It all comes down to who buys the food, shelter, power, and gadgets that keep modern urban life livable. Once people have built tools that replace labor, what labor is there to do other than maintenance, service, and entertainment of those who OWN the means of production? There can only be so many toolmakers and the German middle class is holding much of that role. Yet as anyone who has seen IT go to India knows, that's only temporary.
Hence, once labor-saving tools and processes were exported to a slave army in China, the Western "working class" largely became superfluous. Once the Chinese come up to speed on toolmaking, so will go the middle class jobs as well. That massive government regulations only made domestic production less competitive only accelerated the process.
This is what cuts to heart of the justification for the bureaucratic state. Regulations exist to mitigate risks otherwise born or managed by the insurers of producers. When we export the production to a "come and get me" producer in China, they not only enjoy the margin of slave labor, they avoid all responsibility for the externalities of production, hazards of use, legal, or environmental. The Chinese are quite apparently willing to adsorb those costs, for now.
OTOH the bureaucratic state is inherently less efficient in managing those risks than a competitive insurance industry, never mind more corrupt. So as long as we socialize those risks because of our outrageous legal overhead and the constant temptation of corruption, SOMEBODY will take advantage of that disparity in costs of production.
IMO, the only way to fix this is to return risk management to the marketplace. That means tort reform and insurance deregulation in a big way.
Well said!