Globalism's role in pricing power

Dallas Morning News | Danielle DiMartino:

“Six of every 10 companies don't see how they'll get their hands on that magic stuff called pricing power in the new year. To add to their troubles, nearly half the respondents see higher inflation barreling down on them.”

Global competition threatens to keep pricing power out of the hands of manufacturers for as far into the future as we can see. China is a world power in manufacturing. India is a power in software and services; manufacturing is next. Countries like Vietnam and Thailand already are taking pricing power away from even China. No country is exempt from the effects of globalization.

Add rising energy prices to global competition and you have a perfect storm that puts tremendous pressure on American jobs. Expect each new labor contract to include givebacks in the form of wage cuts and lower health and retirement benefits. In the past, such concessions came only after long and sometimes violent strikes. Today, striking only hastens the move of jobs offshore. It's a counterproductive tactic.

How does the US remain competitive? The main driver is productivity growth. Businesses are aggressively exploiting the increased efficiencies made possible by technology: computers and the Internet. In the future, it will be nanotechnology and biotechnology that offer the US a competitive edge, provided we step up investment in basic research. But competitive pressures facing businesses are leading them to scale back their own private research labs, not re-invigorate them. And the public sector's involvement in basic research has been cut back by a generation of public policy officials brought up to believe government is the problem, not the solution. Restoring the national means and national will to invest in America's future is the challenge facing the US in the 21st century.