Re: Life under the bridge for techie California outcast


Straydog wrote:
> On Sun, 4 Dec 2005, Kamal R. Prasad wrote:
>
> >
> > Straydog wrote:
> >> On Sat, 3 Dec 2005, Kamal R. Prasad wrote:
> >>
> >>>
> >>>>>>>>
> >>>>>>> does that take you (americans) any closer to abandoning an exorbitant
> >>>>>>> lifestyle in return for more jobs?
> >>>>>>> if it does, then maybe you can tell that to your elected
> >>>>>>> representatives i.e. that you need a cost+ std of living in line with
> >>>>>>> your productivity so that more employers will opt to hire americans
> >>>>>>> VOLUNTARILY.
> >>>>>>
> >>>>>> According to the book (by Duncan) I just finished, he expects the dollar
> >>>>>> to collapse at some point in the future. When that happens, all that USD
> >>>>>> flowing into India will come to a stop. You will starve.
> >>>>>>
> >>>>> No -when that happens, purchasing power will shift out of the US to
> >>>>> countries which provide higher productivity and americans will buy
> >>>>> fewer luxury goods and won't need help from politicians in securing
> >>>>> their jobs i.e. their job oppurtunities will be commensurate with their
> >>>>> skills and not their nationality.
> >>>>
> >>>> 1. How can you not understand that when the dollar collapses, all of the
> >>>> India-USA exchange rate will reverse. *We* will be the cheap labor and the
> >>>> money will come to us.
> >>>
> >>> No -and to understand what Im saying, you need to understand the term
> >>> Purchasing power parity.
> >>
> >> Go back and re read above. I _started_ by talking about a statement in a
> >> book written by an economist with some ~15 years experience analyzing SEA
> >> economics and working in SEA. I said that he said the dollar will collapse
> >> in the future. This was not exactly a response to what you said, but your
> >> response to what I said was not, either. However, you _linked_ your
> >> response to mine by starting your sentence like this: "No -when that
> >> happens, purchasing power will shift out of the USA...." And, I can tell
> >> you that every book or article I've read says that if the dollar
> >> collapses, then everything made in the USA (manufactured or service) will
> >> become cheaper and two things will happen: i) our exports will go up
> >> (because they are cheaper), and ii) our imports will go down (because it
> >> will cost more to buy imports). And, this contradicts what you say will
> >> happen.
> >>
> > all true.
>
> Fine. Good. Thank you.
>
> >> Im not suggesting a collapse of the USD. What
> >>> Im suggesting is a rationalization wherein $1 buys the same goods &
> >>> services in the US as in India.
> >>
> >> The only way $1 will buy the same in India as in the USA is if the USD
> >> does collapse.
> >>
> > not collapse completely but reach a resonable exchange rate -is what I
> > meant.
>
> OK.
>
> >> This will lead to same cost of living
> >>> (as far as necessities are concerned) between these 2 countries. When
> >>> that happens, neither will it be cheaper to hire americans nor Indians.
> >>> If work shifts from country A to country B, it will be solely because
> >>> personnel in the other country are doing a better job.
> >>
> >> And, the only way this can happen is if the dollar collapses. Or, if you
> >> can come up with a different cause, please tell us.
> >>
> > there are 2 things that matter (a) cost of living b) std of living.
> > Both need to come down in the USA for there to be parity or vice versa,
> > when the USD achieves parity -both will come down but not crash down.
> > Parity =equivalence not complete deterioration.
>
> I think not. We already have a gap between the wealthy and the poor which
> is growing. The rich will never see a decrease in standard of living, no
> matter where they live. The poor will simply be able to afford less of a
> health plan and medical care or they will not have any health care. Maybe

Health care is a lot affordable in India than in USA. Medical insurance
provides coverage only for hospitalization in India. The rest are so
cheap -insurance is not necessary.
When I say cost of living comes down -it means everything from house
rent to medical insurance to food and other basic necessities come
down. And all of this is in relation to cost of living of OTHER
countries not wrt other sections of society within the same country.


> that will make you happy. But, I see, also, a growth in average standard
> of living in India as its economy grows. YOu will still have people in
> poverty and YOUR rich guys will get richer, and there will be more of
> them.
>
When a country shifts from socialist economy to fre-market capitalism
(as India has done), it creates disparity of income -which is what you
are refferring to.

> The only problem with standard of living are unwanted endpoints:
> exhaustion of non-renewable resources, production of polution, global
> warming, waste, etc. If I take the optimistic viewpoint, then to some
> degree or maybe to a large degree some technical adjustments will correct
> this situation.
> \
No -the problem at your end is the non-essentials like a BMW/SUV etc..
and all kinds of electronic gadgets. When your std of living comes
down, you won't have to shift to a smaller apt or eat less food. You
will just find these things unaffordable as they must have been a few
decades back (ot whenever the USD was not finalted) or at least they
will cost a multiple of the basic necessities of life. When that
happens, the labour market will become competitive and employers will
not shift out work to cheaper locations -because the basic necessities
cost the same across countries.


> The cost of living is where the whole debate is. Whose cost of living? Why
> is it different? When will it re-adjust? We can speculate endlessly on
> this. One thing I see in all of the curves of past data on prices, and all

Your cost of living is much higher than that of the countries to which
work is being offshored. It can adjust either because the USD gets
devalued or because other countries experience tremendous wage
inflation. The latter means that as salaries go up, the rents/mortgage
prices go up, triggering even more salary hikes and so forth till the
cost advantage of shifting work to these cheaper locations diminishes
drastically. That is what happened to Japan but it took about 20 yrs to
happen. And unlike Japan, India is huge.


> economic and banking curves is that none of them are flat lines. They are
> curves that go up and down, sometimes slowly and sometimes rapidly. The
> problems are when everyone suffers like recessions and depressions. I see
> no one successfully predicting these and most of the "patchwork" to fix
> the problems are temporary and partial fixes.
>
You are referring to intra-country issues, and Im referring to
inter-country issues.

> Another solid criticism of your posts is that you still ignore the rest of
> the world. I have no idea why you think only in the US the standard of
> living must fall. Japan and Europe are also high standard of living areas
> and I can assure you that they will not like the idea of a decrease. In

I do not know much of these countries to make a comment -but I don't
deny that this is a problem that confronts all rich countries.

> China, their standard of living is going up. In the lase 1-2 years, from
> statistics I've read, they are now consuming 8% of the worlds oil while we
> are consuming 20%. The Chinese have certainly come up in the world and
> very rapidly. When India gets its economy better developed, do you think

Yes -but their economy is heavily dependent on supplying goods to the
US. If the USD loses its purchasing power, they will not be able to
sustain their growth i.e their major customer will stop importing goods
or default on his bills.

> lots of people will not buy cars? I know of no society in past history
> which _voluntarily_ took cuts in standard of living.
>
Umm. to give you a similar but not the same example -England was in the
same position a few decades(?) back. The British pound was heavily
inflated and unemployment was rife. George Soros shorted the British
Pound in the currency market and made his fortunes from that. At that
time, they were living extravagantly beyond their means and it kind of
came down crashing. (This info is gleanded theough what I read about
George Soros and not about the British economy -so it may not be
entirely accurate).

> >>>> 2. Even if the USdollar goes to 1/10 of what it is now, we will still have
> >>>> hundreds if not thousands times more money than India will have.
> >>>
> >>> Its not relevant. Im not suggesting a re-distribution of wealth or
> >>> poverty.
> >>
> >> But you don't like our high standard of living (because it is
> >> unsustainable). You don't want "re-distribution" of poverty? You mean you
> >> want to keep all the poverty that you have?
> >>
> > if Indians continue to remain uneducated or unemployed, a
> > rationalization will not chane the landsape in India i.e people will
> > contine to remain poor.
>
> OK
>
> > Likewise, devalung the USD to achieve parity
> > does not mean that mddle class people ithe US will end up in ghettos.
>
> I think many people would say that we will no longer get all that cheap
> manufactured goods that are imported from everywhere but now mostly China.
> So, in terms of a material life, yes, that will represent a decrease in
> standard of living. And, it will represent some decline in our economy
> (more expensive goods will not sell as much, thus fewer salespeople,
> fewer stores).

... but when foreign goods become unaffordable -locally made goods will
become affordable and more americans at the low end will find jobs i.e.
the size of the lower & middle class will increase at the expense of
those who could do with the current import binge.

>
> > Their counterparts taking up offshored jobs are also living middle
> > class lifestyles -but with lower purchasing power.
>
> Well, if I understand your sentence, then that is not my problem unless we
> talk about what do our guys do after their job goes out of the USA and
> they still have to pay bills and the only US jobs left are jobs that pay
> less.

you didn't understand my sentence. If your purchasing power is to drop,
it will not require living in ghettos to retain your job. You will
still be able to live a middle class lifestyle as we do, but with a lot
less purchasing power. A merc would be affordable to a company owner
and not to a worker.

>
> >>>> 3. It will be many years before your 50% poverty, 50% no electricity, 50%
> >>>> illiteracy rate will go down to where more than a small fraction of your
> >>>> people will be able to compete with the rest of the world.
> >>>>
> >>>
> >>> When purchasing power shifts to countries with higher productivity,
> >>
> >> When costs of production are cheaper, not higher productivity. YOu can
> >> measure productivity either: i) output per person, or ii) output per cost
> >> (forget the person). It would also be better to concentrate on not
> >> purchasing power but shift in ownership of assets (as in Indian ownership
> >> of US securities, US real estate, US corporations).
> >>
> > no for the working class -cost of lving which translates to cost of
> > labour and consequently a financially unviable labour market for
> > employers is what matters.
>
> Kamal, fifty years ago the USA made almost everything it needed.
> Everything was fine. We have been over this before. It all boils down to
> technology allows certain kinds of work to be exported, and many kinds of
> factory products to be made more inexpensively in certain countries

No -technology can export work only if there are cheaper locations to
export to. As you said down this thread, it is a tool which can be used
for both good and bad purposes. The notion of a cheaper location
becomes true once the currency is inflated -but seldom otherwise. As
long as 1$ can buy more in India than it can in the US -it can said
safely that there is no parity.


> both because of cheap labor. And, the 3rd world countries all LOVE to get
> USD. All of these countries could NOT have seen their own economies grow
> without not only help from the USA but _business_ from the USA.
>
true for small economies i.e countries with smaller
populations/geographies. Large countries have a better shot at being
self-contained.

> t doesn't matter who holds the shares of a
> > company -what matters is who can provide services at the right price.
>
> Cheapest price.
>
> But, what matters to me (and lots of the rest of us) is what else happens:
> the loss of our middle class, the decrease in the number of jobs that are
> needed to feed the greater number of people who have no jobs. That is what
> matters to me.
>
and to fix that you need to restore the competitiveness of the labour
market. if americans can offer better productivity than overseas,
employers (no matter how much of a devil they might be) will continue
to retain americans in the workplace.

> >> the
> >>> govt in these countries will be able to spend the same amount on
> >>> welfare as rich countries currently do i.e.
> >>
> >> I will leave that for you and your government to be happy with.
> >>
> >> they will do a better job
> >>> at poverty alleviation & improving literacy rate.
> >>
> >> I will wish you luck.
> >>
> >> Further, people in
> >>> other countries will stop flocking to the US to do shifty jobs for the
> >>> sake of dollars as salaries will be comparable across countries.
> >>
> >> Maybe.
> >>
> >>> Lastly, americans can continue to do the job they like without
> >>> bothering about having their job offshored to a cheaper location -as
> >>> there won't be one:-)
> >>
> >> I won't make such a prediction. I would like everyone to have a job if
> >> they want to work and can educate themselves for that work and I would
> >> like that they make enough money to have a decent standard of living (not
> >> a luxurious standard of living).
> >>
> > your std of living is nothing but splurge by other people's standards
> > and reverting to what t used to be in USA 20-30 yrs back is what i
> > meant.
>
> We have a lot of silly things in the USA (SUVs and cell phones and video
> games) and a lot of silly trends (more people going for plastic surgery
> instead of the pursuit of healthy living) and we have a small number of
> rich people becomeing even more obscenely rich than ever before, but other
> than that, I see nothing wrong with having a car, a decent house,
> plumbing, electricity, and a whole lot of other things we have, including
> the internet. And, I think it is fine for all of the other people in the

if you lead a lifestyle in excess of what your productivity entitles
you to, you risk losing your job to someone who lives a more modest
lifestyle. The fact that numerous jobs have already been lost on this
count is proof that what Im saying is true.

regards
-kamal

.

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