What this means for you & me is that companies that sell goods in a global market will not have to worry so much about paying decent wages to American workers in order to support consumer demand for the company's products because the new middle classes in other countries will be spending their own money.

On the issue of free trade my mom had a saying:

"You can't live in a nice brick house while the rest of the world lives in a mud hut."

Now people are affraid they will lose their brick houses as the poor of the world upgrade to wood.

Although this is a real fear if you take the long view it will work itself out.

The notion of a global race to the bottom for wages and benefits is a short term understanding of the game. As people get more, their natural noble greed insistst that they demand more. This is what happened in the US when jobs moved from the north east to the south west, and then on to mexico, and from there on to china and india.

But with each step of industrialization the new workers eventually tire of mistreatment, demand more, unionize and get more. Owners may move onto the next country in defense, but it isn't hard to realize eventually, they will run out of countries, and all the worlds workers will demand fair pay for fair work, just as eventually all US workers did.

The US had the unfortunate luck of going first in this global game of industry, which means that yes, many americans may have to trade down from brick to wood. But because of our status as a western nation we won't let people fall into mud huts.

And as the mud huts of the world turn to wood homes and eventually brick, we all will benefit as the power of the worker unites across boarders creating a global consortium of labor setting prices to the owners of what is fair days work for a fair days pay.

All humans are blessed with greed, and the same greed that motivates a move south or east, will eventually make these moves useless. We are closer to the global tipping point then we think, when the advantages of moving your manufacturing less than the disadvantages. The rapid rise of oil of course helps this along.

So long as there is a place on this world that is not industrialized and people can be bought cheaply trade disadvantages workers. But as soon as the world is industrialized, and workers know what kind of scratch they make in Detroit vs. Bombay, then the table turns, and in that industrialized world, companies may have no were to run to, and will have to deal with their workers fairly.

Wall Street has discovered that finding cheap labor will continue to bring down costs, and boost profits, but that didn't create a permanent middle class in America and it won't do it anywhere else in the world. Too bad these people don't think about anything beyonf than next quarters profit statement. The massive deflation their policies promote will only lead to something much more like Communism. Should we invoke protectionism and protect the American standard of living?

There are good reasons to think we should. The energy crisis will accomplish some of this, while it becomes too expensive to ship raw materials around the globe, (already true in coal, and somewhat so with Natural Gas).

It may also be true that California has enough iron ore to produce enough steel to take care of the states needs, no one has really explored this issue. The export of manufactured goods never caused the current problem, it was the export of technology, know how, and intellectual property, which the big investment banks really don't seem too eager to protect.

Maybe in India or China that is true, but in this country, you can't even live a decent life for 30,000 a year, especially in large cities and after taxes. You mean to tell me that we're supposed to be happy that the LOWERING of our standard of living is leading to greater wealth in India, while our economy stagnates and its disposable income disappears? I don't think that anyone in India or China was saying that a few decades ago when mercantilism assured that the reverse was true. For that matter, this kind of "leveling off" of wages worldwide is no different than worldwide communism, except that an elite minority of investors at the top reap all the benefits instead of the "proletariat".

This is the kind of extreme-capitalist thinking that leads to socialist revolutions.

Under this stupid "labor mercantilist" economic model, the Paul O'Neills of the world are destined to have their homes burned down during the revolution that will ensue when the income distribution in this country stops looking like a Bell Curve and starts to look like a big valley between two huge hills.

Let's face it, manufacturing goods for the U.S. market in China or India is doomed in an expensive-energy world, along with the Wal-Mart distribution model. Conversely, if we continue to degrade the standard of living of most of the people in this country so that the Paul O'Neills (and the Walton family) can just have more and more money that they can't possibly spend, we won't even have enough capital left here to support the localized economy that expensive energy is going to require. This is short-sighted and asinine unless O'Neill and his ilk foresee some sort of world-wide profit-sharing distribution that mitigates the reduction of the standard of living in the "first" world.

That's why I will laugh while these free-traders get chased out of their ransacked mansions by starving people, and we can comfort them by saying "this is really good overall for the economy, it's expanding the middle class in the U.S."

But with each step of industrialization the new workers eventually tire of mistreatment, demand more, unionize and get more. Owners may move onto the next country in defense, but it isn't hard to realize eventually, they will run out of countries, and all the worlds workers will demand fair pay for fair work, just as eventually all US workers did.

I think the plan is for the U.S. to decline to such an extent that they can move the cheap work back here when the rest of the world tires of the game.