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There is simply no way to escape the logic that if US polciy makers continue to allow to US to be a poor place to invest because of the reasons cited earlier more investment flows will move offshore.

Yes there is. It is called restoring China to enemy nation status. It is called revoking MFN status. And kicking them out of the WTO. And restoring the proper protective tariffs to ensure the vitality of key U.S. industrial sectors. China's inducements are NOT replicable in the U.S. Slave labor was abolished in 1865 as you recall. And that slave labor IS the almost SOLE advantage the PRC has. The infrastructure is minimal. The language barriers are real. The 'political correctness' police are omnipresent and oppressive. 5 laborers are needed for every American needed to do the same job. The lack of pollution controls is also not replicable. The lack of worker-safety codes in not replicable. The Chinese strategy of employing a tax-limited oasis currently extant, is a temporary suck-the-stupid-capitalist-idiot-into-the-noose strategy long-familiar to communism's practitioners. Once the industry is 'captured' the nationalization...and expropriation will follow.

"You wanna put government regulations on me right away?"

I don't wanna; but, I would suggest that that is what will happen if we don't reverse course and start building that middle class back up. There is a reason why the aristocracy allowed a middle class to evolve, and it wasn't done as an altruistic pursuit.

"Yes there is. It is called restoring China to enemy nation status..."

I essentially agree with your position on China. China should be treated as a National Security threat and not a trading partner. I also believe that a number of American and European business leaders have been childishly credulous about the assertions of the Chinese government and will lose billions of dolars in direct investment if the Chinese liberlization project fails.

I would add, however, that is is wrong to assume from the very special Chinese case that all other jurisdictions attracting US direct corporate investment are using police state tactics to create a docile labor force and other advantages not available to Democratic governments. The simple fact is that a number of these jurisdictions are using intelligent government policies to attract foreign direct investment. They don't treat corporate investors like potential criminals and they subject them to endless, harassing lawsuits. Actually treating corporate direct investment in the US as SOMETHING GOOD and to BE ENCOURAGED is a policy that COULD BE undertaken in the US. It would probably require that the entire plaintiffs bar be shipped to a concentration camp in Arizona for an indefinite period of time.