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 America’s 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 America’s 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 America’s 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, America’s 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.
Asia’s 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 America’s 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 America’s 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.
why don't you go to a local wm and find out for yourself. You can take a shower when you get home.
Because I've done enough work proving you wrong. Any more would just be piling on.
How are we getting richer?
No fair, I've got him first to adjust his all holy table to remove the top 2% outliers and their effect on earnings averages. This might take a life time or until the economy collapses, so catch a movie or ten.
Net worth is at a record level.
Not quite, he's a pro at jumping to insults but as far as insults go, they're about on a 5th or 6th grade level. Maybe he should outsource the insulting, I'm sure some Indian or Chinese guy can be wittier then Toddster there and do it for half the neurons he's burning out.
So where have you proved me wrong? WM's enron type fact sheet that said they bought 18 billion from china?? Wm did not get the term chinamart out of thin air.
Last time I checked Net Worth was Assets less Liabilities. We are the largest debtor nation in the history of the planet. Our liabilities are 10 times our annual GDP. Please show a little more depth of thought.
Let me count the ways. China does not hold the majority (+50%) of our Treasury debt. China does not have 300,000,000 engineers. Shall I continue?
Correct!!
We are the largest debtor nation in the history of the planet.
Correct again!!
Our liabilities are 10 times our annual GDP.
Huh? Annual GDP is about $12 trillion. Where have you seen our liabilities are $120 trillion?
Unlike yourself I admitted I made a mistake on those two. Prove to me without some enron type chart from WM or a pro import lobbying group that WM does not stock it's shelves with 65% or more goods made in china.
BTW: This is really getting old.
What are my unadmitted mistakes?
Prove to me without some enron type chart from WM or a pro import lobbying group that WM does not stock it's shelves with 65% or more goods made in china.
Gee, you want me to prove a negative? Why don't you get a chart from an anti-WalMart protectionist group that shows the real Chinese imports at WalMart?
Don't you think that if WalMart was lying and your truth (65%-75%) came out that the lie would destroy WalMart? Why would they risk it?
And that was only two. Did you want me to list more?
Sorry, I mis-stated. Liabilities are 8 times GDP. GDP is $10T not $12T. Liabilities (not current deficit) are $80T.
BTW, Where have you seen Net Worth at record levels?
Look at the economy. It's growing.
Last year, my income went up by 45% from the prior year. The value of my house shot up.
I'm not alone. The statistics say we're getting richer.
Quote: Last year, my income went up by 45% from the prior year. The value of my house shot up
These are the best of time and the worst of times. Tell that to the tens of thousands of people who lost manufacturing jobs in my state of ohio.
In current dollars, 1st Quarter 2005 GDP was $12.1917 trillion.
Liabilities (not current deficit) are $80T.
You mean for Social Security and Medicare?
BTW, Where have you seen Net Worth at record levels?
Here. $48.7945 trillion.
I think Putin is kind of cool. Cliff notes time, I see him as the Russian version of Teddy Roosevelt where he broke up the oil trust over there so all I could say to Putin, "go, man, go!" However, I do have one caveat, as an American I cannot trust him or Russia 100%, but if I was Russian (some of my ancestors came from there) I would be all for him.
Wow!!! That's like O.J. admitting he killed Nicole!!!
Yes WM buys 20 billion directly from china only...just like they say.
Well, actually $9 billion.
And yes, they buy the rest from American suppliers like Stanley tools, GE and Black & Decker.... who just happen to buy from china. It's not what WM is telling you but the omission facts they are leaving out.
Doesn't look like they're leaving anything out.
Myth: 70 percent of the merchandise sold at our stores comes from China.
Fact: The special interest group who makes this claim doesn't tell you where it got that statistic. In actuality, Wal-Mart's business with U.S. suppliers remains strong and healthy.
In 2004, Wal-Mart spent more than $150 billion for U.S. products and services sold at our stores. A single company with sales of that magnitude would rank #6 on the Fortune 500. You can count on this fact, too: The products and services from US suppliers sold at Wal-Mart stores provide good jobs to more than 3 million employees at 61,000 suppliers in states across America.
Wal-Mart estimates that we purchased about $18 billion from China last year -- about $9 billion imported from direct sources and about $9 billion from indirect sources -- compared to $150 billion spent last year with all kinds of suppliers in the U.S.
See, the indirect sources would be companies like Stanley Tools, GE and Black & Decker.
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