Economic Collapse of Saipan... model for Western economies?

[gnome]

Was watching on Current over the weekend...

Thumbnail sketch...

With foreign import quotas on clothing, garment businesses set up shop on Saipan and paid about 1/2 the minimum wage in the USA... garment makers on US mainland complained loudly about the "unfair competition", to no avail. (As Saipan is a commonwealth of the US, "foreign import quotas" do not apply.)

The garment business flourished for a few years with Chinese workers happy to make higher wages than they could make at home.

After a few years, however, all of the jobs were lost to even lower labor costs elsewhere in Asia. There had been 34 garment makers on Saipan at its height... now only 1... and the owner says he expects to close it before the end of 2009. Saipan now looks almost like a ghost town... no thriving business, only a small percentage employed in any capacity.... everybody else basically willing to do anything to earn a day's wage.

Doesn't take much imagination to see the possibility of every manufacturer who is not the low cost producer facing similar pressure... AND to understand all Western government efforts to artificially halt the slide and prop things up at a higher level will be futile. (US auto industry ring a bell?)

The decline is likely to be long and hard... regardless of "stimulus".

 

[allaboutmoney]

maybe wars with the full intention of robbing the country of target can save the economy

wouldn't that create high paying jobs and free resources

 

[ByLoSellHi]

Indonesia is next.

And so on and so on...


Some people call me a pessimist. I swear that I'm a realist.

Time will tell.

 

[libertad]

Efficiency is the bottomline "end game"....

Efficiency explains Iraq/Iran ($5 Lift costs)....China (labor 1/5 or less US)...India (labor 1/5 or less US)....the list gets longer and longer....

What can protect the US ?.....Productivity where there is a competitive advantage....This means that the world/local needs what the US produces, and it is not available at a better price anywhere else (proximity/circumstantial)....

ie BYD makes a battery that gets 250 miles before charges....will fully charge in two hours....and is half the price....This means the US has to beat it ....simple as that....and will of course have interim demand in the adjustment period....But the window will close....

So the real question is what does a country have that everybody wants, needs, and can afford ?
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What is very interesting is the stock market itself....

BATS has proven that the stock market is just a computer program that could be housed anywhere....

This is a program that can be utilized to trade all securities....

My opinion is that this should be housed in a tax exempt country whereby all companies could domicile....

Furthermore all individuals should be able to establish true universal accounts....in the cash currency of choice ....with interest available at Central Bank rates....

Brokers can be replaced with a few well designed internet pages....

Entrants can be boilerplated....

Information can be boilerplated....

Rules boilerplated....

The bottomline is that one would no longer have to subject their capital to the poltical whims of their country....ie move to Swiss Francs with a few mouse clicks....
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The jobs are going to go where they are going to go....based on the needs of the company....
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Thus companies nor individuals are going to get stuck with their governments "crap" when they have true universal accounts....with respect to their savings or cash flow....
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Ok so now that the capital playing field can be leveled on any turf....the capitalist now concerns themselves with where should I place my bets in terms of innovation and production....

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ie Internet based schools could start on the premise that costs will be born after employment happens....the list goes on and on....

Saipan "third worlded" it.... They got a little better off ....and had no future vision....and got spanked for it....

 

[Cesko]

Saipan "third worlded" it.... They got a little better off ....and had no future vision....and got spanked for it....

Plus extreme corruption. Saipan getting money for nothing from U.S.. Where can it lead to?? Model of anything?? Hardly. But it suits Gnome's mindset perfectly.

 

[gnome]

Quote from allaboutmoney:

maybe wars with the full intention of robbing the country of target can save the economy

That WOULD be a way... and was the way countries expanded and increased their wealth prior to modern times.

However these days, such aggression is not tolerated.... as internationally not politically correct. The US has been the major player in stopping that kind of thing (other than our "acquisition" of California from Mexico).

From the US's point of view, a major unintended consequence of globalization has been its bringing into play the concept of "world's lowest cost producer". America is at a disadvantage now where labor is a significant cost in any item.