Those companies did not reduce the price of good when their manufacturing costs were reduced.
Some companies did. A lot of stuff I see in Walmart and Home Depot is either cheaper or higher quality for the same price.
Normally though, we would expect prices to go down more than they did however. Under a sane money system, prices actually go down over time. That's what raises the standard of living. Companies improve productivity, find cheaper ways to make things, streamline their business, etc. and pass the savings on to customers. Not because they're generous, but because of competition.
What happened, starting around 1996, was that the Federal Reserve goosed the money supply. Make a list of things which have stayed the same price or fallen: it's mostly consumables, manufactured goods, electronics and so forth. Now make a list of things which have gone up in price: health care, education, etc. Group 1 is things which can easily be outsourced overseas; Group 2 is things which cannot.
What's happened is, monetary inflation has neutralized falling prices. The Fed no doubt pats itself on the back for keeping "core" prices more or less in check during the last 10 years; but in fact prices should have dropped dramatically. We should see shoes at $10 a pair instead of $50, HDTV's for $300 instead of $1000, etc. (I made those numbers up, I don't know what the actual numbers would be of course, I'm just making a point).
The Fed furthered their blundering by viewing price deflation as a bad thing. They are deflation-phobic because in their minds, deflation is linked with recessions and depressions. But there are two types of deflation, good and bad, and falling prices due to free trade/productivity improvements are not bad! There was even a deflation scare in the late 90's (even supply-siders like Jude Waninski fell for it) because of cheaper imports. Naturally the Fed responded by creating money out of thin air, to save us from the horrors of $10 dollar Nikes.
You can look at a chart of M3 money supply and see it take off like a rocket right around Greenspan's "irrational exhuberance" speech. Gosh Mr. Greenspan, I can't figure it out either. You open up the money spigots and it sets off a speculative bubble (the dot-com boom)? Of course this benefited people with stocks, but ordinary people have to deal with layoffs and higher priced "non-outsourceable" goods, without seeing the benefits of dramatically cheaper consumer goods. They also re-inflated after 9/11 with a vengeance, this time setting off a housing bubble. Great for speculators and developers; not so great for the average family trying to buy a house without an ARM mortgage.
Ever heard of Rome????Rome fell when it became fascinated with MONEY, SPORTS, and SEX....
Rome is a good analogy for the US now, I'll agree with that. They overextended their empire, their government grew wildly out of control, spending far too much on lavish public works, taxes went sky high, and worst of all, their government inflated their currency to near worthlessness. In only a few decades they diluted the silver content of their coins from 90% down to barely 1%.
