America R.I.P.
By Paul Craig Roberts
October 16, 2012, 9:36 pm.
VDARE
During the second half of the 20th century the United States was an opportunity society. The ladders of upward mobility were plentiful, and the middle class expanded. Incomes rose, and ordinary people were able to achieve old-age security.
In the 21st century the opportunity society has disappeared. Middle class jobs are scarce. Indeed, jobs of any kind are scarce. To stay even with population growth from 2002 through 2011, the economy needed about 14 million new jobs. However, at the end of 2011 there were only 1 million more jobs than in 2002.
Only 426,000 of these jobs are in the private sector. The bulk of the net new jobs consist of waitresses and bartenders and health care and social assistance….
[N.S. And the health care and social assistance workers who are employed by “private” organizations are “private” in name only. Most are overwhelmingly paid for by the taxpayer.]
As for manufacturing jobs, they not only did not grow with the population but declined absolutely. During these nine years, 3.5 million middle class manufacturing jobs were lost. Over the entire nine years, only 48,000 new jobs were created for architects and engineers.
In the 21st century the US economy has been able to create only a few new jobs and these are in lowly paid domestic services that cannot be offshored, such as waitresses and bartenders.
The lack of jobs, especially high value-added, high productivity jobs, is the reason real median household income has declined and the distribution of income has worsened. Without rising real household income, there cannot be a consumer economy….
The cause of all of the problems is the offshoring of Americans’ jobs. When jobs are moved offshore, consumers’ careers and incomes, and the GDP and payroll and income tax base associated with those jobs, go with them. When the goods and services produced for American markets by offshored labor are brought into the US to be sold, the trade deficit rises, and downward pressure is put on the dollar, pushing up domestic inflation. (On October 12, statistician John Williams (shadowstats.com) reported that “third-quarter wholesale inflation jumped to an annualized 6.2%.”)
Jobs offshoring is driven by Wall Street, “shareholder advocates,” the threat of takeovers, and by large retailers, such as Walmart. By cutting labor costs, profits go up.
It is that simple.
[No, it isn’t. While I agree with most of Roberts’ analysis—excepting his usual assertion that we are fighting wars on behalf of Israel—as to what has been going on for the past 10-15 years, he’s wrong about the cause of offshoring. Offshoring and mass immigration were both responses to the violence and never-ending extortion of black supremacism, er, the “civil rights” movement.
I’ll have more to say about this matter in a future column.]
This is the reason for jobs offshoring, IMHO.
ReplyDelete"... when a country with a key currency has a deficit in its balance of payment -that is to say, the United States, for example- it pays the creditor country dollars, which end up with its central bank. But the dollars are of no use in Bonn, or in Tokyo, or in Paris. The very same day, they are all re-lent to the New York money market, so that they return to their place of origin . . . if I had an agreement with my tailor that whatever money I pay him he returns to me the very same day as a loan, I would have no objection at all to ordering more suits from him." - Jacques Rueff.
Essentially, the accounts of the US can never be settled with its foreign creditors for the reason that zero maturity notes, dollars, are exchanged for interest paying notes - bills and bonds. It just keeps getting bigger and bigger. Where is the incentive to produce when you can but the world's production for virtually nothing other than the cost of interest on debt. If push comes to shove, you can always default on those obligations and pay them squat.
Therefore, multinationals can set up in foreign countries, pay in local currency and sell the product in dollars to us, which are essentially (the dollars) unearned. All others have to produce and sell in order to earn dollars - not us - we just print it.
The countries accepting those dollars, turn around and recycle them back to us for debt., such as China does. As they say on Wall Street - nice piece of business if you can get it.
The only means of extinguishing trade account deficits on a system-wide basis ie. world-wide, is settlement in gold.