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.
Well, there's the problem. Once born, people take exception to termination, even when it's done peacefully in front of a video screen for processing into green crackers.
All this stuff seems so obvious today, but when I was kid, there were 48 states. I saw the boundaries move myself. We need to be real careful about that, because "sovereignty" isn't about borders. It's about a common culture. "Sovereignty" is how some people over here who think that all men are created equal, that they are endowed by their Creator with certain unalienable rights, keep the guys over there who think Islamic Law is the way to go, from ruining their lives. Never mind the boundaries... if the common values slip away, the boundaries won't matter. We really, really need to do something about the multiculturalists. We didn't used to have a problem turning Brits, Italians, Poles, Chinese, Germans, Lithuanians... whoever into Americans. Two generations after they got here, they all got the part about the unalienable rights. Now we have Daughters of the American Revolution graduating from college whose only knowledge of George Washington or Thomas Jefferson is that they owned slaves. This problem is not coming to us from "overseas." It's right here inside the borders.
No one would argue with that. But there might be huge arguments over how to achieve that. If you are privy to some special wisdom or insight on the subject, that's terrific. All the guys who think you're full of canal water believe that they are smart and right as well. We are lucky to have a democratic republic in which to sort that out amicably. It could be worse; we could have a Fidel Castro who decides what he thinks, and the rest of us would have to live with it.
That is true by definition, for those people who have already defined "Globalism" to mean some worldwide Marxist victory. If you get far enough into that thinking, trade with Canada becomes a step on the Slippery Slope toward world communism. "Roll up the shorelines! Put troops at the borders! Watch our economy soar when 50% of the oil we use vanishes!" I've heard the rant. I know how it goes. I just don't buy it. I could define "globalism" to mean "Global U.S. hegemony, backed by the biggest, baddest military the world has ever seen." Instead we have guys running around yelling "Globalism is coming! Globalism is coming!" as though that has to end with the communists in charge. Well, no it doesn't. The Ayatollahs want it to end with Mohammad in charge... do you worry about that? I don't. I worry more about Americans turning into Marxists themselves than I worry about Fidel Castro or Kim Jong Il winning some global economic struggle.
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As I said, simple, but totally wrong. Any real (and more important, humane) solutions would be a lot more complicated. But it wouldn't surprise me to see more than a few social Darwinist types latch onto the idea, and have no problem with the whole "stuffing into ovens or mass graves" bit.
You're right. I'm sorry. Corporations are just big, stupid animals. There are no people making decisions anywhere at all. Clearly this is true since, humans generally exhibit loyalty. Loyalty to those with whom they deal, and a sense of patriotism for their nation. Hell, some humans even squeeze a little Christianity into their daily lives, actions, and decisionmaking processes.
No humans are involved anywhere in the exporting of industry, just cheaper MeatBots.
That's a big issue. In the science fiction stories, the robots do all the work while the humans pursue their musical talents, acquire Ph.D.s, and so on. In the real world that isn't what happens. I remember a TV interview with some Village Elder on an island where some people were living whom we had displaced. We had moved them to this island in the 1950's so that we could test atomic bombs on their home island. Part of that deal was that everyone there was set for life... they all got stipends from the U.S. government and none of them had to work a day in their lives. So here they are on an island paradise in the South Pacific with all their material needs taken care of. This guy is saying it's the worst thing that ever happened to them. "His people" have no initiative. They have lost their souls. Many spend every day drunk, or on drugs. They're wasting away in Margaritaville.
Is that the future? I hope not.
BLIND DEVOTION WANTED?Of Corporate America's leader's in 1997, 86% demanded LOYALTY, only 3% demanded INTEGRITY.Fully 86% of about 500 chief executives surveyed by Goodrich & Sherwood Associates, New York-based employment consultants said they value loyalty most in subordinates. Next -- and far down -- on the list of top-valued qualities were sense of humor, named by 6%; capacity for hard work, by 5%; and integrity, by 3%.
Seems appropos to many things ...
While the employer/employee relationship has often been adversarial through history (Especially at the behest of greedy unions), it seems lately that industry officers are demanding this loyalty in a way that reminds me of a man saying "nice doggy" to a faithful, aging black labrador while reaching around for a stick with which to beat it to death.
It only looks that way because the humans making the decisions have not acquired the same enlightened wisdom that you have concerning how to proceed. They have some other enightened wisdom that they're following, and doggone it, it's not the same as yours. To you it looks like they have no loyalty to their fellow humans, and that they are not patriotic. To them it looks like if they don't move the plant to Mexico, the whole damned company will go out of business because the American consumer does not care one whit how many American flags you print on the box, they care about the $10 price difference. At least this way we can save the accounting department and the sales force.
The day that the shoppers in Wal-Mart decide to pay $35 for the American-made Wammerjammer instead of $19.95 for the one from Taiwan, those meatheads in the corporations will be the first ones moving the plants back. You simply cannot go to market with an uncompetitively-priced product in this country. All those free citizens out there spending their own money will not buy the damned thing. Been there, done that, watched a 100-year-old American 'household name' go splat... right into Chapter 7. Quit blaming some artificial Bad Guys in Suits for the actions of free people spending their own money.
I interpret that as good news. That means that finding people with integrity is not a problem. Of all those 100,000 people we've hired, very, very few have turned out to be embezzlers or crooks. So we don't worry about that. What we worry about is the sumbitch we spend 9 years and $100,000 grooming for a regional manager slot, only to have him jump to Yoyodyne for a $5K signing bonus.
Why is a burger-flipping job more damaging than some other type of job? If I understand you correctly, the main issue is how much burger-flippers get paid. However, this is only important in relationship to prices of goods and services. If goods are cheap (near zero price) - I don't see how a burger-flipping job is somehow less honorable work than assembly line work if the purchasing power is the same.
I don't think it is. I think it's a realistic assessment of the fact that most people put their pants on one leg at a time. Some of these rants treat "corporate executives" as though they are a class of hereditary nobility who spend their entire lives in big corner offices, plotting how to screw everybody. They are totally unlike us Ordinary FolkTM... a sort of alien presence governing our lives in some mysterious way.
Can't anybody here play this game? These are the same clowns you went to high school with, except that some of them got lucky or worked their buns off or married the owner's daughter. They don't know what they're doing any more than anyone else does. Twenty years ago they were a bag-carrying salesman. Ten years ago they were sent to run the Middle East-Africa Division, where 15 of the 19 countries they operate in had active armed combat going on in them, or were being ravaged by disease. Bigger problems, but the same answer: Now what? After five years of that and a stint running Manufacturing & Engineering, they get to sit in the big corner office and make mistakes that cost billions instead of millions.
Evil? There are some. But mostly they're just guys who go to work every day and try leave things a little better than they found them.
What did happen since? Tell us about that. See if you can do it without turning six examples into a smear on a hundred million people in two million organizations.
Private companies -- a differenet story. Small business -- a different story. But when a company signs up to sell paper -- well -- paper is what they sell. And not even that anymore.
Like others I hoped and advocated for a removal of tax on dividends. Why? In may case because I know that dividends are a marking to market in some way. Those checks have to come from some real pot of money and not just imaginary puffery or a scondrels chicanery. Oh sure, even with the dividend CFO's will borrow from Peter at 2% to pay a dividend of 1%, still hiding that there's no real income to meet than payment.. I've heard, reliably, of people killed for an inside stock tip (oh more to it than that, but that's a succint synopsis -- looting dottering widows as well). I've say alongside a flying team of accountants in one of our major industrial colosi -- a division that was tossing money out the door in mismanagemnt, what were they there for? Not for business, for taxes! Making sure every aspect of accounting was aligned with maximal tax avoidance. That money could be wasted, as long as it kept taxes down.
I had a friend who was bank examiner -- an examiner of examiners. He left the business -- cocaine was rattling too many brains -- CFO's, examiners, accountants: as good as he was, he could not hold back a tide.
There was a major NY bank merger, two of the top eight .. why? Because the CEO of one was screwing the CIO of the other, so the story goes. Fiduciary duty, that.
A fundamental value of publicly traded stock, what is it? Graham and Dodd valuation? Can't hardly be done anymore.
Fiat money has swamped integrity and honest books out of the market.
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