True, though there need to be controls on this sort of change. That's why we have things like tariffs. If you just open the flood gates on cheap imported labor, you'll decimate the domestic economy and then everyone loses. It's like over-cutting wood for fuel. If you impose restrictions, then forests have time to recover and you have more wood in the long run. If you don't, then forests die out and no one gets any wood. The "wood", in this case, is the money large companies are taking from domestic workers and giving to foreign workers (which they then go and spend in foreign economies i.e. the money is not spent in the economy that supports the large company and said arbitrage bites them in the butt).

If this specific attack on the power of labor were matched with a corresponding attack on the power of capital, it wouldn't be such a problem.

Unfortunately, intellectual property rights are only getting stronger. Land rights are only getting stronger. Taxes on wealth and unearned income are only getting lower. Employee and union rights are only getting weaker.

Thus the effect of immigration on the downward pressure on wages is magnified.

Because it is unfair -- we require companies to treat their workers like human beings and ban certain forms of exploitation, abuse, etc. Facing reality and accepting that if workers can be abused, they will be abused so we might as well be the abusers is one way to deal with this fact. Another would be, for example, to ban all imports made under conditions which don't meet U.S. human rights standards and remove the economic inventive, but instead we go the opposite direction, the direction of "free trade" which is great for people who can afford to spend capital and move operations to countries where they can abuse workers, but not so great for American workers -- we aren't even allowed the opportunity to be abused and exploited.

More attention to production and productive activity rather than consumption would help. Industry and thrift is what lifts people's fortunes. Not consumption and debt.

The U.S. has many factors contributing to economic competitiveness but also some serious drags: difficulty accumulating capital savings among the middle and lower classes, inefficient cities and suburbs, housing that is too extravagant and expensive for people of modest means, mortgages still underwater, high cost education and a very expensive health care system riddled with fraud. Most of these are due to unwise policies anchored on the public and private accumulation of debt. All of them are solvable with a proper understanding of the issues.

The complaints about the 1% or 0.1 or 0.01% largely can be traced to the architecture of this system which is anything but a free market. It guarantees large cash flows for favored groups who naturally support it.

Refactoring all this will require a great deal of capital spending, internal migration and a shift in incomes away from sectors that have been supported by policy such as finance, gov, education, entitlements, war, retail and healthcare in favor of redesigning the American lifestyle along leaner, more competitive lines. Think smaller homes closer to work and more sharing. Yes it will look more like other more competitive parts of the world do today. It may be called a depression 20-30 years from now but it's better to think of it as cleanup and refactoring-- a clearing out and reckoning of all the bad decisions and policy driven malinvestments of decades.

The biggest thing many people really have control over is their own lifestyle expectations and location. Naturally young people sense this and are cutting back accordingly. Not sure how many are willing to relocate for opportunity.

For average joes in the U.S. the high water mark was probably the 70s and 80s. The stuff that led to America #1 occurred between 1870 and 1960. We've been coasting for a while pretending we still have a beast under the hood and gas in the tank. It's just now becoming ever more difficult to paper over the situation with more debt.

The U.S. still has amazing positive attributes and strengths. Labor force mobility, the most efficient system for consumer goods distribution in the world, generally high quality building and housing stock (albeit inefficiently spread out), generally high knowledge and expectations of service and quality, etc. The list is actually long and the cultures ability to adapt and reinvent itself is a strong reason not to bet against the U.S.

We could opt for a basic income but not at anywhere near the levels of currently expected individual prosperity. We'd have to redefine poverty to something more along the lines of what the rest of the world considers poverty and say, we can help you avoid that. America is not presently designed to support a "middle class" life at $10-20 a day. Some other counties are.

The consequences are a massive drop in poverty.

http://ourworldindata.org/data/growth-and-distribution-of-pr...

Also a massive drop in inequality, if that's the sort of thing you care about.

http://www.maxroser.com/economic-world-history-in-one-chart/

That may be true in the short run, but it's a more complex question in the long run. What if uncapped arbitrage has an adverse effect on the American economy? Then there won't be as much money left to export to India.

Did you mean inequality?

Why does it have to be either/or?