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Importing People, Exporting Jobs
NewsMax ^ | June 18, 2002 | Paul Craig Roberts

Posted on 06/18/2002 2:27:04 PM PDT by M 91 u2 K

Recent economic reports indicate that the recovery is struggling to move forward. The main barriers are high consumer indebtedness and mediocre corporate earnings. Consequently, neither consumer demand nor business investment is driving the recovery.

Interest rates are low, but Federal Reserve easing has not provided the usual stimulus to spending and equity prices. Part of the problem is the reverse wealth effect from the drop in equity values.

The wealth effect from the long bull market made consumers comfortable with more debt, which they used to finance second homes and high living. When the market dropped, much wealth disappeared, but the debt remained.

Companies, too, made acquisitions that they could not sustain when the boom ended.

The stock market decline made the year 2000 a bad one for taxpayers. Managers of mutual funds and investment partnerships, alert to a market decline, realized capital gains early that year. Unfair U.S. tax laws required these gains to be apportioned to fund owners and taxed as capital gains even though the total value of the funds declined dramatically by the end of the year.

Taxpayers were forced to pay huge tax bills on these phantom gains, thus depleting their cash just as they were suffering large markdowns in their asset values.

Federal regulators stupidly contributed to the economy's debt woes by blocking mergers that were designed to provide a national broadband network, thus frustrating the business plans and causing the failure of many dot.com companies.

Considering the damage that government does to our economy, it is amazing that people look to government for solutions.

More trouble is brewing. The dollar is weakening and could be headed for a long slide. Strong foreign demand for U.S. assets kept up the dollar's exchange value despite massive U.S. trade deficits. Since 1994, foreign ownership of U.S. assets increased sharply as foreigners used the dollars we paid for their goods to purchase U.S. government and corporate bonds, stocks and companies.

According to Bridgewater Associates, foreigners now own 48 percent of the U.S. Treasury bond market, 24 percent of corporate bonds and 22 percent of U.S. corporations. Altogether, foreigners own $8 trillion of our assets – a sum almost equal to a year's output of our economy.

Foreigners are now "overweight on the dollar." This means that they view their investments as too skewed toward the United States. If foreign willingness to hold dollars declines relative to our trade deficit, the dollar will fall in value.

A fall in the dollar has bad and good effects. Import prices will rise, driving up inflation measures and, perhaps, confusing the Federal Reserve about policy.

Rising import prices will hurt the consumer, already burdened with debt, stagnant wage and salary income, and falling investment income due to low interest rates and poor equity performance.

On the other hand, reported earnings of U.S. multinational corporations will rise, as their foreign earnings will be worth more in dollars. This effect could give a boost to the stock market.

The growth of American incomes is being held down by two other factors, which are not receiving enough attention. There are fewer well-paying jobs, as U.S. firms shift operations abroad. Simultaneously, a massive inflow of poor immigrants into the United States is holding down construction and low-skill wages.

Increasingly, CEOs are compensated according to their company's earnings and stock price. This bottom-line pressure causes management to move as many operations abroad as possible in order to take advantage of low-cost labor.

When this process first began, many economists dismissed it as merely the loss of low productivity jobs that the United States didn't want anyway. However, the U.S. taxpayer has helped to educate so many Chinese and Indians that well-paying jobs once held by U.S. engineers and research scientists have left the country, taking the incomes with them.

The United States has become a country that imports poor people and exports jobs that provide upward mobility.

It is a mistake to see the loss of jobs and income as the workings of free trade. The downward pressure on incomes does not result from an exchange of goods. Something different is occurring. Middle class incomes are being traded away in order to gain larger bonuses for top management, and politicians are pandering to the immigrant vote at the expense of lower income native-born citizens.

The longer this process continues, the more explosive it becomes, both socially and politically.


TOPICS: Business/Economy; Constitution/Conservatism; Culture/Society; Government; News/Current Events
KEYWORDS: espionagelist; freetrade; geopolitics; govwatch; nwo
I just hope Pat Buchanan comes back to the Republican party to fight these new inclusive compassionate conservatives. We need loudmouths like mike savage and Buchanan because nice conservative guys like Bush cant win in todays culture War.
1 posted on 06/18/2002 2:27:04 PM PDT by M 91 u2 K
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To: Tancredo Fan
ping
2 posted on 06/18/2002 2:32:26 PM PDT by Black Agnes
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To: M 91 u2 K
Considering the damage that government does to our economy, it is amazing that people look to government for solutions.

It sure is!

3 posted on 06/18/2002 2:42:00 PM PDT by concerned about politics
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To: M 91 u2 K
Actually what we need is a "packaged politician" (sorry but that is what it takes nowadays), that carries the Buchanan torch. Buchanan carrying it submerges the message.
4 posted on 06/18/2002 2:43:41 PM PDT by L`enn
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To: M 91 u2 K
The United States has become a country that imports poor people and exports jobs that provide upward mobility.

Those who can afford to get out of here, do. Why stay?
If they're forced to share the profits here, go somewhere where they can keep their wages. They're not stupid!
Socialist societies always fail.

5 posted on 06/18/2002 2:45:10 PM PDT by concerned about politics
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To: Sabertooth, Tancredo Fan
Ping.
6 posted on 06/18/2002 2:54:09 PM PDT by Shermy
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To: concerned about politics
Those who can afford to get out of here, do. Why stay? If they're forced to share the profits here, go somewhere where they can keep their wages. They're not stupid! Socialist societies always fail.

?

It's not workers keeping their wages, but management seeking to maximize their salaries and options.

7 posted on 06/18/2002 3:01:51 PM PDT by Shermy
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To: Shermy
btt
8 posted on 06/18/2002 3:22:23 PM PDT by GailA
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To: M 91 u2 K
The United States has become a country that imports poor people..............

We need the poor people as consumers for the cheap goods imported from China ;-)

9 posted on 06/18/2002 3:24:17 PM PDT by varon
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To: varon
Yeah, that's the ticket! Poor people shop more at Wal-Mart and Wal-Mart items are usually 'Made in China'.
10 posted on 06/18/2002 3:26:25 PM PDT by Black Agnes
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To: L`enn
YEs, sadly, you are right. The news media did a number on Buchanan. The effectively neutralized him and the many who agreed in private just would not support him. The news media knows Americans will not support anyone they manage to make a laughing stock. We just don't have the intestinal fortitude.

I don't know anyone who has the backbone to say the things Buchanan expounds.

Someone called Bush a conservative - ????????

11 posted on 06/18/2002 3:27:04 PM PDT by nanny
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To: M 91 u2 K; Carry_Okie; *"NWO"; *"Free" Trade; *Espionage_list; *Geopolitics; *gov_watch; ...
The United States has become a country that imports poor people and exports jobs that provide upward mobility.

It is a mistake to see the loss of jobs and income as the workings of free trade. The downward pressure on incomes does not result from an exchange of goods. Something different is occurring. Middle class incomes are being traded away in order to gain larger bonuses for top management, and politicians are pandering to the immigrant vote at the expense of lower income native-born citizens.

The longer this process continues, the more explosive it becomes, both socially and politically.
==================


Guys, AND the closer "they" come to the destruction of the middle class in the U.S. of A. and the ability of U.S. of A. citizens to buy even foreign made goods as the foreigners' ability to buy the goods they make is already. We SEE TODAY that U.S. of A. citizens are less able to buy the goods they make themselves, let alone foreign made goods, than they were in the mid 1980s. This has been "public" POLICY of administrations since the administration of Bush the first. Ever spiralling downward. Peace and love, George.
12 posted on 06/19/2002 10:19:39 AM PDT by George Frm Br00klyn Park
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To: M 91 u2 K
More trouble is brewing. The dollar is weakening and could be headed for a long slide. Strong foreign demand for U.S. assets kept up the dollar's exchange value despite massive U.S. trade deficits. Since 1994, foreign ownership of U.S. assets increased sharply as foreigners used the dollars we paid for their goods to purchase U.S. government and corporate bonds, stocks and companies.

According to Bridgewater Associates, foreigners now own 48 percent of the U.S. Treasury bond market, 24 percent of corporate bonds and 22 percent of U.S. corporations. Altogether, foreigners own $8 trillion of our assets – a sum almost equal to a year's output of our economy.

PS. Pat won't come back to the Republican party because he is a conservative for America.

13 posted on 06/19/2002 1:18:52 PM PDT by ex-snook
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