As far as employer-provided, yes. Pay for your own damned health costs.
Next question.
Posted on 03/20/2005 8:11:01 AM PST by A. Pole
A country cannot be a superpower without a high-tech economy, and America’s high-tech economy is eroding as I write.
The erosion began when U.S. corporations outsourced manufacturing. Today, many U.S. companies are little more than a brand name selling goods made in Asia.
Corporate outsourcers and their apologists presented the loss of manufacturing capability as a positive development. Manufacturing, they said, was the "old economy," whose loss to Asia ensured Americans lower consumer prices and greater shareholder returns. The American future was in the "new economy" of high-tech knowledge jobs.
This assertion became an article of faith. Few considered how a country could maintain a technological lead when it did not manufacture.
So far in the 21st century, there is scant sign of the American "new economy." The promised knowledge-based jobs have not appeared. To the contrary, the Bureau of Labor Statistics reports a net loss of 221,000 jobs in six major engineering job classifications.
Today, many computer, electrical and electronics engineers, who were well paid at the end of the 20th century, are unemployed and cannot find work. A country that doesn’t manufacture doesn’t need as many engineers, and much of the work that remains is being outsourced or filled with cheaper foreigners brought into the country on H-lb and L-1 work visas.
Confronted with inconvenient facts, outsourcing’s apologists moved to the next level of fantasy. Many technical and engineering jobs, they said, have become "commodity jobs," routine work that can be performed cheaper offshore. America will stay in the lead, they promised, because it will keep the research and development work, and be responsible for design and innovation.
Alas, now it is design and innovation that are being outsourced. Business Week reports ("Outsourcing Innovation," March 21) that the pledge of First World corporations to keep research and development in-house "is now passe."
Corporations such as Dell, Motorola and Philips, which are regarded as manufacturers based in proprietary design and core intellectual property originating in R&D departments, now put their brand names on complete products that are designed, engineered and manufactured in Asia by "original-design manufacturers" (ODM).
Business Week reports that practically overnight large percentages of cell phones, notebook PCs, digital cameras, MP3 players and personal digital assistants are produced by original-design manufacturers. Business Week quotes an executive of a Taiwanese ODM: "Customers used to participate in design two or three years back. But starting last year, many just take our product."
Another offshore ODM executive says: "What has changed is that more customers need us to design the whole product. It’s now difficult to get good ideas from our customers. We have to innovate ourselves." Another says: "We know this kind of product category a lot better than our customers do. We have the capability to integrate all the latest technologies." The customers are America’s premier high-tech names.
The design and engineering teams of Asian ODMs are expanding rapidly, while those of major U.S. corporations are shrinking. Business Week reports that R&D budgets at such technology companies as Hewlett Packard, Cisco, Motorola, Lucent Technologies, Ericsson and Nokia are being scaled back.
Outsourcing is rapidly converting U.S. corporations into a brand name with a sales force selling foreign designed, engineered and manufactured goods. Whether or not they realize it, U.S. corporations have written off the U.S. consumer market. People who do not participate in the innovation, design, engineering and manufacture of the products that they consume lack the incomes to support the sales infrastructure of the job diverse "old economy."
"Free market" economists and U.S. politicians are blind to the rapid transformation of America into a third world economy, but college-bound American students and heads of engineering schools are acutely aware of declining career opportunities and enrollments. While "free trade" economists and corporate publicists prattle on about America’s glorious future, heads of prestigious engineering schools ponder the future of engineering education in America.
Once U.S. firms complete their loss of proprietary architecture, how much intrinsic value resides in a brand name? What is to keep the all-powerful ODMs from undercutting the American brand names?
The outsourcing of manufacturing, design and innovation has dire consequences for U.S. higher education. The advantages of a college degree are erased when the only source of employment is domestic nontradable services.
According to the March 11 Los Angeles Times, the percentage of college graduates among the long-term chronically unemployed has risen sharply in the 21st century. The U.S. Department of Labor reported in March that 373,000 discouraged college graduates dropped out of the labor force in February—a far higher number than the number of new jobs created.
The disappearing U.S. economy can also be seen in the exploding trade deficit. As more employment is shifted offshore, goods and services formerly produced domestically become imports. No-think economists and Bush administration officials claim that America’s increasing dependence on imported goods and services is evidence of the strength of the U.S. economy and its role as engine of global growth.
This claim ignores that the United States is paying for its outsourced goods and services by transferring its wealth and future income streams to foreigners. Foreigners have acquired $3.6 trillion of U.S. assets since 1990 as a result of U.S. trade deficits.
Foreigners have a surfeit of dollar assets. For the past three years, their increasing unwillingness to acquire more dollars has resulted in a marked decline in the dollar’s value in relation to gold and tradable currencies.
Recently, the Japanese, Chinese and Koreans have expressed their concerns. According to a March 10 Bloomberg report, Japan’s unrealized losses on its dollar reserve holdings have reached $109.6 billion.
The Asia Times reported on March 12 that Asian central banks have been reducing their dollar holdings in favor of regional currencies for the past three years. A study by the Bank of International Settlements concluded that the ratio of dollar reserves held in Asia declined from 81 percent in the third quarter of 2001 to 67 percent in September 2004. India reduced its dollar holdings from 68 percent of total reserves to 43 percent. China reduced its dollar holdings from 83 percent to 68 percent.
The U.S. dollar will not be able to maintain its role as world reserve currency when it is being abandoned by that area of the world that is rapidly becoming the manufacturing, engineering and innovation powerhouse.
Misled by propagandistic "free trade" claims, Americans will be at a loss to understand the increasing career frustrations of the college educated. Falling pay and rising prices of foreign made goods will squeeze U.S. living standards as the declining dollar heralds America’s descent into a has-been economy.
Meanwhile, the Grand Old Party has passed a bankruptcy "reform" that is certain to turn unemployed Americans living on debt and beset with unpayable medical bills into the indentured servants of credit card companies. The steely-faced Bush administration is making certain that Americans will experience to the full their country’s fall.
To find out more about Paul Craig Roberts, and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate web page at www.creators.com.
COPYRIGHT 2005 CREATORS SYNDICATE, INC.
Second is to introduce national single payer system to relieve employers from the crippling burden and help workers to be more mobile and secure.
The third is to provide free full (tuition/room/board, no means test)scholarships for better 50% of students based on competition exams. This will enable American graduates to compete on the job market without burden of debt to pay.
And you say you are a conservative? How do you differ from Teddy Kennedy? Are you sure you dont belong on DU?
bookmark
He he. Losing the argument?
I just follow the logical conclusions from the present situation. USA industry cannot compete against countries with VAT, national health care and full student scholarships. The only alternative is restoring the traditional tariffs or imitating the competition.
And I am conservative on the moral/religious/social issues. On the matters of economy I am a pragmatic - whatever solution works best be it free market or liberal. (I personally tend to think that the mixed calibrated system is best).
Does Daddy know you're messing with his computer?
It's not them, it's free-market capitalism. /sarc
Yes, that puts it well. You've generalized from the specific case shown for autos. Mr. A. Pole makes the case that it's because Reagan threatened auto tariffs, in post 103, but a lot of auto plants have been built here, since Reagan. That answer doesn't wash for me. Also, it's worth noting that South Carolina exports BMWs to Germany and the world, and I think there are other manufacturers that do that sort of thing.
We'll end up like england. A glut of lawyers and insurance companies and a few land barons, and not much else.
I don't care what the rich snobby people say, we need manufacturing. All wealth is derived from the land. THat is a universal truth. THat means farming and the process of aquiring raw materials and transforming raw materials into finished product.
When you reach a point when your entire economy is based on accumulating wealth from paper and entertainment, you are headed down a dead end road. THat is a non-sustainable situation. It can be propped up for a period, but inevitably, it will implode.
We have already reached a point where our college educations are becoming pointless. More younger people are opting out of a traditional 4 year degree these days. They go to some accelerated program, and get just the minimum required to qualify for the promotion they are up for. And in the very technical fields, they don't even bother with that.
As far as employer-provided, yes. Pay for your own damned health costs.
Next question.
Thank you for your answer but I am only concerned about U.S. goods produced offshore and imported for sale here. I am not sure that you addressed that. If you did then it went over my head and I will revisit your reply. Thanks.
Let me just jump to the reason for my question.
Most "free traders" attempt to deflect arguments against sending production offshore and importing the finished product to sell to the American public by pointing to "insourcing."
"Look how many jobs Americans get from insourcing," they argue. "Other countries outsource to us. Outsourcing offshore is good," they triumphantly declare.
Yes indeed it is -- if the American companies were selling over there and not importing the goods for sale here.
Besides, if foreigners can do it here (insourcing) why can't those American companies do it.
True free trade has American companies producing and selling over there.
But "free trade" IMO is transferring technology, wealth, and production to developing countries in exchange for "cheap" labor. The goods are then exported to America for sale.
Intellectual property gets stolen and soon production shifts to foreign (as in Chi-com) enterprises that elbow American companies out of the way. They then become the exporters. IMO. Not good.
"That is why USA needs to change tax system into VAT."
There are no VAT proposals in congress that I am aware of (feel free to correct me if I am wrong) that replace our income tax and payroll tax system. They all want to add a VAT in addition to our current tax modes.
Furthermore, VATs have high compliance costs, also. Perhaps not as high as our current system, but certainly higher than the FairTax, which would be a National Retail Sales Tax collected at a single point with a uniform rate.
We can't stop progress just to make sure people have jobs.
If the wages do not grow, many workers will not be able to afford the health care - they will either get deep into the debt or go without it. So in the longer run they and others will support the national health care.
Today's America is very different from XIX. Health care is seen as a necessary part of the normal style of life. And people given choice between laissez-faire capitalism without safety net and socialism will chose the later unless the choice is taken away from them by Latin American style authoritarian regime.
Predatory oligarchical capitalism requires opression and use of force because of lack of popular consent. The New Deal policies defended the stability of American system and they were very successful in that aspect. The new freemarketeers move in the opposite direction.
Unfortunately you are right.
Furthermore, VATs have high compliance costs, also. Perhaps not as high as our current system, but certainly higher than the FairTax, which would be a National Retail Sales Tax collected at a single point with a uniform rate.
How is this going to fix the problem with trade/budget deficits, with rising costs of health care and with the workers losing ground?
No, he prefers your mom.
Commoditized industry comptetes only on price.
To hell with such "progress" which is changing USA into Latin America or XIX England. Nothing good will come out of it.
They were complaining 20 years ago about how hard the factories and mines were on the people.
They were complaining 20 years ago about how hard the factories and mines were on the people.
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