The American Dream

The Recession

This recession has rendered 4 million Americans jobless. People blame it on things ranging from the credit bubble to jobs going abroad. So why do jobs go abroad? Highly skilled workers at very low cost across the globe – in Asia (China, India, South Korea,…), Eastern Europe, and South America.

American politicians talk about “generating” jobs, almost like you can turn on a switch and make it happen. You cannot generate jobs unless you fix two things: availability of highly skilled labor and reducing cost of labor.

The government can only help in the former by giving incentives to universities to recruit and retain the best teachers. Either one does that, or increase the visas for highly skilled immigrant professionals. If neither, then the USA will no longer have the best people – neither home-grown nor imported, and the jobs will move overseas.

Now regarding reducing the cost of labor, that is something that the government can do very little, as it involves a fundamental change in the American psyche. It involves relinquishing the American way of life, the American standard of living, that is, the American Dream.

That is, even if one does succeed in availability of highly skilled workers (either home-grown in universities or imported professionals), one will not be able to produce at the cost at which it is produced in China or India. The American will not want to buy a TV made 100% in the USA, because it is likely to cost significantly (if not double the amount) of what it costs to manufacture in China. This is because you have to pay significantly more (if not double the amount) of salary to the American worker compared with China. This is because the American worker expects a much higher standard of living than that of the Chinese or Indian worker.

The American Dream

Most middle-class Americans want to enjoy the same lifestyle, regardless of what their income can afford them. They are able to do this by running on credits, the credit industry. Everyone wants a big house, a big car, a big TV, etc. Everything is super-sized. In the USA everyone wants to live the “American Dream”, sold to by a rampant consumerism and mass market pop-culture.

In contrast, in other countries around the world (in Europe, South America, Asia,…) people spend and live a life in proportion to what their income can afford them. In these countries, the gap between the lifestyle of a plumber and an IT professional is far more (based on what their income can afford them), and yet they both live respectable and contented lives – i.e. without showing resentment over what they cannot afford. Crime should be higher in these because of the huge disparity in living standards. But they are not. Ironically, it is in the USA where crime related to haves and have-not’s are the highest.

The average middle-class worker in the USA would be having a comparatively luxurious house (compared with his foreign counterpart). It would be fully carpeted, central a/c, central heating, over 1000 sq. ft. living area, front/back yard, refrigerator, microwave, washing machine, dishwasher, a 30″ HDTV, a huge gas-guzzling vehicle (like a truck or minivan), and so on. Giving the illusion that he has a higher standard of living for the same type of work (compared to his foreign counterpart). When in reality he’s running on a significant amount of loans and credits — because the banking and credit industry (in the “great American tradition”) hands out credits as if they were balloons. All it needed was for the balloon to pop. The credit bubble was created in the first place by bankers, which in turn was created by the USA government when it prints dollars, like when it needs to bail out the banking industry.

It’s still mind-boggling that the US national debt is over $1 trillion. Now wouldn’t any country with a $1 trillion pocket change be able to achieve a similar higher standard of living? Conversely if the USA did not have a debt of $1 trillion, its living standards would certainly be not what it is now. It will still have a reasonably better living standard than the rest of the world (because of its strong infrastructure), but at the very least people will be living in more modest houses/flats in proportion to what they earn (like the rest of the world does), instead of living in an unsustainable dream or illusion.

And even those who have made it big, “the American Dream”, have tons of stress related problems and frustrations in making ends meet (the tension of covering their loans), compared with the modest and contented living a person say in any other country (like even our neighbor Canada or interior Europe).

Conclusion

About half-a-million homes were foreclosed during the recession. The reasoning for this is also not a rocket science. This happened because Americans spend on things way beyond what their income can afford, being lured into the trap by the credit industry’s promoting of the “American Dream”… and up in serious debt (like loans, credit-cards, mortgage, etc).

Even if the USA were to secure its place as having the number one skilled professionals, unless there is a fundamental change in the American way of life, to be able to accept significantly lower salaries, and the proportionate lifestyle and spending, they cannot be competitive in the global marketplace.

As the saying goes in Hindu philosophy, everything works in cycles. While emerging economies start embracing Western artifacts like consumerism… developed economies that have been saturated by consumerism will start embracing Eastern artifacts like yoga to deal with the anxieties introduced by consumer culture.

I can see the budding of the “Indian Dream” in India, thought it is very localized (not as pan-national as the “American Dream” in the USA), in IT cities in India where people are going crazy with the introduction of credit cards and very liberal loans.

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