← Autodidact Archive · Original Dissent · Sertorius
Thread ID: 17341 | Posts: 17 | Started: 2005-03-16
2005-03-16 14:36 | User Profile
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March 15, 2005 Americaââ¬â¢s Has-Been Economy
By Paul Craig Roberts
A country cannot be a superpower without a high tech economy, and Americaââ¬â¢s high tech economy is eroding as I write.
The erosion began when US corporations outsourced manufacturing. Today many US companies are little more than a brand name selling goods made in Asia.
Corporate outsourcers and their apologists presented the loss of manufacturing capability as a positive development. Manufacturing, they said, was the "old economy," whose loss to Asia ensured Americans lower consumer prices and greater shareholder returns. The American future was in the "new economy" of high tech knowledge jobs.
This assertion became an article of faith. Few considered how a country could maintain a technological lead when it did not manufacture.
So far in the 21st century there is scant sign of the American "new economy." The promised knowledge-based jobs have not appeared. To the contrary, the Bureau of Labor Statistics reports a net loss of 221,000 jobs in six major engineering job classifications.
Today many computer, electrical and electronics engineers, who were well paid at the end of the 20th century, are unemployed and cannot find work. A country that doesnââ¬â¢t manufacture doesnââ¬â¢t need as many engineers, and much of the work that remains is being outsourced or filled with cheaper foreigners brought into the country on H-lb and L-1 work visas.
Confronted with inconvenient facts, outsourcingââ¬â¢s apologists moved to the next level of fantasy. Many technical and engineering jobs, they said, have become "commodity jobs," routine work that can be performed cheaper offshore. America will stay in the lead, they promised, because it will keep the research and development work and be responsible for design and innovation.
Alas, now it is design and innovation that are being outsourced. Business Week reports ("Outsourcing Innovation," March 21) that the pledge of First World corporations to keep research and development in-house "is now passé."
Corporations such as Dell, Motorola, and Philips, which are regarded as manufacturers based in proprietary design and core intellectual property originating in R&D departments, now put their brand names on complete products that are designed, engineered, and manufactured in Asia by "original-design manufacturers" (ODM).
Business Week reports that practically overnight large percentages of cell phones, notebook PCs, digital cameras, MP3 players, and personal digital assistants are produced by original-design manufacturers. Business Week quotes an executive of a Taiwanese ODM: "Customers used to participate in design two or three years back. But starting last year, many just take our product."
Another offshore ODM executive says: "What has changed is that more customers need us to design the whole product. Itââ¬â¢s now difficult to get good ideas from our customers. We have to innovate ourselves." Another says: "We know this kind of product category a lot better than our customers do. We have the capability to integrate all the latest technologies." The customers are Americaââ¬â¢s premier high tech names.
The design and engineering teams of Asian ODMs are expanding rapidly, while those of major US corporations are shrinking. Business Week reports that R&D budgets at such technology companies as Hewlett Packard, Cisco, Motorola, Lucent Technologies, Ericsson, and Nokia are being scaled back.
Outsourcing is rapidly converting US corporations into a brand name with a sales force selling foreign designed, engineered, and manufactured goods. Whether or not they realize it, US corporations have written off the US consumer market. People who do not participate in the innovation, design, engineering and manufacture of the products that they consume lack the incomes to support the sales infrastructure of the job diverse "old economy."
"Free market" economists and US politicians are blind to the rapid transformation of America into a third world economy, but college bound American students and heads of engineering schools are acutely aware of declining career opportunities and enrollments. While "free trade" economists and corporate publicists prattle on about Americaââ¬â¢s glorious future, heads of prestigious engineering schools ponder the future of engineering education in America.
Once US firms complete their loss of proprietary architecture, how much intrinsic value resides in a brand name? What is to keep the all-powerful ODMs from undercutting the American brand names?
The outsourcing of manufacturing, design and innovation has dire consequences for US higher education. The advantages of a college degree are erased when the only source of employment is domestic nontradable services.
According to the Los Angeles Times (March 11), the percentage of college graduates among the long-term chronically unemployed has risen sharply in the 21st century. The US Department of Labor reported in March that 373,000 discouraged college graduates dropped out of the labor force in February--a far higher number than the number of new jobs created.
The disappearing US economy can also be seen in the exploding trade deficit. As more employment is shifted offshore, goods and services formerly produced domestically become imports. Nothink economists and Bush administration officials claim that Americaââ¬â¢s increasing dependence on imported goods and services is evidence of the strength of the US economy and its role as engine of global growth.
This claim ignores that the US is paying for its outsourced goods and services by transferring its wealth and future income streams to foreigners. Foreigners have acquired $3.6 trillion of US assets since 1990 as a result of US trade deficits.
Foreigners have a surfeit of dollar assets. For the past three years their increasing unwillingness to acquire more dollars has resulted in a marked decline in the dollarââ¬â¢s value in relation to gold and tradable currencies.
Recently the Japanese, Chinese, and Koreans have expressed their concerns. According to Bloomberg (March 10), Japanââ¬â¢s unrealized losses on its dollar reserve holdings have reached $109.6 billion.
The Asia Times reported (March 12) that Asian central banks have been reducing their dollar holdings in favor of regional currencies for the past three years. A study by the Bank of International Settlements concluded that the ratio of dollar reserves held in Asia declined from 81% in the third quarter of 2001 to 67% in September 2004. India reduced its dollar holdings from 68% of total reserves to 43%. China reduced its dollar holdings from 83% to 68%.
The US dollar will not be able to maintain its role as world reserve currency when it is being abandoned by that area of the world that is rapidly becoming the manufacturing, engineering and innovation powerhouse.
Misled by propagandistic "free trade" claims, Americans will be at a loss to understand the increasing career frustrations of the college educated. Falling pay and rising prices of foreign made goods will squeeze US living standards as the declining dollar heralds Americaââ¬â¢s descent into a has-been economy.
Meanwhile the Grand Old Party has passed a bankruptcy "reform" that is certain to turn unemployed Americans living on debt and beset with unpayable medical bills into the indentured servants of credit card companies. The steely-faced Bush administration is making certain that Americans will experience to the full their country's fall.
Paul Craig Roberts, a former Reagan Administration official, is the author of The Supply-Side Revolution and, with Lawrence M. Stratton, of The Tyranny of Good Intentions : How Prosecutors and Bureaucrats Are Trampling the Constitution in the Name of Justice. Click here for Peter Brimelowââ¬â¢s Forbes Magazine interview with Roberts about the recent epidemic of prosecutorial misconduct.
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2005-03-16 16:07 | User Profile
"Free market" economists and US politicians are blind to the rapid transformation of America into a third world economy, but college bound American students and heads of engineering schools are acutely aware of declining career opportunities and enrollments. While "free trade" economists and corporate publicists prattle on about Americaââ¬â¢s glorious future, heads of prestigious engineering schools ponder the future of engineering education in America...
The larger the American flag lapel pin sported by a Republican businessman, the higher the percentage of his workforce is squatting on mats in Bombay and Shanghai.
To save America's Middle Class we must either bring back tariffs--or outsource Wall Street to Bengladesh...
2005-03-16 16:30 | User Profile
[QUOTE=Howard Campbell, Jr.]"Free market" economists and US politicians are blind to the rapid transformation of America into a third world economy, but college bound American students and heads of engineering schools are acutely aware of declining career opportunities and enrollments. While "free trade" economists and corporate publicists prattle on about Americaââ¬â¢s glorious future, heads of prestigious engineering schools ponder the future of engineering education in America...
The larger the American flag lapel pin sported by a Republican businessman, the higher the percentage of his workforce is squatting on mats in Bombay and Shanghai.
To save America's Middle Class we must either bring back tariffs--or outsource Wall Street to Bengladesh...[/QUOTE]
Interesting proposals, but it's wide of the mark, IMHO.
We must attack capitalism at its root, and that means ridding the free market of the terrible distortions capitalism imposes on it.
Perhaps the most destructive of all of capitalism's weapons is the routine use of the corporate organizational form with its limited liability.
The corporate organizaitonal form allows investors to limit their liability to the value of their investment. The express policy reason behind this is to encourage risk taking.
Now, at the heart of every business transaction is a risk-benefit analysis. The state is artificially distorting the market in favor or risk taking. But costs of risks are real, they cannot be made to disappear by state mandate. So, where does the economic value of that additional risk get charged off on the ledger? To repeat, it can't just disappear.
The answer is that it is charged to the social capital account. Our "corporate libertarians" deny that there is such a thing as social capital (in the teeth of Adam Smith, I might add) and so they keep no account of that, but at the same time they never actually tell us where the cost of the additional risk goes, now do they?
Capitalism is all about mining the commons of social capital and privatizing it to the benefit of corporate insiders and passive investors. The corporate organiational form encourages the creation of disinterested passive investors (aka "absentee landlords") and the creation of a parasitic overseer (aka corporate officer) class that hide behind corporate limited liability to impose these additional costs of risk on society, privatize social capital.
Again, we must attack the evil of capitalism at its root and liberate the free market.
2005-03-16 16:45 | User Profile
[QUOTE]--or outsource Wall Street to Bengladesh...[/QUOTE] Howard,
If we won't do that can we at least correct the statue of the bull on Wall Street to reflect reality? That is to cut the horns off of it, paint it gold and if it is anatomically correct, cutoff the sex organ. I think that would make a wonderful representation of what Wall Street is all about.
Walter,
Good post. If one loves the idea of the nation one has to detest what is called "capitalism" today.
2005-03-16 16:51 | User Profile
[QUOTE=Sertorius] Good post. If one loves the idea of the nation one has to detest what is called "capitalism" today.[/QUOTE] I agree. One of the greatest triumphs of the current system was its successful effort to make 'capitalism' a synonym for 'private property' in the minds of most people. This makes people reflexively view any critique of capitalism as an attack on the very idea of private property itself, which is not the case. Private property is as old as humanity. Capitalism is a product of the so-called Enlightenment that conflates a certain economic theory with morality, and which leads to plutocracy and the degradation of the masses.
2005-03-16 17:04 | User Profile
Unless someone in the US has a SUPER PLAN to save the US I don't see anything happening in the future, to me the US is like a dog running around in circle trying to catch its own tail.
2005-03-16 18:41 | User Profile
I have a "super plan" sort of, and it's starting to get through to the more "perceptive minority."
My cousin is a very nice woman, Harvard educated, a lot of Scandinavian blood (much more than me), very liberal, in her 40's.
However, she has always been kind of economically reactionary and optimistic about globalism. Just way too upbeat and positive about the way things are, way too sure that "ultimately it's OK."
In our last conversation we discussed how corporations try to hurt the little guy in every way possible, and she agreed with a note of sadness in her voice. She asked, "So what are we going to do about it?" expecting an answer along the lines of "nothing."
I said, "Well, that's just the thing. THere is something we can do, once people are hurting enough and therefore motivated enough to act. You have to look at it like a businessman, and question every economic act you make. If enough millions of people make a "universal and permanent boycott" of the System, it will smack 'em upside the head, the way they deserve to be smacked.
Here's a starter list:
The long term goal is to help crash the economy and avoid the "debtor's hell" they have in store for us with the bankruptcy bill, and to smack the corporations upside the head, to punch them right in thier profit holes.
My liberal cousin seemed to agree with me. My plan isn't violent or even especially radical. It wouldn't have been radical by the standards of old America, where a favorite slogan was "waste not, want not." She didn't act like I was a kook this time, she is starting to see that I might be sane after all. Also, her boyfriend is a real smart guy, a scientist, but he hadn't heard of Peak Oil, so I said to him, "well, then, you heard it from me first, because believe me, you'll hear more about it. It's been on Salon.com and New York Times and even read into the Congressional Record as of March 14th, 2005."
Rob
2005-03-16 23:31 | User Profile
Also, her boyfriend is a real smart guy, a scientist, but he hadn't heard of Peak Oil, so I said to him, "well, then, you heard it from me first, because believe me, you'll hear more about it. It's been on Salon.com and New York Times and even read into the Congressional Record as of March 14th, 2005."
You're not kidding, peak oil changes everything. This entire economy is based on cheap energy, when that's gone, economic growth is gone. And that means the end of the usury system. Peak oil fits in with Joseph Tainter's "collapse" thesis: > "With subsidies of inexpensive fossil fuels, for a long time many consequences of industrialism effectively did not matter. Industrial societies could afford them. When energy costs are met easily and painlessly, benefit/cost ratio to social investments can be substantially ignored (as it has been in contemporary industrial agriculture). Fossil fuels made industrialism, and all that flowed from it (such as science, transportation, medicine, employment, consumerism, high-technology war, and contemporary political organization), a system of problem solving that was sustainable for several generations." [URL=http://en.wikipedia.org/wiki/Complexity%2C_Problem_Solving%2C_and_Sustainable_Societies]Tainter's Complexity[/URL]
All of these highly artificial social shennanigans such as Black equality, welfare statism, educating morons, holohoax empathy etc. and the rest of the Jewish agenda have been propped up by the luxury of cheap energy. They will collapse.
2005-03-30 16:37 | User Profile
The Bankruptcy Bill is not just part of the Conservative agenda. 18 Democratic Senators voted in favor of it as well. While Chapter 7 is legitimate and will still be around despite this legislation it does need some reform. For example this bill requires that one must live in a state for 3 years before they can declare bankruptcy which will prevent spur of the moment moves to Florida.
2005-03-30 22:58 | User Profile
[QUOTE]For example this bill requires that one must live in a state for 3 years before they can declare bankruptcy which will prevent spur of the moment moves to Florida.[/QUOTE] The residency requirement determines the extent to which a debtor can avail himself of the state's exemption laws (e.g., Texas's or Florida's generous homestead exemptions). But the debtor can still file for bankruptcy protection.
2005-03-30 23:05 | User Profile
[QUOTE=mwdallas]The residency requirement determines the extent to which a debtor can avail himself of the state's exemption laws (e.g., Texas's or Florida's generous homestead exemptions). But the debtor can still file for bankruptcy protection.[/QUOTE] I am not saying I don't think people should no longer be able to file for bankruptcy, I just think it is a good thing that they can no longer buy a big house in FL to avoid having to relinquish other assets.
By the way I am new to the forum, and am glad to be here. Have been watching for a while, but just recently started to post. I tried to post in the new member forum but did not have permission for some reason.
2005-03-30 23:13 | User Profile
Welcome, Alexander. I am a bankruptcy lawyer, but I have not read the entire bankruptcy bill. I don't have much contact with personal bankruptcies.
2005-03-31 06:59 | User Profile
I hate to sound over simplistic... but the answer is quite simple. There is no need to "revamp" our system... we simply need to go back to the "common sense" principles that our country operated on before it was "hijacked" by these idiot globalists. For over a century our nation has been influenced by forces that have turned our civilization upside-down. We simply need to turn the country right side-up again. There is only one catch: the people must have the fervor and resolve to do so.
Have you heard of the ââ¬Å12 Step Programââ¬Â for drug addicts and alcoholics? Here is the ââ¬Å12 Step Programââ¬Â for declining superpowers:
1) Immediately revoke the citizenship of all Jews and give them temporary visas.
2) Cease all immigration.
3) Close all borders pending analysis.
4) Recall all U.S. Armed Forces from around the world for reassignment here.
5) Abolish the Federal Reserve and transfer that authority and responsibility back to the U.S. Treasury where it was in the first place... prior to 1913.
6) Abolish the Federal Income Tax and go to a flat 10% tax on net income.
7) Abolish the use of fiat money and return the country to the gold standard and real bills.
8) Abolish all laws and constitutional amendments not passed according to the constitution.
9) Abolish all foreign aid and treaties that violate U.S. Sovereignty.
10) Abolish all anti discrimination and equal opportunity laws.
11) Restrict the government to a budget of 500 billion dollars a year.
12) Restrict the Executive, Legislative and Judicial Branches of our government to popular approval terms of service. Any disapproval by citizens and these servants are immediately terminated. (Perhaps using the Internet for instant polling?)
What say you now gentlemen? :biggrin:
2005-03-31 07:12 | User Profile
[QUOTE=Alexander]The Bankruptcy Bill is not just part of the Conservative agenda. 18 Democratic Senators voted in favor of it as well.[/QUOTE]
Neither formalized half of the single ruling party has anything remotely to do with conservatism, despite a handful of conservatives managing to linger on the fringes of the Republican "Party," i.e. Rep. Tom Tancredo of Colorado, Rep. Ron Paul of Texas, and that one other Representative from Tennessee, who upon the death of Dr. Samuel Francis, praised him on the House floor. Most of the GOP is anti-conservative in any meaningful sense.
2005-03-31 15:59 | User Profile
[QUOTE=Kevin_O'Keeffe]...despite a handful of conservatives managing to linger on the fringes of the Republican "Party," i.e. Rep. Tom Tancredo of Colorado, Rep. Ron Paul of Texas, and that one other Representative from Tennessee,[/QUOTE] That would be my homeslice John (Jimmy) Duncan, Jr. Those three are probably the only members of Congress that shouldn't be immediately tarred and feathered.
2005-03-31 17:26 | User Profile
Phantasm? on
I am with you on the rest of them.
2005-03-31 22:31 | User Profile
[QUOTE=Ponce]Phantasm? on
I am with you on the rest of them.[/QUOTE] Ponce... you're quite right.
Your suggestion on #1 is definitely an improvement. And regarding #6... now that I think about it... the maintenance of the U.S. currency supply along with trade tariffs should be more than enough to generate an annual budget of $500 billion dollars a year.
Thank you for "fine tuning" the 12 Step Program.
:thumbsup: