How sure are we that technology is the cause? Another comment mentioned inflation [1]. I'd like to bring up the possibility that globalization is the culprit.

How sure are we that technology is the cause? Another comment mentioned inflation [1]. I'd like to bring up the possibility that globalization is the culprit. If there's a large pool of workers in poor areas of the world willing to work for $1 / hour or less, then theoretically we should see a shift in capital and infrastructure spending trying to connect them to the global economy, and wages everywhere else will try to lower to that level. AFAICT that's more or less exactly what's going on. Also, in the US, from c. 1960-1990 labor unions had a monopoly on unskilled labor in many domestic markets, which allowed the price of labor (i.e. wages) to move away from a competitive pricing model and get closer to monopoly pricing model. Globalization allowed companies to break the unions' monopoly on labor by moving operations to other countries. The solution is simple and obvious: If producing X in country Y saves you D dollars due to lower wages, laxer safety/environmental regulations, lower taxes [3], etc., you should tax those goods by D dollars when they cross your border. However, the money that can be made by avoiding monopoly labor pricing means that the business community successfully bribes / lobbies politicians. Even educated voters are largely ignorant of economics, and politicians can usually come up with rhetoric to support just about any economic policy they want, so the voters don't provide enough political force to stand up for their interests in a way that's effective. Warren Buffett talked some years ago about why we need to have tariffs [2]. In the State of the Union, Obama mentioned giving tax advantages to companies that locate their operations in the United States. We'll see what happens, but I'm skeptical about whether there's any political will for meaningful policy change. [1] https://news.ycombinator.com/item?id=7152014 https://news.ycombinator.com/item?id=7152014 [2] http://money.cnn.com/magazines/fortune/fortune_archive/2003/11/10/352872/ http://money.cnn.com/magazines/fortune/fortune_archive/2003/... [3] Think of the case of small countries that don't have much of their tax revenue go toward military, but benefit from the relative peace and stability of the current post-cold-war geopolitical situation which is partially the result of much greater military spending by the US.