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....You are hoping for a scenario that would pretty much ruin the country.
You are right about the effects of deflation, but I am not hoping for it. I am proposing an alternative to having the job move overseas. Also, the scenario you present is an extreme example of deflation. Would inflation, caused by the imposition of tariffs on the goods produced, be better?

That's a hell of a choice. Lose your left leg, or only your left foot.
And life's not fair. And the poor little old lady living only off social security because she chose not to plan for retirement has to choose between medicine and food. *sob*. $35,000 a year is enough to live off. I promise.

If we want to enjoy a higher standard of living than the rest of the world in a environment where (a) global free trade rules and (b) many highly productive workers in the developing world (like China) CAN"T because of various local factors easily turn their own ever increasing productivity into ever increasing wages, then the ONLY answer is that US workers have to be and become VASTLY more productive than workers elsewhere. Otherwise, jobs will indeed inexorably flow from here to elsewhere.

The main problem is that in the process of becoming vastly more productive than the rest of the world, many unproductive workers will be shed. Some of the "discarded" unproductive workers will find jobs in more productive sectors of the economy. But many will not. It's just a simple fact of life. That's the real reason we need a social safety net at all -- not to support those who "won't work" but to make possible an economy that regularly sheds unproductive modes of work, sometimes leaving in its wake vast dislocation. the social safety net needs to ameoliarate that just enough not to include perverse disincentives to labor.

But the bottom line is that unless and until there are a set of global labor standards and laws that serve to translate productivity gains in places like China or India or Mexico (and on and on) into significantly higher wages for workers in those places, work done here at relatively high wages by less productive workers will flow to where it can be done for lower cost and more productively. There's no way to stop this process except by means that will make everybody worse off in the end.

Think of globalization as involving a great sorting out of who gets to do what work at what cost. Eventually, we'll come out alright, but there will be lots and lots of bumps and bruises along the way. The mistake would be to adopt policies (like tarriffs and other trade barriers) that might appear to smooth out the short term bumps and bruises but would be disasterous in the long run. Better to adopt policies that hastens, rather than delays, the shift to more productive work, including, on one side of the coin, policies that encourage capital formation, trade, and the like and, on the other side, policies that encourage labor mobility, re-training, etc.