We will have lost our knowledge and it'll take decades to recover, if we can recover at all.
The billionaires will escape unscathed.
I agree with point 4. If we had distributed supply chain then things may work better longer term but I am amazed that businesses still look to offshore everything without looking at the long term prospects of their workers and communities.
Now the reason for that is that behind every hour of work of an average westerner there's a lot more capital helping, and more educational capital too. But if developing countries do get closer, then inevitably prices will start rising.
Not all industries can benefit so much from added capital. Those that can, and the service economy, are done in developped countries. Those that can't, are done in developing countries. If the two equalize, then the inequality in labour hours will equalize and westerners will either have to work more or consume less of products that are made in developing countries.
There is no natural force driving it.
You could argue the trade imbalance in which money flows a little bit more in one direction, but that can actually go on so long as the 'Richer Nations' are growing the economic base and expanding the money supply in serviceable terms.
But what's hidden in the obvious discussion of which direction money is flowing in trade ... is the direction that surplus is flowing. The economic surplus is pretty much on the side of the more powerful countries. Everyone benefits, but the rich nations benefit more.
Almost all of the corporate value (i.e. net profits) in the iPhone is realized in the US. The consumer surpluses are also vast but they are distributed to whoever actually buys an iPhone.
As long as trade isn't too imbalanced and much of the actual cash can be returned to 'Rich Nations' by sale of services etc., and, those net consumer/industrial surpluses remain big ... the equilibrium of 'poor countries doing labour and rich countries doing services' can go on essentially forever.
The factors that will change are:
1) China is going 'up market' and will provide more advanced things.
2) The Rest of the World will start to provide competitive labour - and more importantly - be vehicles of consumption as well making rich export markets for everyone.
3) AI will probably affect production in fairly significant ways. Robots with a little bit of dexterity and AI might very well be able to do some tricky assembly ... can you imagine that they could actually lay out, fold and cut fabric? And then sew together pieces? I can see that happening.
Finally, I would say it's definitely not good to look at all of this as a 'zero sum' game, and ultimately wealth is only relative anyhow.
If we ignore the geostrategic and social issues about power, and 'liberal democracy' etc. - there's every opportunity for a lot of poor nations to move up the ladder very quickly (already happening) and for rich countries to stay rich. As those nations 'catch up' their rate of acceleration slows down somewhat as it's rather difficult to 'get ahead' let alone 'stay ahead' for long. I don't even think China will ever actually 'get ahead' - they are, per capita, still quite poor on the whole and their growth is slowing.
As cultural values start to shift, the very measures we use for 'Purchasing Power Parity' start to shift as well. For example, how do we put a price on clean air, vacation, basic freedoms? And from a less secular but still hugely relevant perspective - living among one's culture, with one's 'people', the architecture, the view from your office/home, the lovely bike path to work, the gardens, the local bier garden where you see your friends, the local football team etc. etc.. People already to value those things a lot (see: Europe) they just don't directly factor into our equations. Over the next few decades we're going to rely less heavily on GDP and more on other measures.
It doesn't need to become exactly equal. The gap just needs to shorten. And it does, at exponential speeds.
Already the average GDP in the West is only twice the worldwide average, this only shrinks every year.
Honestly, anyone who falls for a paradox of competition deserves it.
Same for the film industry. Piracy is common consumption, law has had no power in this billion dollar industry, and yet this industry is striving. I say, companies should be allowed to protect their films with the DRM they want, but once the film is in the open, the law shouldn’t try to protect it from being copied. So you’d just pay to be among the first to see the movie, in a good quality, and the rest of peer-to-peer would be legal.
IP law and patents is a weird contraption, making very little money compared to what it costs, and a major risk to any innovating company. IP law is a major drag on our industry, that’s not even respected by our real competitors.
The theory is: Nobody will invent anything if they don't have a monopoly on the idea. As if without patents, someone would have a great idea and say "I'm not going to invent this thing and become a millionaire, because someone else might copy it cheaply and become a bigger millionaire! Nope, rather just keep stocking shelves!"
They are reproducible if we have the political will.
But 1) subsidies are what we would call a 'distortion' and those should be dealt with, possibly with anti-dumping tariffs;
2) There is such a thing as 'strategic investment' in key industries where the bar is very high and $10M from a VC won't help. This is where we need coordinated leadership.
3) There are other ways of 'building stuff'. Automation, AI etc. present opportunities for creating substitutes for those value chains.
In particular, I think what the DARPA should push for is a robotic 'pair of hands' - i.e. a very easily programable set of very nimble robotic hands with accompanying vision, that can be made to do specific tasks within parameters i.e. 'pick up that part, add this other part' and handle most of the weird things that can go wrong.
4) In germs of geopolitics ... it may be more ideal to push for more diversity in sourcing and to help develop India, Malaysia, Mexico etc. towards doing at least more of those things. That's hard though.