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.
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.
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.
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?
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.
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.
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.'
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?
Thank you for sharing!
And this has been happening intentionally for 35 years.
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.
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