It has everything to do with that. All of those taxes means about 50% of our income goes to the government, that's why we demand a high income. Minimum wage means even those with low skill sets have to demand a relatively high wage. Of course we want cheap goods, that's human nature, but we can't produce those goods here because we need a higher income to deal with the taxes. Plus welfare and other social spending make people less willing to work.
And even if 50% did not go to the government the wages STILL would not be low enough to compete with the Indians and Chinese because the over all cost of living and standard of living is so much lower there compared to the west. There having indoor plumbing in many places is still a luxury, let alone having 2 tvs, 3 computers and 2 cars, not to mention 100kgs extra on the body in fat. And without the taxes there would be no military, no police and basically no society, then what the hell is the point? Without taxes, most of the US would not have power let alone telecommunications... much like rural China and India. Blame taxes and other conservative pet peves, but the fact is that even without that, the US or the west would not be able to compete with near slave labour practices of India and China. We have gotten too comfortable with our air-conditioned houses eating our fatty foods watching American Idol and surfing the net for porn while complaining that the politician's are corrupt.
What it all comes down to is the society we have built over the last 100 years, that the standard of living demanded by our citizens is high and I dare you start claiming that people should lower their wage demands to that of the Chinese and Indians... while living in New York or Arkansas. That wage could not even feed a pig, let alone a family. It would require that house prices would need to fall by at least 75% in many areas, plus all prices in general. There would be a need for a huge deflation to even come close to your utopia.
That is why the free market principles have failed yet again because it is exporting jobs overseas without replacing them in the domestic markets. Sure the US and Europe have gone from a manufacturing (minus Germany) society to a consumer lead service industry and onward to an information lead industry. Problem is that the cheap places can easily replace the information industry as well (as we see with call centres and considering most information technology is built in China any ways), and that leads us with the service industry... so everyone should be McD people now? This WILL lead to unemployment because people can not adapt fast enough or even want to adapt, especially the older generation... like a 50 year old car worker that is now forced to work in a supermarket at 1/10 of the wage.
Point is that our own policies of globalisation, liberalisation, a need for 3+% growth and lets not forget the urge for cheap goods, has driven work out of the countries in question into the hands of the cheapest stable countries the world .. and that means we get unemployed in the short and medium turn.
Now in theory globalisation is a great thing.. but we are not one world, and the income differences and standards of living are so hugely different, that in fact globalisation will ultimately lead to the downfall of many former industrial powerhouses like the UK, France, US and so on.. unless they start to protect themselves from price dumping practice of China and India, who are very good at protecting their own markets to keep the edge over everyone else.