Those businesses that leave the country are the ones that cannot operate efficiently in the United States. They remain inefficient but overcome their losses by riding on the backs of workers abroad and gaining temporary advantages offered there.
Unless they find new markets, they contribute to the long run overall world decline caused partially by reduction in the number of formerly employed, especially the higher paid workers.
Decline in demand by lowering or eliminating salaries of workers in our global markets especially in the most developed countries tends to maintain the economic depression to which this general overall economic conditions led to in the first place.
Unemployed workers, here and in the rest of the world tend to consume less of the production. Decline in consumption reduces demand and therefore production contributing further to the inefficiencies of the relocated firms, followed then by a decline in profit and a reduction in investment in production enterprises.
Investment money then remains idol and tends toward the stock market and finds its way toward what is appearing to make more profit but not necessarily because of their efficiencies. Soon the rising prices of these stocks leads to reduction in the ratio of returns to investments.
This is where we are now. Some investors have already begun to withdraw somewhat from the market with some concern and waiting by the sidelines. Unless production and money in the salary sector increases the demand even for the cheaper goods, investors will again begin sitting on their investment money, this time withdrawing and keeping from investing it in the stock market .
A pronounced withdrawal will again affect any renewed optimism developed by growing demand in new housing and halt, if not again begin to reverse the upward trend of the stock market. This may again place a hold on housing construction and move the stock market into an uncomfortable situation to say the least.
The movement of production overseas is a new element of economic depression that may keep us in depression for much longer than it did in the great depression and cause us to experience something of a depression-recession rather than what most economists have been referring to as a recession.
Government “interference” in the banking crisis and somewhat in consumer spending contributed to the actual improved recession affect taking us somewhat out of the depression drop that we were in.
But until more money finds, its way into consumers’ hands we are still in “recession-depression” economic conditions. We need to experience world round consumer spending to get out of this one. So called concern for “jobs, jobs, jobs” merely as a slogan isn’t going to do it. Jobs do not make themselves.
This is a time for “economic pump priming” and requires government spending and not spending cuts. Being in a 50\50 situation, half calling for spending cuts and the other half calling for increased spending we are going to find that we shall be prolonging our condition. Whatever our economic religion, unless we face the realities rather than our doctorial beliefs we are in for a tough decade.