Mother, mother, mother - there's too many of you crying.

[sebastian_dangerfield]

Originally Posted by Adder

Some musing on trade, cheap labor and automation.

This comment's about all you need to know on causation:

Here is what happened. Industrialization of the huge population of S.E Asia caused a global imbalance in economic rent (the return on capital) and wages. The developed economies had high wages and low rents, while the emerging markets had low wages and high rents. Free trade and globalization allowed the reallocation of domestic capital to the emerging markets. In consequence, the developed economies suffered slow growth, stagnant wages, rising inequality and poor productivity as investment in domestic productive capacity declined.

Most likely the damage is long term. The loss of manufacturing to the temporary global imbalance in factor prices will be permanent. In the future, it is likely gravity effects will dominate forming large industrial hubs centered in Asia. The developed economies will be sidelined into services that tend to feature low productivity growth. Even apart from the loss of domestic employment opportunities, the unnecessary loss in technological and industrial capacity is incalculable.