(DIRECT NEWSLINE)—Despite low interest rates and high home ownership levels, nearly half of Americans surveyed feel the economy is getting worse. Rich Karlgaard, publisher of Forbes magazine attributes this, at least in part, to a sense of impending deflation he calls “the cheap revolution.”

The problem with the above advances is that they have been accomplished with less investment in American capital than at any previous time. Take the servers that power Google’s search engines. According to Karlgaard, the company has stitched together 100,000 cheap servers at a cost roughly one-tenth of what it would have cost had the company used an outside provider.

Likewise, talented labor is, thanks to electronic connectivity, available over the Internet at a fraction of the American cost. India, for instance, has gone beyond being a source of call center labor and is now used by hospitals as a source of cheap radiologists—medical technicians who can read an MRI and report back to stateside hospitals at a fraction of the cost of an American radiologist. In China, a newly graduated scientist or engineer starts professional life at a salary of around $12,000.

In short, any good or service that is a commodity will likely see its price “fall off a cliff,” as Karlgaard put it. The lack of domestic investment is apparent, and it is a major contributor to why Americans still feel nervous about the economy. Competitors can operate without the fixed costs of a New York City- or San Francisco-based location.

The antidote for this is investment in education and research and development, and to create products and services that can’t be viewed as commodities. And sales pitches will have to begin earlier in the distribution process.

“Marketing will have to integrate itself into the supply chain,” Karlgaard said. As long as domestic marketers offer value, he continued, customers will always pay a fair value.

Karlgaard made his comments on Tuesday during a keynote address at Ad:Tech04. The electronic marketing conference ended yesterday.

Despite low interest rates and high home ownership levels, nearly half of American surveyed feel the economy is getting worse. Rich Karlgaard, publisher of Forbes magazine attributes this, at least in part, to a sense of impending deflation he calls