What argument? You mean the one where I posted facts and you posted feelings? If you want to argue facts, let's go.
If you want to talk feelings, use this and then get back to me when you feel better.
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.
What argument? You mean the one where I posted facts and you posted feelings? If you want to argue facts, let's go.
If you want to talk feelings, use this and then get back to me when you feel better.
Dear SwankyC,
"You and ol' '90% of Walmart's good are made in America' ToddsterPatriot dont like to accept fact."
First, I don't think that's what ToddsterPatriot posted a few posts back.
Second, I've refrained making any comments on ToddsterPatriot's assertions, and will continue to do so. It wasn't the point I addressed.
"You call it an anecdote, I'll call it reality."
And that's why you appear to be a bit reality-challenged, unable to distinguish between your own limited experience and the larger reality. It's analogous to saying that if you're unemployed, most people are probably unemployed.
"...but you're still trying to say they are making all of their vehicles here and it just isnt true."
At no time have I said this, or even implied it. In fact, if you were to re-read and actually comprehend what I quoted, you would have seen that:
"...actually make most of the vehicles that are sold in the US here in North America,..."
MOST means more than half. ALL means 100%. There is a substantial difference between more than half and 100%. Your inability to deal with reality seems to have spread even to your ability to comprehend what I wrote.
The only point that I've made is that at least Honda and Toyota make a lot of vehicles in North America, a significant proportion (apparently more than half) of those actually sold in the United States.
Do you dispute that?
If not, why do you persist? I haven't said anything more than that.
"That's all I got,..."
And it is very little, indeed. Bald assertions devoid of substantial evidence.
"...you're wrong and im not gonna argue with you like a child."
* chuckle *
That's how a five year-old argues - "You're wrong and I'm right." LOL. That really is how children argue.
Glad you can admit it. That's the first step toward recovery.
;-)
sitetest
You are funny. I gave the latest numbers for the same latest whole year for both countries - 2004 and you give 2003 number for Japan and partial 2005 for US.
Either way, a small overcrowded island without the resources should do much much worse than it is doing if the policies were inferior. You do not get it. I give you grade F+.
Yeah, you gave me numbers. I don't suppose you have a link to that number?
Either way, a small overcrowded island without the resources should do much much worse than it is doing if the policies were inferior.
Worse than 1.6% economic growth over the last 15 years? You socialists certainly have low standards.
Good grief. Is that why China is losing all those manufacturing jobs?
Actually, WalMart bought about $137.5 billion in American goods out of about $198 billion total. So that would be just under 70% American. About 7.5% Chinese, about 22.5% other.
I agree there are serious problems with free trade, but what does the author propose as an alternative?
What is the link between free trade and bankruptcy reform?
And these 373,000 college graduates who can't find jobs - what did they study? Sociology? Art History? Feminist Studies? Journalism?
Or did they study Accounting? Marketing? Engineering? Computer Science?
A'hem. Could it be that reflects precisely the introduction of Western manufacturing into China? And a real displacement effect is occurring. The new technology is not getting made here. Who is making all the newest, latest generation cell phones? The new LCD screens? The new plasma screens? The guts of all the latest-generation PC's and laptops? And servers? Switches? Circuit boards? Even semiconductors now.
And of course, there is the 'buggy-whip' industry they are taking over too... Who is making all those auto parts for new cars? GM wants to shift $10 billion a year over there... h'mmmm.
That is true.. It is starting now, however in 5 years it is going to be a hot item..
Got it. We don't build nuthin', nowheres, no how.
Are you aware how many aerospace engineers have been laid off in the U.S.? And how adverse the employment climate is relating to their hiring vis-a-vis H1-B's?
Figures that the Wizards of CATO are living in the Land of Oz....
Looks like Paul Craig Roberts to me.
Sounds like Paul Craig Roberts too.
Sort of like, a'hem, your jolly selves.
Oops, you found me out.
RE: 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.
Having dealt with this up close and personal, I offer the following commentary. In my case, there was essentially no choice. The competition started up a price war and many of them outsourced. It happened very fast and our shareholders were not very patient. Ideally, we would have figured out how to become more lean, reduce scrap and, siginificantly, greatly steepen our ramps to volume, quality and reliability on new products. But the impatient shareholders held the cards, and outsource we had to. If there is any moral to the story, it is that being a publicly owned company essentially sucks, from the standpoint of management span of control. However, from the standpoint of stock options, it has its appeal.
Poor Gríma, I mean Paul. He's a witless worm.
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