Why America Should Ditch The Global Commodities Market

Why America Should Ditch The Global Commodities Market

During the industrial period, America was the most innovative nation on the planet. We were the creators of inventions that were unheard of and the orators of accomplishments that were made of dreams. As time progressed, we successfully maintained our innovative prowess, while the rest of the world attempted to catch up, but catch up they did. Today, we are seeing the manifestation of globalization in great abundance. Nations are exporting and importing goods of every variety from every corner of the world. A positive side effect is that the citizens of nations who actively engage in global trade often enjoy a better quality of life. America has maintained the most successful economic status for many years due in-part to the presence of a large middle class. The same is happening in foreign nations. The increased global trade is giving rise to a middle class that is more educated, more determined and willing to take advantage of every possible opportunity. So what sets America apart from the rest of the world today? The answer is very little and this is why.

While America was the first to pioneer many of the technological advances that are commonplace today, we have not yet progressed onward. Our infrastructure is aging and the nations that were categorically labeled as “developing” possess facilities that are far superior to ours. For instance, Japan owns and operates the most technologically advanced trains on the planet. Yet no more than 65 years ago, the nation laid in absolute ruin after the Hiroshima/Nagasaki bombings. With an embattled and destitute military, the country found another way to engage in the global marketplace. Desperation does indeed breed innovation, and Japan is the physical embodiment of that philosophy. So in some aspects, the U.S. has actually fallen behind. The commodities market and its manufacturers are slowly becoming the new emerging superpower nations of the world.

The lax labor laws and inexpensive human capital of countries like China, Thailand, India and Taiwan have all attracted U.S. based businesses offshore. It’s no secret that they can manufacture a product at a fraction of the cost when compared to that of an American manufacturer. To compound the issue, the standard of living in these countries is typically lower, which translates into nominal wages. In contrast, the US maintains stringent labor laws such as a national minimum wage and in some cases, employee advocacy organizations like the various unions operating within the automotive field contribute to inflated costs. In addition, the United States maintains a significantly higher standard of living (when compared to the rest of the world) and most employers incur additional costs related to employee wellness such as health-care. All these factors inflate operating costs and reduce the profit margins of American businesses, putting them at a significant disadvantage to compete with foreign-based business.

There are global challenges that are yet to be solved. Where will our next commercial fuel source come from? Why not concentrate our efforts instead on finding new creative solutions to problems that plague us as a nation such upgrading our decrepit infrastructure? If desperation breeds innovation, now is our time to innovate the same way Japan did after the war. Let the world’s emerging nations manufacture commodities. America is at the point of desperation and education is one path toward innovation that is reminiscent of the industrial period. It would be unwise to completely abandon our roots and rely only on service-based business modeling. Just as diversification minimizes excessive risk in an investment portfolio, the United States should wisely employ the same strategies when engaging in global trade. Reallocating some of our resources away from saturated, low-priced commodity markets and redirecting them to cutting edge research and development will restore America’s competitive edge. The strength and future of America is not based on manufacturing only, but on our ability to innovate, just as we did during the industrial period. Let’s concentrate our efforts toward innovation, and usher the globe into a new era.

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