correct. Unfortunately, they do not and sometimes we might have to go against the rules in the book in order to survive and prosper. WE cannot put up barriers so high that trade is hurt but we cannot let in lots of stuff that would hurt our prosperity, or what's left if it, either. Also, we are in debt and without some forms of industry and so on, we will never pay it off. Heck, I don't think we will ever pay it off anyways, but that is for another topic and time unless any of us wants to take it from there.

If I may say where 1rudeboy is correct on is that we have priced our labor up through too high demands from unions and regulation along with taxes. I agree with him on that one, we do need to make our country more business friendly but with a lefty Congress right now and the "Kenyan in Chief" in the White Hut, that is about as likely as making monkey's fly out of my butt.

Good post.

As to your comment about multigenerational households, my daughter, in her thirties, continues to live with us, and works full time. My wife and other daughter look after the house, and we are able to have a higher standard of living than we would otherwise.

Also, we are in debt and without some forms of industry and so on, we will never pay it off. Heck, I don't think we will ever pay it off anyways, but that is for another topic and time unless any of us wants to take it from there.

I suspect that the ultimate plan, if there is one, is to inflate our way out of the debt. I've already noticed some significant inflation in foreign manufactured products that can't be reduced in price by finding cheaper manufacturing processes. A Canon professional camera lens (300 2.8L) has increased in price from a little over $3000 to $4500 in the last eighteen months. The replacement camera for my current one (Canon 1D Mark IV) is $5,000. The previous model was $4000. This is a departure for Canon, who used to keep their price points the same when upgrading to a new model.

Inflation that reduces our foreign buying power could force some manufacturing back here, although I can't see much happening if regulations and taxes continue to increase. Also, business people now are concerned about the instability of our government. Not so much that it's going to collapse, but that sweeping new regulations will change the rules overnight. Businessmen feel safer dealing with China than the US, right now.