Like the tides, or Brownian motion, or plate tectonics, the global economy often feels like a force beyond our control.  Yet the irony is, unlike the first three, economic forces are entirely the product of human interaction.  It is humans, after all, who make the buying and selling decisions.  It is humans who decide whether to close a plant in the United States or open one in Mexico or China.  It is humans, acting through their governments, who decide whether to subsidize a particular industry or impose tariffs on another.  It is you and I who decide whether to buy used or new, Honda or Toyota, Chevy or Ford, Mama's Deli or Bob Evans.  We make the economy run.  We create the winners and losers.

One major shift in the global economy is the movement of manufacturing jobs to low-wage countries.  The July 11th issue of The Kiplinger Letter predicts, "More U.S. manufacturers will migrate to China or go belly-up.  Affected industries cover a wide range, including auto parts, cosmetics, glass, appliances, electronics, furniture, plumbing fixtures.  They will go the way of apparel, TVs and toys…already gone to producers overseas, where wages are low and regulations less strict."

Kiplinger predicts Ford and GM will import ten times more parts from China by 2010 than they do now, with DaimlerChrysler also insisting on "China prices."  The letter continues, "Fierce competition is pushing suppliers abroad, often to China, where labor costs are a tenth or less of what U.S. manufacturers face."

Stories like this, about massive global shifts of capital and jobs, get a lot more interesting when you consider that 2800 Marion residents work in the world's largest dryer plant here which is facing ever-stronger competition from Korean, Chinese and Mexican manufacturers.  Or that several thousand jobs here involve making finished cars or parts for them.  When sales of new cars slow because incentives have worn off or there's a glut of late model used cars, Marion families feel it through production cuts.

Why are there such huge discrepancies in wages?  One reason is the differences between free market and controlled economies.  In every case I can think of where an economy has been run by the government, it has failed to produce markets, failed to encourage entrepreneurship, and failed to produce significant wealth for its people.  Consequently, as these economies emerge from their slumber, workers find even low wages better than the low standards of living they faced previously.  In a country like China, teeming with over a billion people, there is no shortage of workers willing to make fifty cents an hour for 12 and 14-hour days. 

Because of their limited domestic markets, however, enterprises in low wage countries are dependent on the more developed markets of North America and Western Europe in which to sell the output of their new plants.  Eventually, there will be a leavening.  As American companies make the choice to move production and jobs overseas, the robust American market becomes a bit less robust.  Meanwhile, though, the Wall Street Journal reports Chinese workers are gaining a voice and demanding better pay as labor reforms begin to take hold.  Over time, as their earnings more closely reflect the value of their labor, domestic markets will grow in today's low-wage countries.  But how long will it take?  And how much of American manufacturing will go away in the process?

One school of thought is, "we'll replace manufacturing with technology."  But what good is technology without a productive enterprise in which to apply it? 

Eventually, even the global economy comes down to you and me.  We want ever-higher prices for our services, but lower costs for the things we buy.  We're oblivious to the source of the products we buy--as long as the price is low.  Can we have it both ways?  Sure--right up to the time when there's someone on the other side of the world willing to do your job for a tenth of what you charge to do it.