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.
They are a significant factor in forcing American companies to take the short-term remedy of moving out of the United States. I say short-term because a nation, like the USA, cannot continue to exist economically when 80% of its jobs are classified as "service" jobs.
Our manufacturing base is practically nil and the service jobs are moving to India and China. Our government encourages this by issuing visas to hundreds of thousands of workers from these countries to come to this country to be trained to perform these jobs.
Unfortunately the American workers doing the training find themselves without jobs once these foreigners have returned to their homeland and begin scheduling Sear's service staff from thousands of miles away!
We won't see a viable political candidate address this issue because there aren't many honest ones available. Only one comes to mind: Congressman Tancredo, the Republican from Colorado.
We're kept so busy reading about other issues that we haven't the time to concentrate on this issue that is paramount to our future.
2. Eliminate the red tape in the US. Bureaucracies are a killer.
3. Support TRUE free trade. Not one hand behind the back trade. If other countries put massive tariffs on our stuff, slap a 10000% tax on any American based corporation that has their manufacturing in that country and exports it here. Punish countries with slave labor(China).
4. Avoid patronizing business that eliminate our jobs when possible. It's hard as hell, but I try my best to avoid Made in China products.
To that I might add:
5. No government subsidies to corporations to move overseas (end OPIC).
6. No American taxpayor funded military protection for same. Why should we pay for un-American people's safety?
7. No more domestic corporate welfare (end H1B).
8. End minimum wage for minors. (and work to eliminate as the market improves).
9. Bush can do like George Washington and promote domestic goods. Washington wore an American-made brown suit as did Ben Franklin, to promote U.S. textiles. None of this globalist "If it's good for China, it's good for us" bovine squat.
I'll give you one...The united states of the World...It's called globalism...This state can produce anything that America produces...And you look at our exports and you can see they are doing just fine without anything we do...
The United States doesn't have anything but world debt...Who owns the United States' assets??? It's not the Americans...
The unemployment rate is seasonally adjusted to take such factors into consideration.
I'm assuming there is a reason for you to say this instead of "Chinese and Latin American peasants" or "Chinese coolies and Latin American spics"
Your English teacher would frown on your original construction.
I say this having spent the better part of two years underemployed, and just making ends meet for the last eight months at my new job. When I had to, I worked graveyard cleaning grocery stores, and I have a degree in economics. The economy changed on me (tech crash), and my skills were no longer in demand. So, I am in the process of "retooling," and I promise you that I watch very carefully the long-term prospects in my new field. I'm not doing work that can be readily farmed out to an Indian in Bangalore or a Mexican in Guadalajara.
Some of us here in Free Republic are starting to sound like unionized steel workers from 1978. Enough with the doom and gloom. America is better than that.
I think you should have said "Punish countries with the name China. If China stopped all slave labor and was still exporting a lot to the US, you position would be the same. I say this because the vast majority of Chinese made products are not made with slave labor.
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