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.
Produce a better-quality product that makes up for the cost differential.
Of course, we COULD do things like get rid of the more asinine regulations and tax code pieces that do nothing to accomplish their stated goals but cost thousands of dollars per completed item for compliance.
But that would require repeal of some Democrats' favorite laws, and it would take a solid 60-vote majority of sane Republicans (i.e., no Olympia Snowe types) to get it through the Senate.
I am able to think, observe, reason, model, predict, verify and correct. I gave reasons why I think you are wrong; to me you seem to have some religious-level mystery beliefs.
I trust you will recognize those as your words. If you want to dish it out, you have to take it, too.
I have no malice against you. I have malice against bullsh*t, particularly bullsh*t that would lead people to perceive solutions in places where there aren't any.
"The corporations this, the corporations that, they're all crooks, and the ones who aren't are incomptent or fools" is of no utility. It tells us nothing that is generally true. We cannot use it to formulate any plan to fix anything. Collectively, "the corporations" are how we organize ourselves into groups to engage in economic activity. If all of them are full of crooks and fools, then we too are crooks and fools, and there is no solution anywhere because anywhere we turn there will just be another busload of crooks and fools.
So I hear this, and I get out my buzzsaw. Partly because it is a nihilistic rant, which I find annoying, but even more because none of this describes the thousands of people I have worked with in dozens of corporations over the years. Most people are good. Of course there's a crook here and an idiot there, but we did not become an economic superpower by assembling collections of fools and crooks to run everything. It pisses me off to hear people say that. Because it isn't true, and it can't be true or we wouldn't be where we are.
You just happened be the latest person to come by with a statue of the Virgin Mary that you had carefully made of dung. Trust me, I go after every one of those things I see, and I try my best to leave them in little shards along the roadside. Sometimes I break my chain on the damned things. But either way, it has nothing to do with you.
Tit-for-tat threads are the bane of on-line forums, and I refuse to get sucked into one. I will point to notes 228 and 240, say that I consider both to have been general-purpose slurs on corporaions-in-general, and end my participation on the subject of why I chopped up your stuff.
While the stock market and mutual stock funds are a great pride and money belt to so many, I fear it is a sham of the biggest sort. Bondholders come first. What is not bankrupted will be left alive on the drip for the delight of the Federal fascists.
It does not seem to occur to you, as you write sentences like that, that a reasonable person could interpret those words as hurling needless abuse at tens of thousands of quite ordinary people, in thousands of organizations.
You are dealing with a set of people there that is so large that you might as well be criticizing people-in-general for being irresponsible louts. That's fine, there's room in the world for Calvinist preachers too, but you aren't telling us anything about corporations. You're just telling us that people do not meet your high standards. My view is, you're stuck on a planet that is full of them, so get used to the idea that things are going to be screwed up. People screw up; it's what we do best.
I think we are at the point here where you are attempting to transmit emotions through a textual Internet forum, and I'm just not very good at that. I see somebody casting people who happen to work in publicly-traded companies as slave owners, and I think, "That's frigging nuts." It's a limitation of my horribly crippled male brain. If I were one of them thar Metrosexuals I would know that all you're really saying is "those are horrible people and I just know it," but I can't be relied on to ever do that again.
In any case, "slave owners" is close enough to "Hitler" that we can now fairly invoke Godwin's Law. This law states that "if you mention Hitler or Nazis in a post, you've automatically ended whatever discussion you were taking part in." Hitler, slave owners, what's the difference? Let's call the whole thing off.
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