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The Great American Job Sellout - Economy In Crisis
www.economyincrisis.org ^ | Sunday, March 19, 2006 | na

Posted on 03/19/2006 5:49:56 AM PST by B4Ranch

The Great American Job Sellout

Free trade policies that force US companies to outsource or import foreign labors are dramatically affecting opportunity for American middle class. Paul Craig Roberts examined this in March 2005.

Americans are being sold out on the jobs front. Americans' employment opportunities are declining as a result of corporate outsourcing of US jobs, H-1B visas that import foreigners to displace Americans in their own country, and federal guest worker programs.

President Bush and his Republican majority intend to legalize the aliens who hold down wages for construction companies and cleaning services. In order to stretch budgets, state and local governments bring in lower paid foreign nurses and school teachers. To reduce costs, US corporations outsource jobs abroad and use work visa programs to import foreign engineers and programmers. The American job giveaway is explained by a "shortage" of Americans to take the jobs.

There are not too many Americans willing to accept the pay and working conditions of migrant farm workers. However, the US is bursting at the seams with unemployed computer engineers and well-educated professionals who are displaced by outsourcing and H-1B visas. During Bush's entire first term, there was a net loss of American private sector jobs. Today there are 760,000 fewer private sector jobs in the US economy than when Bush was first inaugurated in January 2001.

For years the hallmark of the European economy was its inability to create any jobs other than government jobs. America has caught up with Europe. During Bush's first term, state and local government created 879,000 new government jobs. Offsetting these government jobs against the net loss in private sector jobs gives Bush a four-year jobs growth of 119,000 government jobs. Comparing this pathetic result to normal performance produces a shortage of 8 million US jobs. What happened to these jobs?

Over these same four years the composition of US jobs has changed from higher-paid manufacturing and information technology jobs to lower-paid domestic services. Why?

During this extraordinary breakdown in the American employment machine, politicians, government officials, corporate spokespersons, and "free trade" economists gave assurances that America was benefiting greatly from the work visa programs and outsourcing.

The mindless chatter continues. Just the other day Ambassador David Gross, US Coordinator for International Communications and Information Policy in the State Department, declared outsourcing to be an economic efficiency that works to America's benefit. There is no sign of this alleged benefit in US jobs statistics or the US balance of trade.

Repeatedly and incorrectly, US corporations state that outsourcing creates more US jobs. They even convinced a New York Times columnist that this was the case.

The problem is, no one can identify where the US jobs are that outsourcing allegedly creates. They are certainly not to be found in the BLS jobs statistics. However, the Indian and Chinese jobs created by US outsourcing are highly visible.

On February 13, the Dayton (Ohio) Daily News reported that jobs outsourcing is transforming Indian "cities like Bangalore from sleepy little backwaters into the New York Cities of Asia." In a very short period outsourcing has helped to raise India from one of the world's poorest countries to its seventh largest economy.

Outsourcing proponents claim that US job loss is being exaggerated, that outsourcing is really just a small thing involving a few call centers. If that is the case, how is it transforming sleepy Indian cities into "the New York Cities of Asia"? If outsourcing is no big deal, why are Bangalore hotel rooms "packed with foreigners paying rates higher than in Tokyo or London," as the Dayton Daily News reports?

If outsourcing is of no real consequence, why are American lawyers or their clients paying $2,900 in fees plus hotel and travel expenses and two days billings to attend the Fourth National Conference on Outsourcing in Financial Services in Washington DC (April 20-21)?

On the jobs front, as on the war front, the social security front and every other front, Americans are not being given the truth. American news comes from people allied with the Bush administration or dependent on revenues from corporate advertisers. Displease the government or advertisers and your media empire is in trouble. The news most Americans get is filtered. It is the permitted news. Many "free trade" advocates also are dependent on the corporate money that funds their salaries, research and think tanks.

Another clear indication that outsourcing of US jobs is no small thing comes from the reported earnings of the leading Indian corporations that provide American firms with outsourced IT employees and engineers. During the recent quarter, Infosys' revenues increased by 53%, TCS grew by 38%, and Wipro was up 34%.

On January 1, 2001, Cincinnati-based Convergys Corp had one Indian employee. Today it has 10,000. Why? Because it can hire Indian university graduates for $240 a month, a sum that is a small fraction of the US poverty level income.

Many Americans think that an outsourced job is an existing job that is moved offshore. But many outsourced jobs are created offshore in the first place. On February 11, USA Today told the story of OfficeTiger, "the sort of young technology company that once created thousands of high-paying jobs in the USA, fueling sizzling economic growth." The five-year old startup business employs 200 Americans and ten times that number of Indians. The company has plans for hiring many more Indians to perform "tech-heavy financial services."

Under pressure from venture capitalists who fund new companies, American startup firms are starting up abroad. Thus, the new ventures, which "free trade" economists assured us would create new jobs to take the place of the ones moved offshore by mature firms, are in fact creating jobs for foreigners.

As a consequence, tech jobs in the US are falling as a percentage of the total. Clearly, tax breaks for venture capitalists are self-defeating when the result is to create jobs for foreigners, not for Americans. Why should the American taxpayer subsidize employment in India and China?

These developments have obvious adverse implications for engineering and professional education in America. The BLS jobs forecast for the next ten years says the vast majority of US jobs will not require a college education. University enrollments will decline and so will the production of PhDs as fewer professors are needed.

As India and China rise to first world status, the US falls to third world status where the only jobs are in domestic services.

This has enormous implications for the US balance of payments. Americans' consumption of manufactured goods is heavily dependent on foreign manufacture, whether that of foreign firms or that of US multinational firms that supply their American customers from offshore. How does an economy in which employment growth is concentrated in non-tradable domestic services pay for its imports with exports?

Since 1990 the US has been paying for its imports by giving foreigners ownership of its assets. In the last 15 years foreigners have accumulated $3.6 trillion of America's wealth.

America has been able to pay for its consumption by giving up its wealth because the dollar is the world's reserve currency. As America's high-tech and manufacturing capabilities decline and its red ink rises, the dollar's role as reserve currency must end.

When the dollar loses its reserve currency role, America will not be able to pay for the imports on which it has become dependent. Shopping in Wal-Mart will be like shopping at Neiman Marcus.

Until recent years, US companies employed Americans to produce the goods that Americans consumed. Employment supported sales, and sales supported employment. No more. By their shortsighted policy of moving US jobs abroad, our corporations are destroying their American markets.

Economists give assurances that the dollar's decline and fall will bring jobs and industry back to the US. Once Americans are as poor as Indians and Chinese are today, the process will reverse. Multinational corporations will locate in America to take advantage of cheap labor and unserved markets. By becoming poor, the US can become rich again.

You might want to ask the economists and our "leaders" in Washington why we should put ourselves and our descendants through such a wrenching process.

Copyright 2005 Creators Syndicate, Inc.
Source: http://www.economyincrisis.org

 


TOPICS:
KEYWORDS: assclown; bitterpaleos; breadlines; crisis; economy; paulcraigroberts; skyisfalling; starvation; weredoomed; worsteconomy
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To: neutrino; Nathan Zachary; kstewskis

Nathan Zachary & kstewskis say, " I think this is a commie rant."

Who is right? Us or them? I agree with what the article says and I know I'm not a Commie, but then again I'm not a free trader willing to sell America to the lowest bidder either.


21 posted on 03/19/2006 6:25:12 AM PST by B4Ranch (The truth is good for you, like sunlight, but too much all at once can really hurt.)
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To: B4Ranch
Since 1990 the US has been paying for its imports by giving foreigners ownership of its assets. In the last 15 years foreigners have accumulated $3.6 trillion of America's wealth.

And yet, since 2001, our household net worth has gone from $40.7 trillion to $52.1 trillion. So much for Paul and his zero sum economics.

22 posted on 03/19/2006 6:27:46 AM PST by Toddsterpatriot (Why are protectionists so bad at math?)
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To: Toddsterpatriot
Has anyone mentioned that we are $9 TRILLION IN THE HOLE? How long do you think we can live on credit? It's going to be a real bitch when the debt collectors come around!
23 posted on 03/19/2006 6:31:13 AM PST by B4Ranch (The truth is good for you, like sunlight, but too much all at once can really hurt.)
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To: conservative physics

That and the fact that we are giving away our future amidst all these damn treaties. I have no problem helping my neighbor but I do expect them to work too.


24 posted on 03/19/2006 6:34:42 AM PST by B4Ranch (The truth is good for you, like sunlight, but too much all at once can really hurt.)
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To: Clemenza
Could it be that the native born white folk just have better jobs

Or prefer not to live 12 guys, 4 women, and 2 babies in a one bed apt! Then go home after a year and retire.

Please tell me where Americans can move to and earn $500/hr for a year,+ free north pole benefits, and I will move to the north pole. After a year, I'll move home wealthy.

25 posted on 03/19/2006 6:35:42 AM PST by MrPiper
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To: B4Ranch
Has anyone mentioned that we are $9 TRILLION IN THE HOLE?

Yes, the government spends way too much money. The answer, obviously, is to raise tariffs. LOL!

26 posted on 03/19/2006 6:35:58 AM PST by Toddsterpatriot (Why are protectionists so bad at math?)
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To: kstewskis

Question: Was the man insured? Did he have a company name that is registered or is he just a guy trying to survive?


27 posted on 03/19/2006 6:36:21 AM PST by B4Ranch (The truth is good for you, like sunlight, but too much all at once can really hurt.)
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To: B4Ranch
Average hourly earnings

It is a line. It goes up. Gradually, but without any meaningful deviation from a straight line up. 6 years ago, before the stock market crash and the recession and the war, it was $13.78 an hour. Now it is $16.47 an hour, 20% higher, up 3% per year. US wages are simply not going down. The gloom and doomers have been proclaiming they are and will since approximately 1800 when Malthus had his brainstorms, but actual wages utterly refuse to move in the direction they claim they must.

Civilian employment

It is a line. It goes up. It has a few more deviations from perfectly straight than wages, which all have the same form - a bit of accelerating up, a sharp dip, and a slow curve back up again. At least 7 dips of that pattern are visible on the graph. Those are major recessions. You can see two of them in the 1950s, when none of the factors the article alleges were in play. If you look at the raw data, six years ago there were 136,559,000 jobs in America. Now there are 143,257,000, up 6.7 million or 1.1 million a year on average, counting one such dip. The number of jobs in the US is not going down. The gloom and doomers have been proclaiming they are since at least the 1970s and the modern protectionst movement, which has its origins in the unwillingness of either major party to promote rotectionism, as an economic and political loser. Since then we've added about 63 million jobs. Rather a lot really. You'd hope someone might notice.

Gross domestic product

It is an exponential curve. It accelerates at a uniform rate. Deviations from a perfect exponential are tiny and fleeting, and hardly noticable at all in the long term. Our wealth is proportional to the area underneath that curve. Not only are we not getting poorer, we are getting wealthier at an accelerating rate over time. Six years ago, US work and production was adding $9.52 trillion a year to our resources, annual rate. In the last year, the rate was $12.76 trillion a year, a third faster, and in absolute terms a new income of $3.24 trillion. This is the domestic product and excludes imports. During the same period, the "trade deficit" grew by $324 billion, one tenth of our new income. We got a 34% raise, and splurged a whole 3% of it on additional net imports.

There are sensible financial reasons to worry a modest amount about the trade deficit, about how sustainable it is and about the low domestic savings rate it reflects. That low domestic savings rate in recent years has mostly reflected a propensity of people to rely on price appreciation of stocks then real estate for their savings requirements, instead of ongoing large scale new investment. They have done fine that way, with US net work well over $50 trillion at this point. But in the long run, additional new savings are a more reliable way to future increases in our raging prosperity. The very low interest rates we have enjoyed in recent years are primarily responsible for both those strong asset prices, and the low savings rate. It is sensible to increase rates modestly to encourage additional savings and strengthen the dollar, and the Fed has been doing so, slowly but consistently, for two years.

Political misuse of economics is widespread and depends on fundamental ignorance of the actual processes and facts on the part of those addressed. Facts annihilate the gloom and doomers' misconceptions. They have been utterly wrong about absolutely everything for decades, in the case of Malthusian wage decline nonsense, literally two centuries. It never stops them from spouting the same silliness. But facts are even more stubborn than pigheaded ideology.

28 posted on 03/19/2006 6:36:47 AM PST by JasonC
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Comment #29 Removed by Moderator

To: B4Ranch; Nathan Zachary
I'm not a free trader willing to sell America to the lowest bidder either.

I agree with you too, B4.

(you'll have to please excuse me, I haven't had my coffee yet.)

But you do bring up the crux of the problem. The article does have a point.

The two characters that I mentioned above, have to compete with those who hire the "imports" at a lower wage, however their "product" speaks for itself.

The situation is a bit more complex than what is presented.

Good Sunday to ya ;o)

30 posted on 03/19/2006 6:37:50 AM PST by kstewskis ("I don't know what I know, but I know that it's big".....Jerry Fletcher)
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To: B4Ranch
We are no such thing. US net worth is $50 trillion. The government hasn't balanced it's checkbook since Newt ran the House, but the American economy and people are fine.
31 posted on 03/19/2006 6:37:56 AM PST by JasonC
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To: MrPiper

Oh and I'll hang sheet rock or clean slaughtered seals for that money!


32 posted on 03/19/2006 6:38:53 AM PST by MrPiper
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To: JasonC

I see taxes increasing locally and statewide. The highways are falling into disrepair. Crime is increasing. The kids coming out of school aren't anywhere near as educated as you and I were at the same age. Is this advancement?


33 posted on 03/19/2006 6:39:43 AM PST by B4Ranch (The truth is good for you, like sunlight, but too much all at once can really hurt.)
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To: B4Ranch
"I agree with what the article says and I know I'm not a Commie, but then again I'm not a free trader willing to sell America to the lowest bidder either."
>>>>>>>>>..................
exactly, well said, these Free trader types are so tiresome, posting idiotic things like American's who want the Gov to promote (not protect) American jobs and business FIRST. are commies..
They mis use economics and are so deluded and confused yet they remain smug..
I have posted data showing the drain of trillions from our country over last 30 yrs ..money if spend and circulated in US Economy would have raised all our standards of living and expanded the US economy even more...
The Free traders are a bunch of socialist or ,at best, dupes of socialists who want unified world control over the worlds production and wealth. Free traders are ignorant of the result of what they so strongly support. It is sad to see the deluded trying to deny the facts that are plain to the poor and middle class in America. They even support law breaking and" slave ownership" of the illegal workers here who are just sucked dry by the vampires of the businesses who use them and those that traffic in this human cargo.
34 posted on 03/19/2006 6:39:51 AM PST by ConsentofGoverned (if a sucker is born every minute, what are the voters?)
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To: B4Ranch
Was the man insured? Did he have a company name that is registered or is he just a guy trying to survive?

No, this fellow is insured, bonded, and incorporated.

35 posted on 03/19/2006 6:41:24 AM PST by kstewskis ("I don't know what I know, but I know that it's big".....Jerry Fletcher)
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To: B4Ranch

Who is this "na" character? Is he the guy who has his work published at CounterPunch.org?


36 posted on 03/19/2006 6:42:46 AM PST by 1rudeboy
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To: ConsentofGoverned
Let me repeat this.

The Free traders are a bunch of socialist or ,at best, dupes of socialists who want unified world control over the worlds production and wealth.

They have forgotten about our national sovereignty and the pride of being an American too. All in the interest of a dollar bill.

37 posted on 03/19/2006 6:46:26 AM PST by B4Ranch (The truth is good for you, like sunlight, but too much all at once can really hurt.)
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To: ConsentofGoverned
Free traders are ignorant of the result of what they so strongly support.

LOL!! Please, show us all how the economies of protectionist nations are better than the economies of freer trading nations. Take your time.

38 posted on 03/19/2006 6:46:40 AM PST by Toddsterpatriot (Why are protectionists so bad at math?)
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To: 1rudeboy
Corporations being "forced" to outsource????

Is Sunday a national fantasy-day?

39 posted on 03/19/2006 6:47:17 AM PST by desertlily
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To: JasonC

"but the American economy and people are fine."

If we were fine then our bills would be paid and we'd have cash in the bank. Two things we don't have now.


40 posted on 03/19/2006 6:48:06 AM PST by B4Ranch (The truth is good for you, like sunlight, but too much all at once can really hurt.)
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