[AnthonyMouse]

> How can western countries with good social safety net, reasonable work hours and good wages compete with cut-throat conditions in Asia?

In theory the idea is that they're not supposed to -- if you have unskilled work with no geographical restrictions, you do it where there is the lowest labor cost, and then everyone benefits by paying lower prices. Meanwhile western countries do the higher paying jobs that require a skilled workforce and the unskilled workers in western countries either do service jobs that do have geographical requirements or go to school and become skilled workers.

One of the things that's been killing us on that front is the broken welfare system that puts high marginal rates on lower income people through benefits phase outs, which makes it so that middle class people can't afford to hire lower income people to do service jobs, because 80% of the money goes to the government in benefits phase outs. Which means those people become unemployed, and the higher unemployment rate pushes down unskilled wages, erodes the tax base and increases the total cost government is paying out in benefits to the unemployed.

[mantas]

And it turns out that those cheap countries can produce skilled work too, without becoming expensive and as caring about the workers. Yet bigger than expected portion of western countries' population does not perform well in skilled work market..