Posted on 04/08/2005 11:00:44 AM PDT by churchillbuff
In March, the U.S. economy created a paltry 111,000 private sector jobs, half the expected amount. Following a well-established pattern, U.S. job growth was concentrated in domestic services: waitresses and bartenders, construction, administrative and waste services, and health care and social assistance.
In the 21st century, the U.S. economy has ceased to create jobs in knowledge industries or information technology (IT). It has been a long time since any jobs were created in export and import-competitive sectors.
The Bureau of Labor Statistics forecasts no change in the new pattern of U.S. payroll job growth. Outsourcing and offshore production have reduced the need for American engineers, scientists, designers, accountants, stock analysts and other professional skills. A college degree is no longer a ticket to upward mobility for Americans.
Nandan Nilekani is CEO of Infosys, an Indian software development firm. In a Feb. 18 interview with New Scientist, he noted that outsourcing is causing American students to "stop studying technical subjects. They are already becoming wary of going into a field which will be 'Bangalored' tomorrow."
Bangalore is India's Silicon Valley. A 21st century creation of outsourcing, Bangalore is a new R&D home for Hewlett-Packard, GE, Google, Cisco, Intel, Sun Microsystems, Motorola and Microsoft. The New Scientist reports: "The concentration of high-tech companies in the city is unparalleled almost anywhere in the world. At last count, Bangalore had more than 150,000 software engineers."
Meanwhile, American software engineers go begging for employment, with several hundred thousand unemployed. I know engineers in their 30s with excellent experience who have been out of work since their jobs were outsourced four or five years ago. One is moving to Thailand to take a job in an outsourcing operation at $875 a month.
A country that permits its manufacturing and its technical and scientific professions to wither away is a country on a path to the Third World. The mark of a Third World country is a labor force employed in domestic services.
Many Americans and almost every economist and policymaker do not see the peril. They confuse outsourcing with free trade, and they have been taught that free trade is always beneficial.
Outsourcing is labor arbitrage. Cheaper foreign labor is being substituted for more expensive First World labor. Higher productivity no longer protects the wages and salaries of First World employees from cheap foreign labor. Political change in Asia has made it easy to move First World capital and technology to cheap labor, and the Internet has made it easy to move cheap labor to First World capital and technology. When working with First World capital and technology, foreign labor is just as productive -- and a lot cheaper.
This is a new development. It is not a development covered by the case for free trade.
Outsourcing's apologists claim that it will create new jobs for Americans, but there is no sign of these jobs in the payroll jobs data. Moreover, it doesn't require much thought to see that the same incentive to outsource would apply to any such new jobs. By definition, outsourcing is the substitution of foreign labor for domestic labor. It is impossible for a process that replaces domestic employees with foreigners to create jobs for domestic labor.
Now biotech and pharmaceutical jobs and innovation itself are being moved offshore. The Boston Globe reports that Indian chemists with Ph.D. degrees work for one-fifth the pay of U.S. chemists. American chemists cannot give up 80 percent of their pay to meet the competition and still pay their bills. Rising interest rates will make it difficult enough for Americans to make their mortgage payments, and the dollar's declining exchange value will raise the prices of the goods and services that have been moved offshore.
Americans are unaware of the difficult adjustments that are coming their way. By the time Americans catch on to outsourcing, its proponents will have changed its name to "strategic sourcing" or "partnering."
Corporations, economists and politician have written off American labor. No end of the job drought is in sight.
In the mid-1800s, Isaac Singer moved HUNDREDS of American "factory jobs" to SCOTLAND, creating the biggest plant in the world for building sewing machines. Guess what? American workers began making the machines that MADE the sewing machines.
The last study we had of Chinese economic factor inputs, they were NOT innovating, merely adding new hands to the tiller, and that is not what economic growth is made of.
If that's true, it's not the first time GM has made that noise.
In the last several years, they've told a number of suppliers that GM will NO LONGER work with suppliers that did not have an offshore mfg. facility (at that time, they would accept Mexican plants.)
The supplier could maintain a US plant, but had to have another, someplace offshore.
If GM is now mandating PRChina, it's no surprise--even the Mexicans won't work for 25 cents/hour.
They can come to the US, illegally, and get $5--$9.50 in the veggie fields, slaughterhouses, or construction/landscaping.
Based on our analyses to date, as documented in detail in our Report, the Commission believes that a number of the current trends in U.S.-China relations have negative implications for our longterm economic and national security interests, and therefore that U.S. policies in these areas are in need of urgent attention and course corrections.The U.S. trade deficit with China is of major concern because (i) it has contributed to the erosion of manufacturing jobs and jobless recovery in the United States, (ii) manufacturing is critical for the nation’s economic and national security, and (iii) the deficit has adversely impacted other sectors of the U.S. economy as well. Therefore, our trade and investment relationship with China—with current trends continuing and the deficit expanding—is not just a trade issue for the United States, but a matter of our long-term economic health and national security.
(US-China Economic and Security Review Commission, 6/04 Report to Congress.)
It's not just "a hand on the tiller." It's also a matter of National Security.
And I don't know this group that sponsored this report that you cite.
I know factory jobs are alway moving overseas. However they have never been shipped out of this country like in the past 20 years. We ar eon the verge of having entire industries leave with nothing to replace them. It's going to get way worse before it gets better.
Always only if you mean in the last 30 years. The founding fathers put strong protectionist measures in place that made this nation an economic power house. If you don't understand that, you, sir, are "stupid."
Oh and don't pull the: protectionist measures caused the Great Depressions bit, it's been disproved more times then I care to count.
We'll ignore the fact that 1. the number of factory jobs then was growing faster then the work force (as opposed to now) and 2. the parts manufacture are equally outsourced too.
Correction: $.17
Wrong. Isaac Singer shipped a HUGE factory overseas in the 1800s and protectionism did NOT protect U.S. industries, as new research is showing---quite the contrary, the reason U.S. jobs "stayed" in the U.S. was because (as today) we were making stuff no one else made, including the British.
No, this is nothing new. It's always been happening, and there were the same dire "world-is-ending" whines when Japan was "rising." And now is falling.
Ah, I see. We ignore any facts we don't like.
End of discussion.
You cannot compare Japan with china.
1. Companies and whole industries were not being shut down and literaly being sent to Japan in the '80's.
2. The wage disparity; Japans wages were similar to ours. Not so with china
3. china has nukes pointed at us
COMMISSIONERS ROGER W. ROBINSON, Jr., Chairman Hon. C. RICHARD D’AMATO, Vice Chairman CAROLYN BARTHOLOMEW, Commissioner GEORGE BECKER, Commissioner STEPHEN D. BRYEN, Commissioner JUNE TEUFEL DREYER, Commissioner Hon. PATRICK A. MULLOY, Commissioner Hon. WILLIAM A. REINSCH, Commissioner MICHAEL R. WESSEL, Commissioner LARRY M. WORTZEL, Commissioner Hon. ROBERT F. ELLSWORTH, Commissioner DAVID J. OHRENSTEIN, Executive Director KATHLEEN J. MICHELS, Associate Director The Commission was created in October 2000 by the Floyd D. Spence National Defense Authorization Act for 2001 sec. 1238, Public Law 106– 398, 114 STAT. 1654A–334 (2000) (codified at 22 U.S.C. sec. 7002 (2001)), as amended, and the ‘‘Consolidated Appropriations Resolution of 2003,’’ Public Law 108–7, dated February 20, 2003. Public Law 108–7 changed the Commission’s title to U.S.-China Economic and Security Review Commission. The Commission’s full charter is available via the World Wide Web: http:// www.uscc.gov and begins in Appendix I, page 233.
http://www.uscc.gov
Japan is falling?
Really. They hold the largest single pile of USTreasury securities in the universe. Japanese companies rake in quite a bit of profit from their domestic AND their US manufacturing facilities.
Japan's surplus is very nice.
However, in the larger sense, you are correct--Japan is falling. But it's demographics, not economic muscle, which is killing Japan--similarly Italians in Italy, Germans in Germany.
Difference: Japan will NOT allow foreign labor into the country, as does Italy and Germany. Therefore, xenophobic Japan will simply grow old and die out around 2125.
While it is true that China has a lot of 'hands' to add to the production game, it is also true that those additions are at the expense of US (and Mexican) workers.
It is also true that 'productivity growth' has had an impact on the number of workers in manufacturing in the USA. But one can also argue, without fear of contradiction, that PRChina factories have the same machinery and equipment that US factories have.
The only really significant difference is the cost of labor, insofar as tax and regulatory costs NOT related to labor (as heavy as they are here in the USA) are simply not great enough to propel industry offshore.
It's also a helluvalot cheaper to live in PRChina than in the US. Finally, there is the slave-labor component, well-hidden from US eyes. I know a former President of a $250MM US company which was part of a several-tens-of-billions conglomerate based in the Southern US.
That President told me quite frankly that the US Company did NOT pay the PRChina workers. Rather, they gave a check to PRChina, which distributed the money to the workers itself. At least, the US company HOPED that they did, and did so fairly. They don't know, and are not stupid enough to ask.
Don't know a single one. No economists of repute that I know of there.
Wage disparity is exactly where there is no reason for concern. They are not taking high-wage jobs.
Nukes are a separate issue unless we are exporting aircraft design, plutonium refining, and so on. They are not going to beat us by hurling plastic lawn chairs at us.
So are they are or aren't they? Why are all the studies of the Japanese "miracle" concluding that they fizzled in the 1990s, and that it had nothing to do with demographics but with government policies? They have our $$ because they won't let our products in, thereby taxing their people into a lower standard of living. Yeah, that's real smart.
It is GOOD that we did not "pay the PRC workers." Do you realize what you just said? Their own government continues to be corrupt and starve them---or deny them wages. This is exactly the policy of every 3d world country. When they start paying the workers, worry.
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