The race for the lowest price is a race to the bottom and we all end up losing. We also all participate in our own demise, both through our investments and our own purchasing patterns. It's an inevitable result of capitalism's value system. Businesses are algorithms that maximize profit and don't consider outcomes beyond this unless they can be quantified in dollar terms. The results are entirely predictable.
You can counter-lever against this tendency with taxes and tarrifs and direct this revenue toward social spending to redress the impacts somewhat, if your government has a mind to do that, but the effect is ultimately limited by the fact that trade is a two-way street. There's always someone who'll lobby the government NOT to implement those tarrifs because they're depending on the low import prices, or because they're depending on sales to the same country and worried about countervailing duties. Add to this the fact that capital is mobile and there's always somebody else who wants the jobs and economic growth desperately enough to cut taxes or even take money from the public purse and use it to subsidize industry. And even if you wanted to try it, an effective tarrif system for services provided over the Internet is just about impossible to imagine.
Inevitably, some of the developed world's economic resources will trickle away toward the developing world. That's a good thing for the developing world, in the short term. In the longer term, the only way the developing world will be able to sustain its industrial capacity is through increased local consumption as the developed world's purchasing power evaporates with the high-paying value added jobs it loses. Unfortunately, that's bad for the planet. If consumption patterns in India and China move toward the Western model, with these countries' massive populations it's doubtful the planet can avoid choking in its own filth- especially when you consider the lax environmental regulatory conditions under which much of this third- and second-world industrial development is occurring.
What galls me is the profiteering and selective application of tarrifs in the developed world. We still have huge tarrifs against products from the very poorest countries (i.e. the ones in Africa with no buying power and hence no political clout), and even where there aren't tarrifs the lion's share of the profit on items like clothing and agricultural products is going to parasitic distributors and retailers who add little value. The manufacturing jobs go offshore, but only a small fraction of the benefit follows. The majority of the profit generates wealth for a select few in the western world, and our tax structures ensure that it contributes virtually nothing toward dealing with the societal tragedies that result from the export of jobs. It's the middle class who suffers, because the jobs that are leaving are the ones that underpinned their way of life.
