U.S. Labor Force: One Foot in the Third World

Chronicles Magazine ^ | Tuesday, June 07, 2005 | Paul Craig Roberts

[indthkr]

< ....parents are piling their kids into law schools >

This has definitely been the trend over the past three
to five years. The American workforce of the future is choosing careers with built-in trade barriers, in spite of what the free trade zealots try to push. Its about the only high paying career field that can't be easily outsourced (and yes, I know about efforts to do this...they're not going to be successful).

Unfortunately, I don't think our legal services industry (or should I say disservice industry?) will help the balance of trade problem very much.

There seems to be a fundamental values issue at work here that I don't think the U.S. is going to overcome (or at least before it's too late). Its interesting to note that every one of the nine members of the Chinese Politburo Standing Committee is an Engineer, including Hu Jintao, the president of the PRC. In the U.S., our elected leadership (and I use that term loosely) is predominately made up of attorneys.

I could be wrong, but I think the current prime minister
of India is either a physicist or an engineer.

[defenderSD]

Yes, the extent to which lawyers dominate the political leadership of this country is truly scary.

[durasell]

The democrats are the least of your problems. As far as I know, we are still "one nation under god..." Don't let yourself be blinded by what amounts to a "family squabble in the larger scheme of things.

[Paul Ross]

Where is the relationship prior to 2001?

Guess you didn't read Greenspan. The chart doesn't need to provide "proof" pre-2001 of a relationship, as the theoretical fundamentals are "Adam Smith" axiomatic and well known. And the chart admirably demonstrates what has happened since.

Did you read the Greenspan article? Do you claim to know better than Greenspan? He thinks the falling dollar has to dissuade imports and rebalance trade at some point. I personally am not sanguine about the prospects, and believe currency debauchment unwise, but I certainly HOPE he is right.

The question is, are the countervailing strategic economic policies (i.e., securities reinvestments in U.S. treasuries) of the exporting countries finally being overwhelmed by the general drag on the markets they have effectuated?

Have we reached, indeed, gone beyond a tipping point?

[Paul Ross]

There seems to be a fundamental values issue at work here that I don't think the U.S. is going to overcome (or at least before it's too late). Its interesting to note that every one of the nine members of the Chinese Politburo Standing Committee is an Engineer, including Hu Jintao, the president of the PRC. In the U.S., our elected leadership (and I use that term loosely) is predominately made up of attorneys. I could be wrong, but I think the current prime minister of India is either a physicist or an engineer.

These are points which need to be widely disseminated amongst our public policy community. These guys are not rubes. They know what they are doing. And maybe its our policy community that has snookered itself.

[investigateworld]

True enough, I have come to believe this (our lives) is merely a test.
Remind me to post the "old prospector story", it will bring tears to every free traders eyes.

[Toddsterpatriot]

The chart doesn't need to provide "proof" pre-2001 of a relationship, as the theoretical fundamentals are "Adam Smith" axiomatic and well known. And the chart admirably demonstrates what has happened since.

You provide a chart to prove a relationship. The title of the chart, if you were right would be "Here Is the Dollar-Deficit Relationship" The fact that the title asks "Where Is the Dollar-Deficit Relationship?" shows that it is not there.

And the relationship is only true since 2001? You know the funny thing about real relationships is that they're true for more than just a 4 year time frame. Especially since the 4 years before 2001 work against your claim of a relationship.

Correlation over the last 4 years is not proof of causation.

[Southack]

"I repeat. Not *ALL* sources, eh? By your new positon I guess imports, since they are clearly a "foreign source", aren't counted after all."

Imports to the U.S. *are* counted in the CPI figures.

You said that "foreign travel" wasn't counted in the CPI. That's correct. You then equated "foreign travel" with "imports." That's incorrect.

[Aliska]

I admit, I did question to whether I was a true Freeper

That bothers me that you would think of yourself in those terms. I'll bet a lot of people are sometimes afraid to state their opinion or join in here for fear of being run off the board or ridiculed because they don't agree on every single thing they "think" is acceptable here.

I can't get into this too much right now, and like the Wal Mart thing, on the surface of it, it isn't all good or all bad for America. Some benefit from the trend, and others suffer. There are shades in between, things vary from region to region, so then you have to start looking for net effects which are visible in every community across the country. Some places are booming, some places go bust, and some are both at the same time (like my area). Now. I'm concerned about the net effect and the future effect, and I don't need to look at charts to interpret what I see happening around me and hear on the news. Kodak shuts down or downsizes a huge plant in New York, Maytag moves a lot of its operations to Mexico, the furniture business in North Carolina is declining, it's happening all the time now and in hundreds of ways around the country, and people are talking about it, noticing it, and it doesn't matter which party they vote.

In some ways free trade is good in that we get lots of nice, cheap stuff, and in later years, I've seen things in stores and on the net from countries we never could purchase from in my narrower, younger world, like Russia, Romania, Argentina, Portugal (my favorite cookware was a store promo from there years back), etc., which formerly you either brought home as a tourist or things just didn't make their way into our markets from some countries.

Almost none of our clothing is made here. I don't know where bedding is made any more, but you can get beds in a bag, but if you want a plain set of full-sized matching sheets with pillowcases that I don't particularly even like, the cheapest I can find anywhere are in the $32+ range, some go in the $150 range (don't shop at Wal Mart, could probably save a little there lol). And they are not as nice as the plain percale or muslin, then no-iron synthetic-cotton blend ones we used to be able to buy in the $10-$20 range in the better stores years ago. I'm going to have to try to find some at garage sales. The nice, bargain ones get grabbed up on ebay like you wouldn't believe! And in all the stores left, K-Mart, Target, Marshall's, it's hard to find a complete set of anything like curtains. They are always out of part of it unless you get lucky and you don't have too many windows or you don't like their selection. I quit shopping the really nice stores years ago because prices got so high, even though I could have at times coughed up the cash, I can't justify in my conscience paying $80-$300 for a dress which I seldom wear any more anyway. I used to sew a lot, but that was for creative purposes, because by the time you buy all the proper stuff to make it really nice, you don't save anything unless it's bargain material or something for a kid.

Some guy on another forum lives in Brazil and commented to me that if they buy outside of their country, they have to pay 80% import tax on certain consumer items. I've also noticed when the big companies like Dell have good deals with coupons they throw out on the net, foreigners can't take advantage of them because the last big ticket item I bought from them I had to check a box that said I would not send it outside of the US, which I had no intention of doing because it was for personal use. I partly understand why they wouldn't want to deal with some foreigners, but I don't know why they are doing it and don't have the time to look into it. Lots of ebay sellers don't like to ship to foreigners, for example, usually for valid reasons. Net effect: less income flowing to America, more flowing out.

What I am getting at is that we are losing some business from foreigners. Surely that affects our GNP. I read about a guy from England who bought a plane ticket to come to New York so he could purchase something and got what he wanted and saved money besides. He either couldn't mail order it or the transaction would have been too expensive otherwise, probably because of duties imposed on his end. I can't remember why it worked out that way.

The first alarm bells started going off in my head many years ago when the corporations started getting so big globally and the UPC code was becoming so ubiquitous in so many countries. Also, the buyout and consolidation scramble started at almost the same time. American corporations don't necessarily have to expand, growing larger and larger, in order to prosper. Growing larger just shuts out the competition and makes that corporation richer, but the net effect may be in the negative when it comes to our GNP when those who can no longer compete with the mega-corporations close their doors forever.

It's not all one way or another way with me. There is some good to it, but now that I have seen the downside in the way of tremendous loss of jobs and loss of our traditional way of life, housing through the roof (good for some, bad for others) I've gotten very negative about free trade, especially when other countries practice protectionism and we don't.

I just don't like what I have seen with people tending to polarize into two classes, either rich or poor, and a fluid middle class which is being squeezed one way or the other. That's what I'm concerned about. I don't care whether they are white collar, blue collar or what. They are all American jobs, and if those who lose their jobs can't find equal or better replacement jobs, it affects all of us, in part, and contributes to the fact that our national foreign debt is so high and social security is in trouble.

Free trade seems to be working against us economically overall. If you can buy cheaper imported products, but lose your job or your housing, utility, and automobile costs go through the roof, and you have less disposable income or no income to buy anything, cheap or not, unless you are lucky and your skill is still marketable in the US, and you can surf the economic waves and come out on top of things.

The saying used to be guns and butter. Now it's guns and jacuzis. We have to have it both ways or our economy will suffer. No more sacrifices for Americans and fighting the terrorists. Enlistments are down. I wonder where that will lead us. Sorry, I've done it again. Too long a post that will cause those who read in shorter blurbs to go into skip mode. Just as well.

[Nowhere Man]

That bothers me that you would think of yourself in those terms. I'll bet a lot of people are sometimes afraid to state their opinion or join in here for fear of being run off the board or ridiculed because they don't agree on every single thing they "think" is acceptable here.

Yeah, I thought that myself then as I said before, it dawned on me thinking that a true Freeper is one that cares about where America is going and (bumming from Michael Savage) her borders, language and culture. Thinking that way, I do see myself as a true Freeper. I post my opinions and I admit I always don't tow the party line, whatever that is. Another friend of mine, also a Freeper says, it isn't good to agree on everything. I'm a Red State guy through and through on social, military and religious/moral matters, but being more of an economic centrist, I'm more of a shade of maroon, violet, fuscia, or puce (I do have some Blue State elements in me on economic issues) depending on the economic issue. B-) Great, now I'll be accused of leaning metrosexual. >B-D (LOL) I guess I bought into the Red/Blue State thing and the idea of two opposing sides but it is a lot more complicated than that and there are varying factions that make up both the Red and Blue sides, sometimes the factions don't agree either. I see myself as an independent conservative, I don't buy into the party line and I go on what is best for me personally, my family and friends and the country. With my friend, we both agreed that if we were around 100 years ago, we would have been Teddy Roosevelt Bull Moose (Progressive - not to be confused with the definition of the same term as used today) Progressive types.

There are times I'm cynical though, I think about this a lot to where I doubt there wouldn't be much difference with the the Republicans or Democrats in power, or if Kerry won over Bush. Both are beholden to their special interests and on the corporate level, the line between them kind of blurs at times. I did support President Bush because of the war on terror and moral issues although there are times I think we only get marginal support from the Republicans but on the scale, better than the Democrats.

The loss of jobs as well as control of our borders is a great concern for me. I think, again, both parties are falling down on the job. I remember a good saying from talkshow host, Chuck Harder, when he was on the AM radio bands, "you cannot do business with people who have no money." It will get to the point to where people cannot even afford Wal-Mart. B-P

It's a shame that there are some here who would cheer the fact that factory workers are losing their jobs and just tell them, tough crap, go get another job. Well, you got to do that to survive, even if it is a Wal-Mart job, but it's a shame that some people can be so mean. As the old saying goes, "it is easier to look down on others when you are higher up." I know there were times I might have done that from time to time, not nearly as much as I have seen here. In recent years, it has been a slow realization on all of this stuff, plus my own experiences, I've been humbled more. Sometimes tough love is needed if all else fails but I think there should be attempts to reach out first, I do believe in redemption.

One thing I'm not cynical about is my faith in God that is still developing and I have lots to learn still. I figure if Jesus died on the Cross for me and everyone else, I can take what I'm going through as long as I have faith in Him. I always said, this country needs a revival in religion and get back to our moral foundation, maybe this is part of it to shake us back and get closer to God and out roots.

[A. Pole]

So far if I were to guess, maybe one will become an engineer.

Since your children are young, by the time your mind might change or maybe the job market will change.

[A. Pole]

Its interesting to note that every one of the nine members of the Chinese Politburo Standing Committee is an engineer, including Hu Jintao, the president of the PRC. In the U.S., our elected leadership (and I use that term loosely) is predominately made up of attorneys.

So is this match between engineers and attorneys?

Was there a time when less US CEOs were MBAs?

[Paul Ross]

Correlation over the last 4 years is not proof of causation.

So you ingore all fundamental theories...and contradict your own. And you are ignoring the fact that my chart wasn't posted for the purpose of showing a "relationship" (i.e., a straw man argument) which I didn't assert (knowing far better than you the countervailing factorial influences), but current history.

I.e., showing what is actually happening "on the ground" so to speak.

So you mistate what the argument is and focus on the straw man arguments of Griswold (i.e., phony "relationships" of that which is axiomatic), who also refuses to confront the FACT of the resulting currency debauchment of his policies.

Typical of you Todd, but you are firmly embedded on the hook. You believe in free markets (to a doctrinnaire degree and to the point of excess). The dollar is sinking. Don't suppose its the general free market for our currency driving it down so steeply, do you? And what is the largest of fundamentals driving this market (ones you have previously admitted BTW)?

Our trade imbalance...i.e., defict.

And the degree to which those who are exporting to us buy our pretty Treaury Notes to prevent the collapse of the dollar. That is the well known fundamentals of this bizarre chapter in the free trade follies.

The question always was, have we reached a tipping point, where the exporters to us can no longer keep up with the general and increasing drag against our currency their massive and expanding 1-way exporting has created. Certainly not without massive U.S. help, anyways...which has been restrained in our current administration. Laissez faire, after all.

And now, here is the killer for you. This puts you down for the count.

As all who know my philosophy and positions will attest. I don't advocate currency debauchment. I always thought it problemmatic and more self-wounding than the alternatives.

It was always free traders who posited that a dollar decline would "naturally" fix the trade imbalance. Alan Greenspan thought it would. Milton Friedman thought it would. Daniel Griswold and everyone at Cato currently thought it would. Except it isn't, is it?

The U.S. jugular is being hack-sawed open. And it is gushing out its productive industries. China is slurping up all it can handle.

So the question for the free traders is, why isn't it working? Answer: China, and it's currency peg. They are maintaining the peg in the face of virtually all other competing nation's objections...including our own. For five years they mumble bland reassurance and say they will eventually float sometime soon. And then they put it off. Always. And they are keeping their own citizenry and national welfare in a perpetual state of artificially disinflated disadvantage. I predict when they do float if its near term, it will be miniscule and token.

If the Chinese Communists were behaving out of pure general welfare economics, what is best for their people, they would have let it float long ago and reaped a much higher national income. As the Greenspan article expressly discussed, but you evidently blew off and haven't read, (apparently in your maddened lust to still try and snatch "victory" from your ignomimous defeat in debate)...he openly questions why they would endure so low a return (and increasingly lower) on U.S. dollars that are cheaper all the time as against the rest of the world.

The deeper question goes begging in that article then. Since they are ignoring the standard models of economic-incentivized behavior, maybe it is because they are, as I have always maintained, operating on a completely different plane of motivations, a differnt metric. They are in fact behaving as if they are at war with the U.S. An unremitting multifront war...that is only superficially a non-shooting war. For them, spiting themselves in wealth terms is okay, if it ultimately strips us of our industry, and then smashes our economy, and hence the foundation for the world's greatest military which is being daily told to cut, cut, cut, cut, cut, cut, cut.....

Meanwhile, what do you do while the hourglass runs low for us? You deny reality. You ignore the actual posts and positions of the American side. Your positions clearly are aiding and abetting "Li333" in terms of your state of denial. In your shrill adamancy you exhibit the classic signs of cognitive dissonance. This denial behavior of yours is approaching the psychotic. Similar liberal-belief based cognitive dissonance in the past (and on into current times) led directly to foreign polices of appeasing military enemies.

This kind of dissonance has been exhibited by others on your side, Poohbah was another exceptional example of that. He, of course, was a rascal in a broad range of topics...but most expressly with the military.

Basically preaching a kind of smug over-the-top reassurance that was braggadocio, and embracing neglect and, frankly, appeasement of our enemies. The irony that results would be amusing, if it wasn't so tragic. Remember Neville Chamberlain's?...Check this out ( a little long but worth the read):

The following is the wording of the printed statement that Neville Chamberlain waved as he stepped off the plane on 30 September, 1938 after the Munich Conference had ended the day before:

"We, the German Führer and Chancellor, and the British Prime Minister, have had a further meeting today and are agreed in recognizing that the question of Anglo- German relations is of the first importance for our two countries and for Europe. We regard the agreement signed last night and the Anglo-German Naval Agreement as symbolic of the desire of our two peoples never to go to war with one another again. We are resolved that the method of consultation shall be the method adopted to deal with any other questions that may concern our two countries, and we are determined to continue our efforts to remove possible sources of difference, and thus to contribute to assure the peace of Europe."

Chamberlain read the above statement in front of 10 Downing St. and said:

"My good friends, for the second time in our history, a British Prime Minister has returned from Germany bringing peace with honour. I believe it is peace for our time... Go home and get a nice quiet sleep."

[Paul Ross]

You then equated "foreign travel" with "imports." That's incorrect.

B'zzzt. Incorrect on your part. Imports are "foreign sources." You denied that they were included. You said it. I didn't. Now you say:

"Imports to the U.S. *are* counted in the CPI figures."

Nice debating with you.

[aruanan]

Logic chopping is a lo-cal victory.

[Toddsterpatriot]

So you ingore all fundamental theories...and contradict your own.

What theories are those?

And you are ignoring the fact that my chart wasn't posted for the purpose of showing a "relationship" (i.e., a straw man argument) which I didn't assert (knowing far better than you the countervailing factorial influences), but current history.

That's funny. You said to Asclepius under this same chart "Four years of clear correlation". Maybe you don't know what the word correlation means?

1 : the state or relation of being correlated; specifically : a relation existing between phenomena or things or between mathematical or statistical variables which tend to vary, be associated, or occur together in a way not expected on the basis of chance alone

I'd say 4 out of 15 years is less than if it were based on chance alone.

The dollar is sinking.

Sure, if you don't look at the last 3 months when it was rising.

Don't suppose its the general free market for our currency driving it down so steeply, do you? And what is the largest of fundamentals driving this market (ones you have previously admitted BTW)?

Yes, there is a free market for our currency. I agree with the author of the article you took the graph from. "The logical breakdown between deficits and dollar prices is that trade alone does not drive the global flow of monies. Investment is the other half of the equation, and one should think of it as the dominant half".

And then there is this. Looks like the dollar strengthened between 1990 and 2000. Did the deficit decrease? Grow more slowly? No. The deficit more than quadrupled. And look, the dollar is about the same value in 2005 as in 1990. Is the deficit about the same? No. It was less than $81 billion in 1990, over $600 billion in 2004.

If you want to prove that larger deficits cause a declining dollar (which is why you posted the graph, because they happen to move the same way the last 4 years), it might help if a more than 4 of the last 15 years agreed with your assertion.

US Exports and Imports
1960 - 2002

Figures in US $Millions

Year	Exports of Goods and Services and Income Payments	Imports of Goods and Services and Income Receipts	Trade Balance
1960	25,940	23,670	3,508
1961	26,403	23,453	4,195
1962	27,722	25,676	3,370
1963	29,620	26,970	4,210
1964	33,341	29,102	6,022
1965	35,285	32,708	4,664
1966	38,926	38,468	2,940
1967	41,333	41,476	2,604
1968	45,543	48,671	250
1969	49,220	53,998	91
1970	56,640	59,901	2,254
1971	59,677	66,414	-1,303
1972	67,222	79,237	-5,443
1973	113,050	98,997	1,900
1974	148,484	137,274	-4,292
1975	157,936	132,745	12,404
1976	172,090	162,109	-6,082
1977	184,655	193,764	-27,246
1978	220,516	229,870	-29,763
1979	287,965	281,657	-24,565
1980	344,440	333,774	-19,407
1981	380,928	364,196	-16,172
1982	366,983	355,975	-24,156
1983	356,106	377,488	-57,767
1984	399,913	473,923	-109,073
1985	387,612	483,769	-121,880
1986	407,098	530,142	-138,538
1987	457,053	594,443	-151,684
1988	567,862	663,741	-114,566
1989	648,290	721,607	-93,142
1990	706,975	759,287	-80,861
1991	727,557	734,563	-31,135
1992	748,881	763,741	-38,185
1993	776,921	821,797	-69,166
1994	868,460	948,555	-97,189
1995	1,005,645	1,075,674	-95,069
1996	1,077,148	1,155,489	-102,869
1997	1,194,899	1,281,291	-107,047
1998	1,191,206	1,347,462	-163,153
1999	1,255,671	1,499,762	-261,201
2000	1,416,915	1,772,694	-375,384
2001	1,284,942	1,632,072	-357,819
2002	1,229,649	1,651,657	-418,038

Source: Bureau of Economic Analysis

[Toddsterpatriot]

Paul, are you a scientist?

Up to a third of scientists have engaged in ethically questionable practices over the last three years, according to a survey published in today's issue of the British science journal Nature.

The surveyed behaviors range from extremely serious acts such as fraud and plagiarism -- which were committed by only a fraction of a percent to 1. 4 percent, respectively -- to acts that are ethically far more ambiguous, such as ignoring data that contradict one's theory.

Study charts science's ethical swamplands One-third in survey veered into gray areas

[Alamo-Girl]

Thanks for the ping!

[expat_panama]

The U.S. jugular is being hack-sawed open. And it is gushing out its productive industries. China is slurping up all it can handle.

Hey Paul, get a grip.   Unemployment is low.  Wages are high.  Inflation and interest rates are low. The economy is expanding.  We all know that the bush-bashers are out saying that suddenly all that stuff doesn't matter any more and everything is bad because someone in the services (like Pat Buchanan) would be much more useful to society leaving his job in the service sector to instead be tightening bolts for GM.

Wait a second-- I think we are in agreement after all.

Never mind.

[oceanview]

the age issue and the stringent requirements is just a ruse. I see it everyday - they use those factors to exclude americans, because they want the jobs to go offshore for lower costs. nothing else matters. that's why so many middle aged IT/CS/EE guys have simply left the field for good. they have moved on, some to teaching, some to real estate, and unfortunately - some to Lowes and Home Depot.