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It is in the breaking news sidebar!
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.
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There is only one reason businesses move, ease of doing business. They moved from Detroit to Smyrna, Tn, because there was no union to haggle with, cheaper labor, and less restrictions about zoning, licences, local regulations, etc. They are moving offshore now for the same reasons. The Evironmental Wackos, along with their 800 pound gorrilla, the US Government, have made it almost impossible for corporations to make a profit, and if they do, Teddy Kennedy, et.al., wants to take it away! Case in point: California is practially dying for more electric power. How many power plants have been built in California? How long does it take to get the necessary "permission" from everybody at the EPA down to the local nosepicker behind the desk who makes things difficult, simply because he can! California is IMPORTING electricy from plants built by US companies, in MEXICO! I'm sure it's the same story for any other corporation that wants to expand, modernize, even move across the street!
The bureaucrats only have to look in the mirror to find the problem, but they won't admit it. In the meantime, we have this lovely, misquito infested swamp (wetland), with 150 known endangered species living in it.............
I just got my Contract-Engineering Weekly. The "magazine" lists engineering, construction, and IT jobs around the U.S. It used to be almost 200 pages long, but this recent issue was 32 pages. And a good portion of the listings were "future requirements".
I don't know what the answer is, but America is doomed if we continue exporting all our manufacturing jobs. Hell, I can't find anything at all made in America any more. Even the produce in the supermarkets comes from other countries.
This is the crux of the problem. Tax cuts cannot stimulate the spending of jobless Americans. They don't earn so they don't pay taxes.
The problem is the export of jobs in huge numbers. The price of goods cannot fall enough for the jobless to buy them. Even if everything costs a nickel, you have to HAVE a nickel.
That easy...We can't...Not with our standard of living...We need to convince the Americans that there is no way out of globalism and that we need it to survive because we can't afford to buy the things we make and no one else can either...
This is not a fast operation...It's just beginning...
1. Get out of GATT. No foreigners should regulate American trade. Only the countries involved in the trade.
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.
So what do you propose we do to keep jobs here??? You advocate working for far less cash than you already do...When the job cuts affect you and your's, how much of a pay cut are you willing to take to keep your job here???
Won't be long you'll be changing your name from dirtbiker to roadwalker...
Seems almost like it was "planned' by our so-called "leaders' for a few decades.
The Panama Canal giveaway was only the beginning. Unfortunately, the RepublicRATs are as complicit in this emasculation of America as the DemocRATs.
Yeah, or we could line up all the 70+ retirees and shoot their non-productive, social security collecting asses in the street. That'll teach the bastards to live so long. /sarcasm
When I call Home Depot's customer service and talk to someone in New Delhi, how does that produce for the world market?
I don't think the author makes the distinction as to whether the jobs going overseas produce for the world or domestic markets. His point is that the money formerly paid to US employees by US corporations is now offshore, with negative implications for the dollar and the economy.
The way I see it, only massive tax and regulatory relief will reverse what appears to be an invevitable trend.
And the underlying cause of this is a world oversupply of labor. Fact is, there are billions of people in the third world who are willing to work for dirt-low wages. As long as this is true, companies will find ways to exploit this and cut production costs. As much as I dislike this, I'm not sure I see any solution.
In the long run, we may see the reverse problem: a worldwide undersupply of labor. As the third world develops and their birthrates collapse (as has happened in the West and the Pacific Rim), there will be a global upsurge in labor costs. But this may take decades. In the meantime, those who rely on the sale of their labor (as opposed to those who live off of the earnings of capital investments) will see their standard of living plunge as they compete with Chinese coolies and Latin American peasants in a glutted labor market.
A myth? What is the world economy without the United States? There is virtually none if America collapses economically. The world economy without the United States driving it is the functional equivalent of a brand new Cobra Mustang with the engine removed.
Name a single country that can drive the world's economy if the United States is economically devastated.
Think of when the housing and consumption bubbles burst. I think the housing market s the tape holding everything together right now.
I just read that Chinese save 30% of their income, people on Singapor, 40%---Amercians at time have a negative savings rate. I won't even get into comparing our non existant foreign currency reserves.
We have some deep and serious problems.
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