Posted on 06/07/2005 8:14:42 PM PDT by A. Pole
In May, the Bush economy eked out a paltry 73,000 private sector jobs: 20,000 jobs in construction (primarily for Mexican immigrants), 21,000 jobs in wholesale and retail trade, and 32,500 jobs in health care and social assistance. Local government added 5,000 for a grand total of 78,000.
Not a single one of these jobs produces an exportable good or service. With Americans increasingly divorced from the production of the goods and services that they consume, Americans have no way to pay for their consumption except by handing over to foreigners more of their accumulated stock of wealth. The country continues to eat its seed corn.
Only 10 million Americans are classified as production workers in the Bureau of Labor Statistics non-farm payroll tables. Think about that. The United States, with a population approaching 300 million, has only 10 million production workers. That means Americans are consuming the products of other countries labor.
In the 21st century, the U.S. economy has been unable to create jobs in export and import-competitive industries. U.S. job growth is confined to nontradable domestic services.
This movement of the American labor force toward Third World occupations in domestic services has dire implications both for U.S. living standards and for Americas status as a superpower.
Economists and policymakers are in denial, while the U.S. economy implodes in front of their noses. The U.S.-China Commission is making a great effort to bring reality to policymakers by holding a series of hearings to explore the depths of American decline.
The commissioners got an earful at the May 19 hearings in New York at the Council on Foreign Relations. Ralph Gomory explained that Americas naive belief that offshore outsourcing and globalism are working for America is based on a 200-year-old trade theory, the premises of which do not reflect the modern world.
Clyde Prestowitz, author of the just published Three Billion New Capitalists: The Great Shift of Wealth and Power to the East, explained that Americas prosperity is an illusion. Americans feel prosperous because they are consuming $700 billion annually more than they are producing. Foreigners, principally Asians, are financing U.S. over-consumption, because we are paying them by handing over our markets, our jobs and our wealth.
My former Business Week colleague Bill Wolman explained the consequences for U.S. workers of suddenly facing direct labor market competition from hundreds of millions of Chinese and Indian workers.
Toward the end of the 20th century, three developments came together that are rapidly moving high productivity, high value-added jobs that pay well away from the United States to Asia: the collapse of world socialism, which vastly increased the supply of labor available to U.S. capital; the rise of the high speed Internet; and the extraordinary international mobility of U.S. capital and technology.
First World capital is rapidly deserting First World labor in favor of Third World labor, which is much cheaper because of its abundance and low cost of living. Formerly, Americas high real incomes were protected from cheap foreign labor, because U.S. labor worked with more capital and better technology, which made it more productive. Today, however, U.S. capital and technology move to cheap labor, or cheap labor moves via the Internet to U.S. employment.
The reason economic development in China and some Indian cities is so rapid is because it is fueled by the offshore location of First World corporations. Prestowitz is correct that the form that globalism has taken is shifting income and wealth from the First World to the Third World. The rise of Asia is coming at the expense of the American worker.
Global competition could have developed differently. U.S. capital and technology could have remained at home, protecting U.S. incomes with high productivity. Asia would have had to raise itself up without the inside track of First World offshore producers.
Asias economic development would have been slow and laborious and would have been characterized by a gradual rise of Asian incomes toward U.S. incomes, not by a jarring loss of American jobs and incomes to Asians.
Instead, U.S. corporations, driven by the shortsighted and ultimately destructive focus on quarterly profits, chose to drive earnings and managerial bonuses by substituting cheap Asian labor for American labor.
American businesses short-run profit maximization plays directly into the hands of thoughtful Asian governments with long-run strategies. As Prestowitz informed the commissioners, China now has more semiconductor plants than the United States. Short-run goals are reducing U.S. corporations to brand names with sales forces marketing foreign made goods and services.
By substituting foreign for American workers, U.S. corporations are destroying their American markets. As American jobs in the higher-paying manufacturing and professional services are given to Asians, and as American schoolteachers and nurses lose their occupations to foreigners imported under work visa programs, American purchasing power dries up, especially once all the home equity is spent, credit cards are maxed out and the dollar loses value to the Asian currencies.
The dollar is receiving a short-term respite as a result of the rejection of the European Union by France and Holland. The fate of the Euro, which rose so rapidly in value against the dollar in recent years, is uncertain, thus possibly cutting off one avenue of escape from the over-produced U.S. dollar.
However, nothing is in the works to halt Americas decline and to put the economy on a path of true prosperity. In January 2004, I told a televised conference of the Brookings Institution in Washington, D.C., that the United States would be a Third World economy in 20 years. I was projecting the economic outcome of the U.S. labor force being denied First World employment and forced into the low productivity occupations of domestic services.
Considering the vast excess supplies of labor in India and China, Asian wages are unlikely to rapidly approach existing U.S. levels. Therefore, the substitution of Asian for U.S. labor in tradable goods and services is likely to continue.
As U.S. students seek employments immune from outsourcing, engineering enrollments are declining. The exit of so much manufacturing is destroying the supply chains that make manufacturing possible. The Asians will not give us back our economy once we have lost it. They will not play the free trade game and let their labor force be displaced by cheap American labor.
Offshore outsourcing is dismantling the ladders of Americas fabled upward mobility. The U.S. labor force already has one foot in the Third World. By 2024, the United States will be a has-been country.
Quote: Actually the trade deficit with China went from $124 billion to $162 billion.
Wait and see what those numbers will be in a few more years. Alot of companies have not moved over there because they were seeing what their compeition was doing and where unsure of the process. My brother in michigan said many of his clients are planning or are in the to process send operations to china. He was a staunch free trader at one time but his income has really been going down because companies he sells to have been laying off people or moving to china. His ox is getting gored now so he has changed his view.
As soon as you show me the drop in wages due to NAFTA.
You mean maybe they'll match your incorrect numbers?
Quote: As soon as you show me the drop in wages due to NAFTA.
I'll check out the USBL site myself I guess. The 2004 wages are at near 2000 levels according to your chart. Not a good sign of trade deficits and free tradin.
--and others say the it is between $124 billion to $162 billion. This site with the DOC puts it at $125 billion in 2004.
Quote: You mean maybe they'll match your incorrect numbers?
The 196 billion was the total amount imported. But yeah you are correct in a sense. We'll wait and see what the 2005 numbers are.
In the sense of you being wrong? That's my favorite sense :^)
Yeah, wages can shrink coming out of a recession.
Not a good sign of trade deficits and free tradin.
So while our wages increased from 1994 to 2000 there was no free trade or deficits?
The 2004 wages are at near 2000 levels according to your chart.
Should read 2002 levels.
No he doesn't. Check this:
Actually, China could already be the world's third largest economy when based on more realistic purchasing price equivalents. Some international groups (including the International Monetary Fund), and number of U.S. financial analysts too, think that the Yuan is undervalued by a factor of four. If so, the implications of this are significant. It implies that the size of China's economy is really $6 trillion, rather than $1.5 trillion. It helps explain why they hold $620 billion of U.S. paper. So does your postulate really have any credible legs anymore? No.
You also have to take in to account the fact that companies like IBM, AT&T and Oracle do significant defense contracting as well.
Cheers,
CSG
Wrong, you work for the company that hired you. They pay your salary from their profit margin (some or all of it may come from the government). If you loose the contract the company may or may not be able to relocate you to another (this is just like private industry here). The fact that the government is your client makes no difference on the fact that you are part of the free market. The government is not your employer, it is your client. If you work for a company that has one client and one contract then you effectively work for the client, consequently the most successful defense contractors do not have one client and one contract. They also don't turn around and dump people when contracts are lost (as a rule) usually they have enough work to retool. These principles work the same way for any corporation that deals with private industry. You'd be hard pressed to find a large (i.e. Fortune 100) company that doesn't have some percentage of its profit coming from the government though.
Cheers,
CSG
That may have more to do with the fact that online booksellers can beat any local bookstore on price and they deliver to your door free of charge for orders over $25 dollars. Bookstores in general are being killed off by online book sales. That's one of the reasons they sell more than just books now, e.g., coffee, food, deserts. They know most people just come there to browse with little intention of actually buying a book.
I haven't seen anything on his age either, but I sincerely doubt that his misanthropy over the Iraq War is his first senior moment. That being said, he seems to be a lot more stable than a lot of the other supply-side economists who are notoriously flighty. Arthur Laffer, for example was a big-time booster of Bill Clinton. Roberts going "off the ranch" appears to be much more recent...and so too his "squeaky wheel" political statements. Maybe he had a stroke, I don't know. But as for his economics views, they are long-standing, and well developed. And need to be taken seriously by anybody in the Rational Expectations and Supply Side schools of thought.
BIOGRAPHY FOR
PAUL CRAIG ROBERTS
Hon. Paul Craig Roberts is the John M. Olin Fellow at the Institute for Political Economy, Senior Research Fellow at the Hoover Institution, Stanford University, and Research Fellow at the Independent Institute. A former editor and columnist for The Wall Street Journal and columnist for Business Week and the Scripps Howard News Service, he is a nationally syndicated columnist for Creators Syndicate in Los Angeles and a columnist for Investors Business Daily. In 1992 he received the Warren Brookes Award for Excellence in Journalism. In 1993 the Forbes Media Guide ranked him as one of the top seven journalists.
He was Distinguished Fellow at the Cato Institute from 1993 to 1996. From 1982 through 1993, he held the William E. Simon Chair in Political Economy at the Center for Strategic and International Studies. During 1981-82 he served as Assistant Secretary of the Treasury for Economic Policy. President Reagan and Treasury Secretary Regan credited him with a major role in the Economic Recovery Tax Act of 1981, and he was awarded the Treasury Departments Meritorious Service Award for "his outstanding contributions to the formulation of United States economic policy." From 1975 to 1978, Dr. Roberts served on the congressional staff where he drafted the Kemp-Roth bill and played a leading role in developing bipartisan support for a supply-side economic policy.
In 1987 the French government recognized him as "the artisan of a renewal in economic science and policy after half a century of state interventionism" and inducted him into the Legion of Honor.
Dr. Roberts latest books are The Tyranny of Good Intentions, co-authored with IPE Fellow Lawrence Stratton, and published by Prima Publishing in May 2000, and Chile: Two VisionsThe Allende-Pinochet Era, co-authored with IPE Fellow Karen Araujo, and published in Spanish by Universidad Nacional Andres Bello in Santiago, Chile, in November 2000. The Capitalist Revolution in Latin America, co-authored with IPE Fellow Karen LaFollette Araujo, was published by Oxford University Press in 1997. A Spanish language edition was published by Oxford in 1999. The New Colorline: How Quotas and Privilege Destroy Democracy, co- authored with Lawrence Stratton, was published by Regnery in 1995. A paperback edition was published in 1997. Meltdown: Inside the Soviet Economy, co- authored with Karen LaFollette, was published by the Cato Institute in 1990. Harvard University Press published his book, The Supply-Side Revolution, in 1984. Widely reviewed and favorably received, the book was praised by Forbes as "a timely masterpiece that will have real impact on economic thinking in the years ahead." Dr. Roberts is the author of Alienation and the Soviet Economy, published in 1971 and republished in 1990. He is the author of Marxs Theory of Exchange, Alienation and Crisis, published in 1973 and republished in 1983. A Spanish language edition was published in 1974.
Dr. Roberts has held numerous academic appointments. He has contributed chapters to numerous books and has published many articles in journals of scholarship, including the Journal of Political Economy, Oxford Economic Papers, Journal of Law and Economics, Studies in Banking and Finance, Journal of Monetary Economics, Public Finance Quarterly, Public Choice, Classica et Mediaevalia, Ethics, Slavic Review, Soviet Studies, Rivista de Political Economica, and Zeitschrift fur Wirtschafspolitik. He has entries in the McGraw-Hill Encyclopedia of Economics and the New Palgrave Dictionary of Money and Finance. He has contributed to Commentary, The Public Interest, The National Interest, Harpers, the New York Times, The Washington Post, The Los Angeles Times, Fortune, London Times, The Financial Times, TLS, The Spectator, Il Sole 24 Ore, Le Figaro, Liberation, and the Nihon Keizai Shimbun. He has testified before committees of Congress on 30 occasions.
Dr. Roberts was educated at the Georgia Institute of Technology (B.S.), the University of Virginia (Ph.D.), the University of California at Berkeley and Oxford University where he was a member of Merton College.
He is listed in Whos Who in America, Whos Who in the World, The Dictionary of International Biography, Outstanding People of the Twentieth Century, and 1000 Leaders of World Influence
Not so much that, as that the industries themselves were still here, underutilized, but still up and running, with all the necessary structures and industrial and engineering know-how, and plant and equipment and a skilled work force that could easily expand production and switch to new tasks...just needing the capital and the "customer" so to speak...which were provided respectively by Lend-Lease and the military's huge purchases.
PPP is good for measuring standard of living, why is PPP more realistic when discussing size of economy?
As I understand it we produce 8 times more goods and services priced in dollars than they do, is that wrong?
Nice chart (couldn't you get one from E.P.I.?), that makes us a debt ridden beggar?
CIA World Fact Book:
USA: GDP: purchasing power parity - $11.75 trillion (2004 est.)
Public debt: 65% of GDP (2004 est.)
Budget:
revenues: $1.862 trillion
expenditures: $2.338 trillion, including capital expenditures of NA (2004 est.)
Current account balance: $-646.5 billion (2004 est.)
Debt - external: $1.4 trillion (2001 est.)
CHINA:
GDP: purchasing power parity - $7.262 trillion (2004 est.)
Public debt: 31.4% of GDP (2004 est.)
Current account balance: $30.32 billion (2004 est.)
Debt - external: $233.3 billion (3rd quarter 2004 est.)
Budget:
revenues: $317.9 billion
expenditures: $348.9 billion, including capital expenditures of NA (2004 est.)
Excuse me? Jobs? Sure, primarly as salesmen and secretaries. The manufacturing, support, etc is what is being taken out. Services and goods? Those are free? Hardly. Those are charged for and subsidized by the consumer. In other words, empty investment into Corporate Welfare. Taxes? Only on money repatriated to the US. Most of that cash gets spent on cost of goods sold and resunk overseas into more investments. Keep trying.
Well first of all, we won't honor our treaty to defend Taiwan. Foggy Bottom itself has said that US policy agrees that there is only one China. Further, all of the examples that you provided are the other reasons we won't go to war over Taiwan.
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