What is the downward spiral or race to the bottom economy?

Question

When can we reach rock bottom.

Answer 1

Put simply it is competition for existing resources, in an overcrowded employment market.
For example, Joe blow is a steel worker in a depressed industry. He's earning good money. The steel market however wants cheaper steel, and managers having the morals of Satan, don't care where they get it. Thus the company Joe works for needs to get sales to stay in play, and has to readjust their economics to be able to compete with cheap steel producers.
This has 2 main solutions. One drop the price of their product, or to change the marketing outlook and sell to a different market or value add.
Most management, who lack vision, bravery, and imagination, will opt for the path of least resistance, and drop the price. This leads to lower profit for the same volume sold, and the consequence is that Joe will probable get laid off, or have his wages reduced to cover the shortfall. Joe is now in the race to the bottom. For him to keep his livlihood, he must accept the wage reduction or look for work elsewhere, but in a depressed steel industry there is nowhere for him to run, so he accepts the reduction in pay. The competitors meanwhile drop prices further...you get the idea.
Managers of course will not take up the slack by taking cuts on their over valued skills, and pass the income cuts to the people who actually do the work. Usually the execs make a killing in bonuses when they diddle the workers in such situation, thus absorbing any savings made by cost cutting.
We the public are not innocent in all this. We the consumer unreasonably want cheaper and cheaper product, and thus force retailers to hunt around in the third world to source cheap product, thus cutting of manufacturers in our own countries from previously safe markets. This forces them off shore to cheap labour countries creating unemployment and working poverty in our own nations. We are the masters of our own destinies, and currently short term want for cheap affluence, is cutting our own throats.
Not a pleasant subject by any means is it.

Answer 2

You are describing the 'service economy' It is cannibalistic by nature, The downward spiral in which you refer is similar to all of the service jobs consuming the earnings remains of former production of goods of years past.... while exporting jobs has brought lower goods prices, it has not brought new earnings from actual production of goods....eating each others 'inheritance' in a way.

It will end when a USA worker earns the same as a Chinese worker-or somewhere in the middle

$2.00 per day vs. $100.00 per day currently.

Answer 3

I've had to adjust my status lately from Lower Middle Class to Upper Lower Class...

Answer 4

It has to do with the need or desire to be economically competitive taking over governmental regulation.

Answer 5

I get asked how we should market in a down economy. My answer: no differently than when the economy is booming, with two exceptions. Keep your eyes open for prospective markets or individual clients that in the past you might have shunned or ignored, and who are willing to spend money. The first two ideas explain this.

1. Revisit your strategy. Take on clients you might normally turn down. Think carefully before rejecting a prospect or project - think of what it could lead to when the economy looks brighter (which could be soon).
2. Go after winners. Target industries that are fairing well and are willing to spend money. Don't chase sectors that a couple of years ago were big spenders but now are in trouble. If you're not sure, subscribe to the Wall Street Journal and read it daily and carefully.
3. Ask for referrals. Your current happy clients and customers are your cheerleaders, or evangelists. But they don't automatically assume you're interested in finding new assignments or new clients. Remember also to ask current clients for new assignments. Nicely, of course.
4. Network. Go to trade and professional association meetings where you're likely to meet and rub shoulders with prospects. Look for the influential people and buyers. Join and get involved in organization leadership for maximum exposure and goodwill. Bonus point: Be on a mission and go to meetings regardless of the program.
5. Follow industry trends. Focus on changes in your current clients' industry. What are their new concerns and needs you can adapt to and address? Don't guess or make assumptions! Ask your clients to tell you what's shaking them to the core, and what they would most value right now. If you serve consumers, stay on the bleeding edge of trends that your type of customer identifies with.
6. Make #5 part of your selling and marketing strategy. Show prospects and clients you understand what they're going through and the challenges they're grappling with, by what you say to them in conversation and how you word your marketing materials. Clients buy value, so sell them value.
7. Promote your expertise. Position yourself as an expert to be more visible. Contact targeted publications for their editorial calendar. When you find a topic for which you can be an expert source, let the editor know how you can contribute.
The next four ideas deal with giving away big chunks of your brain reserves and knowledge. Give generously. It's the most honest form of marketing you can engage in.
8. Be a speaker. Speak to target audiences on topics in your field of expertise. Think both in terms of pro-bono presentations and speaking for fees. Speaking skills not up to snuff? Join Toastmasters International (www.toastmasters.org) and National Speakers Association (www.nsaspeaker.org). The resources in both these organizations are endless.
9. Write articles. Publish them on your Web site and give them away. Identify publications in target industries and inquire whether they accept "by-lined" articles (ones you write). Get the guidelines for writers. Ask what topics they're looking to fill. Customize your articles to target markets and get them published in on-line publications, with links back to your Web site.
10. Be a Web resource. Tweak your Web site to provide maximum value. That is, offer articles, tips and resources that visitors can use. If your Web site is merely an electronic brochure, you're missing the vast interactive capabilities of the Internet and the opportunity to build trust with visitors.
11. Keep in touch. Create an e-mail newsletter ("e-zine") that's loaded with valuable content. Get permission (opt in) from recipients prior to sending on a regular basis, although it's OK to send a sample first issue, with the place to opt out or off your list clearly labeled. Make sure the newsletter points people back to your Web site where there's more valuable content.
12. Be intentional. Whatever you do, do it consistently, intentionally and purposefully. Some tactics, such as asking for referrals, can bring in new projects fast. Other activities such as a sending an e-zine and getting media publicity are long term, and are recognition and credibility builders that keep your name in front of prospects for when they're ready to buy. You need to carry out both short and long-term activities for best results.

Above all, be patient. You're in this for the long haul, right? Marketing is a long-term investment, so make it an integral part of your business, whether the economy is down, up, or sideways.

Answer 6

We are far from there yet but all of these treaties with no wage countries will get us there.