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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
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To: Nick Danger
I think you are underestimating the resilience of the American economy. If, for example, Al Gore had gotten 538 more votes in Florida and decided to save us from the internal combustion engine and banned it, what would have happened? On the first day there would have been a market for shoes. On the second day there would have been a market for bicycles. On the third day there would have been a market for rickshaws. On the forth day there would have been a market for rope and scaffolding. If the people can't adapt to the market, the market will adapt to the people.
201 posted on 07/14/2003 8:36:04 AM PDT by MARTIAL MONK
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To: ETERNAL WARMING
Are the Robber Barons going to give it to us out of the goodness of their hearts?

Nope, they have already proven that they are not American corporations. They are international corporations. We are a relatively small nation, population wise but we are a mighty market. As soon as our importance in the market ends, well,...

Much talk on this board about how poor China and India are. And there is no doubt they are dirt poor. But they each have a population of one billion people. These multi national bast*ards know they only need to get ten percent of each countries population consuming to pick up the slack of the lost American consumer.

202 posted on 07/14/2003 8:40:25 AM PDT by riri
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To: riri
At the prices at which these nation's populaces are familiar and willing to 'consume' the 10% figure you bandy about would be woefully deficient for these corporate megaliths bottom line...i.e., the profit margin would be nowhere near what they can get in America. Hence, until they have fully succeeded in destroying the US Middle Class, then they will focussed on the corpulent US market like mosquitos...and then the megaliths will complain about the crappy profits from the Chinese (which low prices they are in fact ignoring today...to 'get their feet in the door.')
203 posted on 07/14/2003 9:04:28 AM PDT by Paul Ross (A nation which can prefer disgrace to danger is prepared for a master, and deserves one!-A. Hamilton)
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To: riri
Much talk on this board about how poor China and India are. And there is no doubt they are dirt poor. But they each have a population of one billion people. These multi national bast*ards know they only need to get ten percent of each countries population consuming to pick up the slack of the lost American consumer.

Normally, one could look at China and say, "What an opportunity!, I can't wait to sell them my product. I'll have to hire some more people and buy more machines to keep up with the demand." But no. China does not buy American. Oh, they may purchase a nuclear reactor or supercomputer...once...and then build their own copies, but anything else? Nah. R&D for free. The Chinese can get everything they want made in China, except movies with great special effects and really bad pop music, and those are easily pirated. Food? Forget it.

Now Nick Danger makes an excellent point about a robotic future. Human progress can be seen as a millenia long struggle to struggle less. Like sex, laziness is the great motivator of human accomplishment.

The utopian dream of getting all of life's stuff for little work has never been closer. The fly in the ointment is that someone, somewhere has to do some work in order to ensure that the machines are making all the stuff and everyone else becomes superfluous, thus the market starves to death and the producer no longer has a market, just a big empty castle and a team of sexbots dressed up like "I Dream of Jeanie."

204 posted on 07/14/2003 9:08:37 AM PDT by Jim Cane
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To: Paul Ross
At the prices at which these nation's populaces are familiar and willing to 'consume' the 10% figure you bandy about would be woefully deficient for these corporate megaliths bottom line...

Today maybe. I am not talking tomorrow or next week. Nor am I saying they are correct in their assumptions.

These corporations remind me of the character in a movie who goes over to the other side is basically a traitor and then when the other side gets powerful enough-one of the first things they do is kill the traitor. Same thing will happen to these corporations once China gets large enough and capable enough.

The Chinese are going to have no use for them. Like it or not, in 20 years or so it will be the Chinese who are top dog.

205 posted on 07/14/2003 9:12:15 AM PDT by riri
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To: Cronos
The profits come to America. Don't forget that.

If you read Christopher Lasch's 'The Revolt of the Corporate Elites' you will take extremely little solace from that. First, these havens of low-labor costs can always nationalize. And historically, they do. And the corporate decision-makers controlling these ill-gotten (i.e., exo-American...relocated jobs) 'profits' are a greater liability than you know. These people no longer regard themselves as Americans, they have consistently voted RAT, and heavily contribute to U.N. - promoting organizations. They regard themselves as 'World' citizens. And if the US becomes too dreary...because of their own undermining policies against it for their own selfish benefits...they will pack up and 'move on.' These generalizations are backed up by real numbers, not just anecdotes. I think it is time you learned to fear for your country.

206 posted on 07/14/2003 9:14:42 AM PDT by Paul Ross (A nation which can prefer disgrace to danger is prepared for a master, and deserves one!-A. Hamilton)
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To: zuggerlee
Actually, I have seen numbers far closer to 40%. When the collapse comes, even the corporate traitors who short-sightedly sold us out will be crying in their beer.
207 posted on 07/14/2003 9:19:23 AM PDT by Paul Ross (A nation which can prefer disgrace to danger is prepared for a master, and deserves one!-A. Hamilton)
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To: riri
These multi national bast*ards know they only need to get ten percent of each countries population consuming to pick up the slack of the lost American consumer.

That is why it is important for some people, at least, to worry about another rise of Marxism. The multi national bast*rds have as their job producing the highest possible return on the capital invested by the shareholders and the creditors. That is what the shareholders are paying them to do, and it is what the creditors relied on when they made loans to the company or bought its bonds.

You seem to believe that you have some sort of claim on these resources, and that you, or a whole bunch of people like you armed with a government, have the right to demand that other people's money be employed to benefit you.

In making these noises, you seek to create support for your attempted misappropriation of other people's money by appealing to granfaloonery — "We all live inside these arbitrary lines on a map, and so we're all in this together. Let us rise up with torches and pitchforks, and seize the money of the other people, and make it ours."

There's a lot of that noise now, and it's growing. This is probably not a good thing. Like I said, we need another plan. Otherwise, you and the people who think like you will eventually vote in some guy who promises to deliver Marxism wearing an Uncle Sam hat. You'll think it's your right to take all those other people's money, because they have it and you don't, and that's not fair. And you're right: it isn't fair.

We need some non-governmental solutions to this, or we are going to get governmental ones. Or worse, violent ones.


208 posted on 07/14/2003 9:22:50 AM PDT by Nick Danger (The liberals are slaughtering themselves at the gates of the newsroom)
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To: Nick Danger
ND, I completeley recognize what you see. In myself and all around me. I know just where you are coming from.

But, what is the answer? Are we to wait until the promise of globalism to be realized? Do we toil today for the splendors that globalism will bring us tomorrow? I get very nervous when I am told I need to suffer in the short term to benefit all in the long term. Very nervous.

You ARE right. We need another plan.

209 posted on 07/14/2003 9:30:21 AM PDT by riri
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To: MEGoody
Gettin' a little ahead of yourself there, Chicken Little.

You've never been to Selma, California, I presume.
210 posted on 07/14/2003 9:44:52 AM PDT by hedgetrimmer
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To: Nick Danger
Corporations seem to believe that they have some sort of claim on the miltary and infrastructure, and companies, armed, courtesy of bribed politicians, have the right to demand that other people's money be employed to protect them and keep the roads to market open.

In making these noises, you seek to create support for your attempted misappropriation of other people's money by appealing to granfaloonery — "We are a global society, and so we're all in this together (well, except for you. Thank you for paying for my government issued armed guard, but now you're fired.) Let us fire a bunch of tax payors, move overseas, and seize the money of the other people to make it safe and keep the roads paved."

211 posted on 07/14/2003 9:55:59 AM PDT by Jim Cane
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To: riri
Like it or not, in 20 years or so it will be the Chinese who are top dog.

Or, perhaps they will just be a radioactive wasteland. Bombs are a great way to redistribute the manufacturing base.
212 posted on 07/14/2003 10:06:47 AM PDT by ARCADIA (Abuse of power comes as no surprise)
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To: Jim Cane
Corporations seem to believe

Yeah, that's certainly one of the rhetorical tricks. If we can get people to abstract the term "corporation" into a thing that they can imagine having free will and acting on its own, we can then demonize them by ascribing all sorts of evil motives to them. We can "tax the corporations" and "screw the corporations" without noticing all the employees and shareholders inside screaming, "Wait! Don't shoot! It's just us!"

It's an interesting commentary on how the human mind works that people will demand that "the corporations" provide them with jobs, and then turn right around and vote to tax the Hell out of them or regulate them out of existence. Like the Holy Trinity, it is a mystery. Or maybe it's just a mental defect. I don't know. Either way, it's one of the "givens" that people will do this, so we have to plan around it.

Or we could plan to it, which is sort of how Democrats make their way in the world. Their whole scheme for acquiring power and money for themselves revolves around tricking people into having the 'consumer' side of themselves beat up, and steal money from, their own 'producer' side. The Democrats take a cut off the top as the proceeds go by, and they have turned this into a nice niche for themselves.

Some people, when they see a corporation go by, see a big box on wheels belching pollution and roaring down the road, tearing up the pavement and terrorizing the armadillos. Inside the corporation, people think they're on a bus, riding down the road together, enjoying life, and hoping the bus doesn't break down. They aren't surprised the roads are there, because they all pay taxes to maintain the roads, and so do all the other people in all the other buses, who collectively pay pretty much all the taxes.

What's amazing is that when the Sun goes down and the bus pulls into a hotel, the people inside will go into their rooms, turn on the TV, and listen to some guy tell them that they should throw logs into the paths of buses, because buses are evil. And they will think, "Yeah! Let's blow up the buses!"

And then the next morning, they'll get back on the bus. Go figure.

213 posted on 07/14/2003 10:42:57 AM PDT by Nick Danger (The liberals are slaughtering themselves at the gates of the newsroom)
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To: cp124; newgeezer
The whole Enron thing made us, the share holders, take a closer look at corporate value and accounting practices. Corporations have been working overtime to cut costs and make the books look good. It should come as no surprise that they are producing more for less. That is what we wanted them to do.
214 posted on 07/14/2003 10:46:24 AM PDT by biblewonk (Spose to be a Chrisssssstian)
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To: biblewonk
I'm glad you mentioned Enron. Here's some information about OPIC (our tax money) and how 1.73 billion were given to Enron to build a power plant in India. Once it was built, the Indian government refused to pay for any of the electricity from the power plant.

http://www.worldnetdaily.com/news/article.asp?ARTICLE_ID=26159
"Federal overseas economic-development agencies have financed or underwritten 18 Enron Corp. projects, exposing U.S. taxpayers to a total of more than $1.73 billion in potential liability, according to agency officials."
http://www.hrw.org/reports/1999/enron/enron8-3.htm
http://www.zazona.com/ShameH1B/Demographics.htm
1.2 million visas issued and they are still arriving. There is no limit to L-1 visas, it is a loop hole.

What will shareholders like you do when America has lost its high-tech advantage because it is no longer a lucrative career choice due to outsourcing?
What will shareholders like you do when the tax burden shifts because the middle-class has shrunk because almost every job behind a desk has gone to India and China?
What will shareholders like you do when the welfare burden increases due to high unemployment and increasing numbers of illegals?
Have the shareholders any interest in keeping America remotely like the America that it took 200 years to build?

Here's Phyllis Schlafly (a noted Christian Conservative) on the "practices" of corporate execs. She calls it a racket:
http://www.townhall.com/columnists/phyllisschlafly/ps20030602.shtml
http://www.townhall.com/columnists/phyllisschlafly/ps20030610.shtml

Have you considered the National Security risks involved in Globalisation? Or is the bottom line all that matters to the Shareholder?
http://www.nationalreview.com/comment/comment-hawkins062503.asp
http://www.tradealert.org/view_art.asp?Prod_ID=803
215 posted on 07/14/2003 11:06:40 AM PDT by LibertyAndJusticeForAll
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To: LibertyAndJusticeForAll
Interesting. Aliant, the power company here in Iowa lost it's butt also by trying to make money overseas. How silly and overly greedy that looks now with hindsight. Why should a power company diversify into overseas, third world, interests?
216 posted on 07/14/2003 11:09:46 AM PDT by biblewonk (Spose to be a Chrisssssstian)
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To: Nick Danger
You seem to believe that you have some sort of claim on these resources, and that you, or a whole bunch of people like you armed with a government, have the right to demand that other people's money be employed to benefit you.

Although not addressed to me, I think you fail to realize that the lines on the map are not arbitrary, nor are the needs of national security, a bunch of peasants with pitchforks arbitrarily seizing private property from shareholders and propertied interests. You make a FUNDAMENTAL mistake of economic assumptions. Just as the Pharisees did when they asked Jesus whether it was proper to pay the tax to Rome. He pointedly asked them whose inscription was on the coin. 'Ceaser' they replied. He then directed that they pay Ceaser what was Ceaser's, and to God, what was God's. National security has ALWAYS, from John Adams 'Wealth of NATIONS' forward recognized that protecting the economic foundations of the NATION was a desireable and necessary objective. Globalism will end all individual rights. Property and otherwise. The Marxists will prevail if sovereignty is not taught in the schools and enforced politically.

217 posted on 07/14/2003 11:50:34 AM PDT by Paul Ross (A nation which can prefer disgrace to danger is prepared for a master, and deserves one!-A. Hamilton)
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To: B-Chan
True, but OTOH, not having the replicator, we don't have the exact problem in the VE stories, just the general problem of the transition to an economy in which producing goods requires no labor.
218 posted on 07/14/2003 12:09:42 PM PDT by jejones
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To: Paul Ross
John Adams 'Wealth of NATIONS'...

Qu'est que c'est cici?

219 posted on 07/14/2003 12:41:54 PM PDT by B-Chan (Catholic. Monarchist. Texan. Any questions?)
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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.

I want to congratulate you on this most excellent post. This scenario is something I've been turning over in my head for some time, primarly to figure out where I should go next in terms of employment (I'm a newly minted EE with no job, but I've haven't given up yet).

True drexlerian nanotech would be one way to reduce manufactuing costs almost to zero. I'm talking Diamond Age stuff, where you have a box that takes molecular feedstock in one socket, electricity in another, and templates for making stuff in a programming port, and these boxes are ubiquitous enough that every apartment comes with one. If we ever make it to that point, manufacturing and distribution go to almost zero. You'd still need raw materials, electricity (both of which are close to trivial if you have this sort of tech), and somebody with the smarts to make programs to tell it how to make stuff.

In that sort of world you wouldn't need too many people to make stuff. It'd be almost like the situation with agriculture, where the trend is for fewer and fewer people to be more and more productive. Besides maintenance and monitoring of the basic infrastructure (sources for the feedstocks and power generation), the only value-added portion would be coming up with those programs, and for that you only need a small group of talented people.

The question then becomes, what do you do with everyone else? While I'd like to believe that people would take this change well, and enjoy the free time to make new opportunities for themselves (or at least be content), the reality is that most folks aren't cut out for that, and will likely take violent exeception to their station. Some will likely be employed in some form of service-sector work (sales and security, if nothing else), but for the vast, vast majority, what are you going to do with them? The Marxists have an answer to that question, as you've pointed out. And those masses would make a very good breeding ground and power base for some Marxist with those answers. That's also not considering that having tech like this would make creating chemical and possibly biological weapons a lot easier (or the "gray goo" disassembler stuff), and puts it well within the reach of smaller and smaller groups of people.

As for short-circuiting the Marxists, I don't have any easy answers. The simplest would be to just get rid of the excess non-producing people somehow, but not in a way that involves inhumane stuff like stuffing them into ovens or mass graves (shades of Deus Ex, anyone?). Any way you slice it, humanity is likely going to be in for a rough ride this century as we grapple with these questions.

220 posted on 07/14/2003 12:46:54 PM PDT by adx (Will produce tag lines for beer)
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