America's Superpower Status Coming to an End

Newsmax.com ^ | 3/1/05 | Paul Craig Roberts

[beyond the sea]

The U.S. economy is headed toward crisis, and the political leadership of the country – if it can be called leadership – is preoccupied with nonexistent weapons of mass destruction in the Middle East.

The U.S. economy is failing. The afflictions are serious. They could be fatal even if diagnosed and treated. America is losing the purchasing power of its currency and its ability to create middle-class jobs. Story Continues Below

The dollar's sharp decline and projections of continuing trade and budgetary red ink are undermining the dollar's role as reserve currency. A number of central banks have announced that they will be diversifying their currency holdings and will not be buying dollars at the same rate as in the past. This will put more pressure on the dollar. At some point, the flight will begin. Instead of buying fewer dollars, central banks will sell dollars, hoping to get out before the dollar hits bottom.

Suddenly, the advantage of being the reserve currency becomes a nightmare, as the world's accumulations of dollars are brought to market. An enormous supply and weak demand mean a very low exchange rate for the once almighty U.S. dollar.

Overnight, those cheap goods in Wal-Mart, which are the no-think economist's facile justification for Wal-Mart's decimation of communities, small businesses and employment, shoot up in price.

[William Terrell]

No. The way that we compete is by replacing human labor with free robot labor.

Ok. Where is the free robot labor?

[William Terrell]

Sorry, sweetheart. If you wish to argue that we Americans only assemble parts manufactured overseas, be my guest.

Ah, cutiepie, not only, just the vast majority. I have checked the inside parts on the electronic devices I have acquired, all foreign made. I have checked the auto parts houses, foreign made, likewise refidgerators, most furniture, washer/dryers, anything I have acquired that could look into. Foreign made components.

Tell me what does not use foreign made parts, either all, most or even some?

[1rudeboy]

So that's it, huh? You'll only be happy if your stuff has American components. Make no mistake, I think that is noble, but how long before you drive our economy into the ground with such nonsense.

[Southack]

"Ok. Where is the free robot labor?"

It's inside every deployed softdrink vending machine. It's inside every newspaper streetcorner machine. It's in every factory welding and painting robot. It's the "switch" that delivers your phone calls, something once manually done by hand.

This isn't to say that the machines are free, but their labor is essentially free once they are built.

And by *automating* processes, nations with extraordinarily high human labor costs such as Germany and Japan can compete, and often beat, the low cost exporters like China and India.

Automation is the ideal. By automating the right processes, Boeing can make rocket engines and commercial aircraft cheaper and with better quality here in the U.S. than can Sino Air in China. Intel can fabricate chips cheaper, faster, and with better quality here in the U.S., all because it knows how to automate the right processes. Dell can build PC's here in the U.S. cheaper, again due to automation.

Coca-Cola and Pepsi take automation to new heights...and dominate the globe in their field because of it.

Anyone familiar with Kraft's notoriously low cost of production knows that they've used advanced math and physics to automate food processes to such a state that no one can really challenge them.

Those in the know, realize that so-called "cheap labor" is under profound attack from the ever-increasing pace of industrial and post-industrial automation.

You simply can't beat good automation with mere "cheap labor."

Heck, it costs *more* to hire even a cheap Chinese kid to hand out soft drinks than it does to park a Coke machine in an office...where it works 24/7 with no sick days, no training days, no vacations, no work strikes, no job-hopping, etc.

Cheap labor is a vestige of a long-passed Age. People who fret about "cheap labor" being a threat are stuck in the past.

Cheap labor isn't a threat. No, it is "cheap labor" that is being threatened. Who needs it?!

ANSWER: fewer and fewer business processes.

[Southack]

"Tell me what does not use foreign made parts, either all, most or even some?"

American aircraft. American booster rockets. American nano-technology. American food processing. American bricks. American lumber. American paper. American cement. Etc.

[ARCADIA]

Boeing has already outsourced its critical wing technology on its Jumbos to China and make only about 40% of its aircraft in the US. You should also consider how much of the productive machinery (machine tools et all) is still sourced domestically.

[chemainus]

I understand if we want a large tail-assembly we have to ask the Chinese if they will make one for us...this mfg. segment was shipped there by Clinton...think of the intelligence benefit to the Chi Coms from knowing what we make what we have as well as having all our technology...we are suicidal...or the Bildebergs are our government...Bush included as he does nothing against China...even let them humiliate us over the airplane in legal Intl. airspace

[chemainus]

A Toyota has more Made in America than a GM car...

[William Terrell]

So that's it, huh? You'll only be happy if your stuff has American components. Make no mistake, I think that is noble, but how long before you drive our economy into the ground with such nonsense.

Drive the economy into the ground? You forget, or maybe not old enough to remember, what I advocate was the way America worked. This way you advocate is a new untested way. Justify for me please junking a tried and true system for an untried and experimental system.

Incidentally, I want to thank you for your repeated responses allowing me to flesh out the fallacies of the global free trade system.

[Southack]

"Boeing has already outsourced its critical wing technology on its Jumbos to China..."

What's your source for that wild-eyed claim?

[Toddsterpatriot]

The drain off of American capital to the countries that make these foreign made parts is enormous. Every component on an "American made" car that is foreign made must be paid for from the amount a person pays for the car.

Look at it from the point of view of the buyer. He doesn't care if his money goes to India or Indiana. If he gets the car he wants at the price he wants, he's happy. You want to raise the price by thousands of dollars so the money goes to Indiana? Well, what's in it for him? How does paying let's say $2,000 more for the same car benefit the buyer?

What percentage of the part used to make an "American made" car is foreign made? Near 100%, most like. Every one of those parts represent money that leaves the country, which means that when we buy a car nowadays a large percentage of the bucks we lay out for it is gone.

So, money leaves the country. So what? The foreigners have 3 choices, they can save the money, spend the money or eat the money. Please explain how each of those 3 choices is bad for America.

Gone? Well, not really, it comes back to purchase American land, companies, stock, debt and politicians. How do you factor those effects into your global free trade?

So, the $2,000 my car buyer saved, where does that money go? To buy American goods, stock, land, debt. That's bad how?

100% American made components are required. You miss the point of what I said. Within the our earlier pro-sumer economy, where we make all the things we use and make the components too, the higher expense was was not a higher expense. People that worked in other jobs made enough to easily afford them.

All you need to do to convince me is to show we are worse off before all this darn free(r) tradin' started. Maybe showing another country that produces 100% of their own stuff and how they are more prosperous than the US.

The question is why would you advocate putting all out eggs in an experimental basket when we already had one that worked fine?

Yeah, real experimental. We didn't trade during the 1700's did we? No trading during the 1800's? Yeah, that trading stuff is real experimental.

Why? For what purpose. Be clear and specific

Can't be clearer than I was before. I'm a consumer with a finite supply of money. I prefer to buy goods for less, rather than for more. I also prefer the freedom to do so. Clear enough?

[ARCADIA]

What's your source for that wild-eyed claim?

It has been all over the news.

the only plane part that Boeing now manufactures in-house is the wing. For the 777, in fact, Boeing outsourced so much of the plane to the Japanese Aerospace Consortium (comprised of companies like Mitsubishi) that some in the American aerospace industry grew concerned that it was offshoring the very expertise that competitively differentiated it

Here is the link to the article quoted above: http://www.openoutsource.com/resource-dated15408-The%20digital%20airplane.phtml

Here are a couple of others:

http://www.don-iannone.com/edfutures/2003/12/boeing-outsourcing-7e7-wing-work.html

http://www.compositesnews.com/cni.asp?articleID=7431

[ARCADIA]

I prefer to buy goods for less, rather than for more. I also prefer the freedom to do so. Clear enough?

It sounds like a combination treason and myoptic planning driven by a need for immediate self gratification. It is not going to last; I hope you have a plan "B" put away somewhere.

[Toddsterpatriot]

You've been busted.

Hardly. Read again.

Using nominal dollar figures makes it appear there was no increase in output. Using real data captures the increase.

What that means is the latest column uses todays numbers. You can argue about the older numbers.

Why don't you get a source that shows % of goods as a share of GDP for the historical data? Prove the graph wrong.

[Toddsterpatriot]

It sounds like a combination treason and myoptic planning

Buying foreign goods is treason? Wow, talk about lowering the bar. I call it freedom.

[Nowhere Man]

The point I get is that you would trade national sovereignty for a television sold locally for $644. That's the modern version of selling Manhattan island for $24 in beads.

A side tangent here, I remember when we first got color TV in early 1971, we bought a 1970 Zenith 23" color Boyden model for like $600 and it lasted 12 years. I still have it, would love to fix it and use it again if I ever get the time and money. I'm looking forward to playing with the convergence (adjusting all three color electron guns for a crisp picture) on that one. B-) Well our current TV, a 1982 Zenith we bought in early 1983, we got for like $650 and is still the daily watcher for 22 years going. Both sets were US made, they are so old that they say "Zenith Radio Corp." on the back. I also have a 1998 19" Zenith color and it seems to be a good set, but I can't really say it is a match for its older brothers. I'm a member of an old TV/radio forum made up of enthusiasts who like to repair old radios and TV's and the consensus is that the newer equipment is not up to quality of the older stuff. Some say the old RCA color TV's from the 1954-60 time period display the best quality color pictures, but I digress.

There are times I think we are declining as a superpower, one one side you have the free traders that would sell our manufacturing and other jobs for quickie profits without looking to the future and we will end up crucified on "a cross of gold." (with apologies to William Jennings Bryant) On the other side of the coin, you have the Cultural Marxists who would impose their libertine values and continue to degrade our society morally. I call it, "The One-Two Punch." I don't see the two sides actively working together, I know many free-traders might be conservative morally, but fail to see their economic policies playing into the hands of the Cultural Marxists as well as the true Marxists like the Chi-Coms. They just sort of run in parallel, right now, but as Marx, or was it Lenin, that did say that they would "sell us the rope to hang ourselves with."

[ARCADIA]

Using real data captures the increase.

So you look at the nominally adjusted data (all values adjusted to constant dollars i.e. year 2000 - so that your unit prices are all expressed in terms of year 2000 dollars) which shows a manufacturing decrease. Then multiply the technology sector by some large number (somebody's fudgefactor) because, your widget today is said to be functionally more capable the the widget of yesteryear. That is irrelevant when you are looking specifically at your level of taxable economic activity.

Perhaps whomever put this chart together used 1940 as a base year, adjusted all the dollars to a common base year, then asked what is the value of the capacity deployed in 2003 in terms of 1940 technology. The resulting number is then shown as the value of economic activity for 2003.

For instance: If in 1940 it would take ten typewriters and ten clerks one week to reproduce what you can do for yourself with a PC over the same period of time. They then compare the cost of the ten people and ten typewriters with the actual 2003 cost of a week of your time and your PC and come up with an adjustment. Something like, "the average office worker today is 8 times as productive as the office worker of 1940", and use that reasoning to either multiply 2003 amount spent on office workers by a factor of 8, or to divide the 1940 number by the same.

The result depends entirely on how you define equivalency between the products. If a car is a means to transport so many people over a given distance per gallon of gas, you get one answer. But, if a car is just so many pounds of steel you get an entirely different answer. You adjust whatever you want until you get the result that you are looking for. You are not adjusting everything, just those line items that you choose to modify.

This chart presents a distorted view which means nothing unless you are clear on how the numbers are being manipulated. We might be better off if we approach the question of US manufacturing from the perspective of global market share.

[mad_as_he$$]

Oh I thought it was a story not another attack on Wally World.

[ARCADIA]

See post #577, in response to your post #574.

[SaltyJoe]

It won't be much use to cry foul over a wild goose chase that caught no fowl.

The WMD may be nonexistent "now" that the world is breathing down the necks of tyrannical regimes in the Middle East. There was quite a paper trail as to it's existence before it was either buried in the sand, dumped in rivers, or burned.

Iran promises to be a nuclear power, and last I heard, "nuclear" is still included in the WMD category.

I think that the article's writer is throwing out stuff for shock value. The free world has more legitimacy in arguing national sovereignty to rid tyranny from nations like occupied Lebanon than to re-hash the WMD argument. Even if America doesn't lead military action against Syria, others looking for WMD there will probably only find sand.

Besides a coalition of forces meeting East of the port city Haifa, Israel sounds dangerously close to the apocalypse. We'd better be very careful about who talks us into assembly for a fight near Megiddo.