Free Republic
Browse · Search
News/Activism
Topics · Post Article

Skip to comments.

The Jobbing of Americans
Insight Magazine ^ | July 3, 2003 | Paul Craig Roberts

Posted on 07/13/2003 7:09:50 AM PDT by cp124

The Jobbing of Americans Posted July 3, 2003

By Paul Craig Roberts The United States continues to lose jobs. Since President George W. Bush has been in office, 2.5 million manufacturing jobs and nearly 600,000 service jobs have been lost for a total decline in private-sector employment of 3.1 million. The unemployment rate has risen to 6.1 percent. If this is recovery, what is going on?

Pundits call it "the jobless recovery." The economy is growing, but jobs are not. Why? One economist recently blamed the absence of job growth on high U.S. productivity. Those who are working are so productive, he said, that their output meets demand, making additional jobs superfluous. His solution, apparently, is to make people less productive.

I think that the jobless recovery is an illusion and that the U.S. economy is creating jobs - but not for Americans. Those 2.5 million manufacturing jobs have not been lost. They have been moved offshore and given to foreigners who work for less money. The service economy was supposed to take the place of the lost manufacturing economy. Alas, those jobs, too, are being created for foreigners. It turns out it's even easier to move service jobs abroad. For example, 170,000 computer-system-design jobs recently have been shifted abroad. Keeping knowledge-based jobs in the United States is proving as difficult as keeping manufacturing jobs.

Outsourcing, offshore production, work visas and the Internet make it easy for U.S. companies to substitute cheaper foreign employees for U.S. employees. Entrepreneurs in India have created firms that specialize in supplying skilled labor to U.S. corporations. The growth in the U.S. economy thus brings about a growth in foreign employment, not in U.S. employment. If this analysis is correct, U.S. job-seekers no longer will be able to tell the difference between recovery and recession. In the old economy, people lost jobs when the Federal Reserve caused a recession by curtailing the growth of money and credit. In the new economy, they lose their jobs because foreigners work for less.

This development has produced a disconnect between economic policy and employment. The Fed's low interest rates and Bush's tax cuts cannot bridge the difference between wages and salaries in the United States versus those in China and India.

When U.S. companies move their production for U.S. markets offshore, U.S. incomes and gross domestic product decline and foreign income rises. When the offshore production is shipped to the United States to meet consumer demand, it becomes imports.

A country that produces offshore for its home market is going to have a big import bill, as those goods come on top of goods that foreign companies export. In 2002, the United States had a trade deficit in goods of $484 billion and a current account deficit of $503 billion.

With production and employment moving out of the United States, the ability of the nation to pay for its imports with exports declines. In the end, there is nothing to bring about a balance between imports and exports except a collapse in the dollar's value. When that happens, cheap goods from abroad become expensive, and the living standard of an import-dependent population drops.

During the short period of time Bush has been in office, the dollar has lost 27 percent of its value in relation to the new European currency, the euro. Considering that European economies are not doing well and that the euro is an untested currency, the dollar's decline is not a good sign.

When we import $500 billion more than we export, foreigners must finance our deficit. They do this by using the dollars we pay them to purchase our assets, or they lend the money back to us by purchasing government or corporate bonds. Either way, Americans lose to foreigners the future income streams from stocks, real estate and bonds, and this worsens our current-account deficit in subsequent years.

Foreigners' willingness to finance our current account deficit with their direct investment in the United States has declined from $335.6 billion in 2000 to $52.6 billion in 2002, a decrease of 84 percent. This dramatic drop in the willingness of foreigners to hold U.S. dollar assets is the likely explanation for the drop in the dollar's value.

If U.S. companies cannot profitably employ costly U.S. labor to produce for U.S. consumers, it is unlikely U.S. companies will be able to export a lot of goods made with U.S. labor. As our manufacturing sector moves abroad, our ability to trade declines as we produce fewer products to offer in exchange for our imports.

The dollar is the world's reserve currency, which gives us the ability to finance trade deficits that no other country could afford. When an alternative reserve currency appears, the United States will undergo wrenching economic, social and political adjustments.

Meanwhile, a rising stock market is consistent with "jobless recovery" as the lower labor costs of foreign employees drive profits. The growing gap between average incomes and executive compensation will handicap the Republican Party and weaken its resistance to a leftward turn in American politics.

Paul Craig Roberts is a Florida-based columnist whose syndicated columns focus on economics, culture, politics and issues of political liberty. He served as assistant secretary of the U.S. Treasury under the first administration of Ronald Reagan.


TOPICS: Business/Economy
KEYWORDS: freetrade; jobmarket; nwo; paulcraigroberts
Navigation: use the links below to view more comments.
first previous 1-20 ... 81-100101-120121-140 ... 261-280 next last
To: ike89
You can slice it any way you want. We are over-regulated, over-taxed with no savings for investment or modernization in industry. When it gets to the point that one wage earner has to work to pay the taxes and the other works to provide the living, the government has gotten too big.

We needed very few double earner families to survive in the Great Depression. Now it is unusual to see a one earner family. Inflation has cheapened the buying power of the dollar and created a hidden tax due to our reckless spending power and debt load.

Look no further than your local, state, and Federal governments for the reason we are in a perpetual recession. Policies such as unfair trade, globalization, and subsidization for business removal overseas, are extensions of the power to destroy. All government has this power which they will exercise if the citizens do not hold them in check.

101 posted on 07/13/2003 12:58:27 PM PDT by meenie
[ Post Reply | Private Reply | To 97 | View Replies]

To: meenie
Let's not forget that in 1996 a special presidential commsion announced that gov't had been reporting the cost of living improperly and created a new method for measuring inflation. Using these new adjustments the GAO offices started reporting price increases as being far lower than previously (and far less true to the real picture).

These adjustments keep things like Social Security payments and cost of living wages lower--which was just some of the smoke and mirrors Clinton used to make it look like he had balanced the budget.

They are in the process of examining the procedures to revise them once again.

102 posted on 07/13/2003 1:05:24 PM PDT by riri (It's not really "jobs" we want, it's the stuff)
[ Post Reply | Private Reply | To 101 | View Replies]

To: Euro-American Scum
You had noted: H-1Bs flooding in

The following is from the INS, part of Homeland Security now.
Is there an annual limit on the number of H-1B aliens?

Yes. The current law limits to 195,000 the number of aliens who may be issued a visa or otherwise provided H-1B status in FY2001. In 2002 and 2003, the number of aliens who can be issued a visa will also be 195,000. In 2004, the number of aliens who can be issued an H-1B visa or be provided H-1B status otherwise will revert to 65,000.

More venture capital money is opening up now than over the last 6 years or so. Why all the doom and gloom on this board?

103 posted on 07/13/2003 1:06:42 PM PDT by doosee
[ Post Reply | Private Reply | To 100 | View Replies]

To: P.O.E.
It is Civil Service that has made it almost insolveable. Fiat money may be the water that waters the poison ivy plant that has choked off the Tree of Liberty and the water that washes the acorns of capital and jobs overseas, But it is Civil Service that has provided the soil in which the choking vine grows. A vine immune to the ax -- for what woodsman will cut it, for fear of the poison?

Like a quicksand is Civil Service, once a good person gets into it, he can hardly struggle out of it -- he (or she) rots and becomes the food of that poison vine.

104 posted on 07/13/2003 1:46:56 PM PDT by bvw
[ Post Reply | Private Reply | To 99 | View Replies]

To: bvw
You wood say that, wooden you? :)

But you're right, the "big lie" of bureaucracy is that its incentive is to enlarge the problems, since to solve them would be the end of the need for said bureaucracy.
105 posted on 07/13/2003 1:56:30 PM PDT by P.O.E.
[ Post Reply | Private Reply | To 104 | View Replies]

To: doosee
Yes. The current law limits to 195,000 the number of aliens who may be issued a visa or otherwise provided H-1B status in FY2001. In 2002 and 2003, the number of aliens who can be issued a visa will also be 195,000.

There may be a limit on H-1Bs, but this is none on L1s. And I didn't mention them, I'll admit. But the two are so similar in effect to be interchangable.

More venture capital money is opening up now than over the last 6 years or so.

That's true. My partners and I benefited from such a loan (and it's an unending source of concern). But I'll compare the venture capital to the administration tax cuts in the effect they are having now as opposed to when Ronald Reagan did something similar in 1981.

Back then, American business took that windfall, invested in their plant and equipment, and hired staff. Does anyone believe that a similar influx of capital will stem the tide of H-1Bs, L-1s and offshoring? Hardly. Business will pocket the money and continue slashing payrolls because it inflates their bottom line, and to hell with the damage it may cause to their employees or the economic well-being of the country.

That's why all the gloom and doom.

106 posted on 07/13/2003 5:30:17 PM PDT by Euro-American Scum (Conservative babes with guns are so hot)
[ Post Reply | Private Reply | To 103 | View Replies]

To: Nick Danger
I found your post thought provoking.I will say the communists promise the road to utopia or garden of eden and there is no government that can ever reach that.The buggy makers had to adjust or go out of business.This new world is a challenge and adjustments ,painful and sometimes in error must be made.Wiser heads than I will make them and the Marxist will fight hard to prevail.
107 posted on 07/13/2003 5:30:45 PM PDT by MEG33
[ Post Reply | Private Reply | To 75 | View Replies]

To: cp124

108 posted on 07/13/2003 5:47:05 PM PDT by MR. CAPITALIST
[ Post Reply | Private Reply | To 1 | View Replies]

To: A. Pole
There is one solution which should satisfy the free traders and the dogmas of free market ideology. American workers can get free medical care, free education, public transportation, food stamps and subsidized housing. After that they will be able to work for wages competitive with China and India. This is the way to avoid protective tariffs and secure the profits for the investors while keeping jobs in America. What do you think?

Toss in a free car/SUV and you got a deal! (/sarcasm)

I don't endorse this of course, I know you're just joking, but I know that's how Sweden and some Scandinavian countries do things. I have an online friend in Sweden and I ask him about how they do things over there. Sure the taxes are high over there but with all the subsidies the average citizen gets, they can and do blow what's left of their salaries on the goodies. I admit their standard of living is not bad although the downside is that the system rewards mediocrity.

Seriously, if the free traders keep pushing their ideas, the only way the people will have a somewhat decent life is to do what Sweden does. I guess it works well enough for them although they only have ap opulationg of something like 6 million or so, I doubt it would work in a nation of 250-300 million like we are today.

But still, we need to keep jobs here, most of us Americans want to keep the opportunities here but if we don't, the only other way I can see is "hand outs" and I don't want that. I'm not for it, but I'm afraid it would be reality.

So in essence the more they push the free-trade agenda, the worse things will get and the socialism that we don't want to see come in America will pass.
109 posted on 07/13/2003 6:05:13 PM PDT by Nowhere Man ("Laws are the spider webs through which the big bugs fly past and the little ones get caught.")
[ Post Reply | Private Reply | To 43 | View Replies]

To: Nick Danger
The real problem here is that free-market capitalism does not have a real good answer for how to manage the transition to a society where almost all return is to capital, not labor.

But the Marxists do, and that is why they will be at the fork in the road waiting for us when we get there. "Public ownership of the means of production," they will say. And that will sound pretty good to people who live in a place where "stuff" is still tied to "jobs" but there aren't any jobs. At least, not for people with IQ's of 100 who weren't born with a silver spoon in their mouths.

In a society where nearly all return goes to capital, there is just plain going to have to be a transition plan that includes capital redistribution. It's either that, or the Marxists will be elected by a landslide and do it at gunpoint.


I think you hit upon something there, Nick. It's something to think about. I'm afraid you hit the nail on the head where the free-marketers really don't have the answer while the Marxists do, albeit they are the wrong ones. Wht scares me is they would sound good to people who are out of work and are looking to survive, then they will see this as a lesser evil but in turn it will be a "road to Hell."
110 posted on 07/13/2003 6:38:44 PM PDT by Nowhere Man ("Laws are the spider webs through which the big bugs fly past and the little ones get caught.")
[ Post Reply | Private Reply | To 75 | View Replies]

To: Nowhere Man
Wht scares me is they would sound good to people who are out of work and are looking to survive, then they will see this as a lesser evil but in turn it will be a "road to Hell."

That's why I wrote the piece. This is coming. We are already hearing Marxist noises in the rants of people right on this forum... people who would call themselves conservatives and would consider the term "Marxist" an insult. But there they are... selling Marxism without knowing it.

People who will do that will buy Marxism without knowing it.

The trick to avoiding Hell will be to make sure that "widely held ownership of the means of production" (which we actually have today) expands so as to forever crowd out "government ownership of the means of production." Once the government owns everything, we have a locus of absolute power, which then corrupts government officials absolutely. Next thing we know, one of them is Stalin. This appears to be the failure mechanism by which Marxism always goes bad, ending in an autocratic police state. It may be that freedom depends on the 'separation of business and state.'

111 posted on 07/13/2003 6:52:17 PM PDT by Nick Danger (The liberals are slaughtering themselves at the gates of the newsroom)
[ Post Reply | Private Reply | To 110 | View Replies]

To: Nowhere Man
It's something to think about. I'm afraid you hit the nail on the head where the free-marketers really don't have the answer while the Marxists do, albeit they are the wrong ones.

Sometimes I wonder if this is not ruse done by closet Socialists. For example Antonio Gramsci designed devious method of preparing revolution by weakening the traditional morality and family. Maybe free traders and free marketeers want to bring back unregulated wild capitalism to create the very conditions which Marx wanted to see?

112 posted on 07/13/2003 6:56:23 PM PDT by A. Pole
[ Post Reply | Private Reply | To 110 | View Replies]

To: MR. CAPITALIST
What a mensch! What a gentleman! What a thinker you are! Do you always have such deep, deep thoughts!

Thank you for sharing!

113 posted on 07/13/2003 6:56:27 PM PDT by bvw
[ Post Reply | Private Reply | To 108 | View Replies]

To: George Frm Br00klyn Park
"Those 2.5 million manufacturing jobs have not been lost. They have been moved offshore and given to foreigners who work for less money"

And this has been happening intentionally for 35 years.

114 posted on 07/13/2003 7:15:10 PM PDT by editor-surveyor ( . Best policy RE: Environmentalists, - ZERO TOLERANCE !!)
[ Post Reply | Private Reply | To 78 | View Replies]

To: Euro-American Scum
That's why all the gloom and doom.


A word of advice that you didnt solicit but for what it is worth most new companies succeed because the founders maintain positive attitudes in spite of adversity and setbacks. You noted you were in a startup but I get the impression that you are accepting defeat before you are defeated. Dont take this as a personal criticism but there is a lot of opportunity for solid startups based in America with American employees.
115 posted on 07/13/2003 7:17:05 PM PDT by doosee
[ Post Reply | Private Reply | To 106 | View Replies]

To: GatekeeperBookman
The kind of deflation I see will be massive and worldwide as new technologies will reduce manufacturing costs to near zero. However it won't necessarily cut across all sectors at once leaving a lot of pain in its wake. For example, your mortgage is more or less fixed for its term but if your wages start falling through the floor, bankruptcies and foreclosures skyrocket, even if the price of goods and services fall faster. The political fallout will be immense.

I see a number of different scenarios.

1) Everyone becomes a service provider. This would have to be accompanied by a massive cultural shift in which such jobs are not looked down on by the old middle class society.

2) Most people can find something that pays a nominal wage which is enough to live on.

3) Brave New World - the lower classes are essentially given some form of "soma" to pacify them - it may take the form of literal drugs or virtual distractions or some form of state-sponsored hedonism. The wealthly happily pay a small sum for domestic tranquility.

4) ND's scenario of a form of Marxism.
116 posted on 07/13/2003 7:18:25 PM PDT by garbanzo (Free people will set the course of history)
[ Post Reply | Private Reply | To 92 | View Replies]

To: Nowhere Man
" I admit their standard of living is not bad..."

You're admitting facts not in evidence.

Sweden has no freedom; you can't even move to a new house without government consent, which takes 3 or 4 years, and as often as not results in denial.

117 posted on 07/13/2003 7:20:53 PM PDT by editor-surveyor ( . Best policy RE: Environmentalists, - ZERO TOLERANCE !!)
[ Post Reply | Private Reply | To 109 | View Replies]

To: zuggerlee
We can erect tariffs around the US but not around, say Brazil - US goods still have to compete with European and Pacific Rim goods on the shelves of Brazilian stores. You can gin up shop America First sentiment in the US but it's a bit more difficult to whip up shop America First sentiment in Brazil.
118 posted on 07/13/2003 7:23:57 PM PDT by garbanzo (Free people will set the course of history)
[ Post Reply | Private Reply | To 87 | View Replies]

To: garbanzo
I see your various scenarios already occurring-to a greater or lessor degree. Not sure any costs will ever approach zero, but they are going way down.

I wonder if we are smart enough to see this ( as a society ) & to take some action ( as individuals ) to counter the problems?
119 posted on 07/13/2003 7:25:18 PM PDT by GatekeeperBookman
[ Post Reply | Private Reply | To 116 | View Replies]

To: MEG33

Out of business?



120 posted on 07/13/2003 7:34:53 PM PDT by hedgetrimmer
[ Post Reply | Private Reply | To 107 | View Replies]


Navigation: use the links below to view more comments.
first previous 1-20 ... 81-100101-120121-140 ... 261-280 next last

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
News/Activism
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson