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Watching the Economy Crumble

Thread ID: 19726 | Posts: 9 | Started: 2005-08-19

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Faust [OP]

2005-08-19 07:43 | User Profile

Watching the Economy Crumble

Who needs a university degree to wait tables and serve drinks, to build houses, to work as hospital orderlies, bus drivers, and sales clerks?

by Paul Craig Roberts

The US continues its descent into the Third World, but you would never know it from news reports of the Bureau of Labor Statistics’ July payroll jobs release.

The media gives a bare bones jobs report that is misleading. The public heard that 207,000 jobs were created in July. If not a reassuring figure, at least it is not a disturbing one. On the surface things look to be pretty much OK. It is when you look into the composition of these jobs that the concern arises.

Of the new jobs, 26,000 (about 13%) are tax-supported government jobs. That leaves 181,000 private sector jobs. Of these private sector jobs, 177,000, or 98%, are in the domestic service sector.

Here is the breakdown of the major categories: 30,000 food servers and bartenders, 28,000 health care and social assistance, 12,000 real estate, 6,000 credit intermediation, 8,000 transit and ground passenger transportation, 50,000 retail trade and 8,000 wholesale trade.

(There were 7,000 construction jobs, most of which were filled by Mexicans.)

Not a single one of these jobs produces a tradable good or service that can be exported or serve as an import substitute to help reduce the massive and growing US trade deficit. The US economy is employing people to sell things, to move people around, and to serve them fast food and alcoholic beverages. The items may have an American brand name, but they are mainly made off shore. For example, 70% of Wal-Mart’s goods are made in China.

Where are the jobs for the 65,000 engineers the US graduates each year? Where are the jobs for the physics, chemistry, and math majors? Who needs a university degree to wait tables and serve drinks, to build houses, to work as hospital orderlies, bus drivers, and sales clerks?

In the 21st century job growth in the US economy has consistently reflected that of a Third World country—low productivity domestic services jobs. This goes on month after month and no one catches on—least of all the economists and the policymakers.

Economists assume that every high productivity, high paying job that is shipped out of the country is a net gain for America. We are getting things cheaper, they say. Perhaps, for a while, until the dollar goes. What the cheaper goods argument overlooks are the reductions in the productivity and pay of employed Americans and in the manufacturing, technical, and scientific capability of the US economy.

What is the point of higher education when the job opportunities in the economy do not require it?

These questions are too difficult for economists, politicians, and newscasters. Instead, we hear that "last month the US economy created 207,000 jobs."

Television has an inexhaustible supply of optimistic economists. Last weekend CNN had John Rutledge (erroneously billed as the person who drafted President Reagan’s economic program) explaining that the strength of the US economy was "mom and pop businesses." The college student with whom I was watching the program broke out laughing.

What mom and pop businesses? Everything that used to be mom and pop businesses has been replaced with chains and discount retailers. Auto parts stores are chains, pharmacies are chains, restaurants are chains. Wal-Mart, Home Depot, and Lowes, have destroyed hardware stores, clothing stores, appliance stores, building supply stores, gardening shops, whatever—you name it.

Just try starting a small business today. Most gasoline station/convenience stores seem to be the property of immigrant ethnic groups who acquired them with the aid of a taxpayer-financed US government loan.

Today a mom and pop business is a cleaning service that employs Mexicans, a pool service, a lawn service, or a limo service.

In recent years the US economy has been kept afloat by low interest rates. The low interest rates have fueled a real estate boom. As housing prices rise, people refinance their mortgages, take equity out of their homes and spend the money, thus keeping the consumer economy going.

The massive American trade and budget deficits are covered by the willingness of Asian countries, principally Japan and China, to hold US government bonds and to continue to acquire ownership of America’s real assets in exchange for their penetration of US markets.

This game will not go on forever. When it stops, what is left to drive the US economy?

Dr. Roberts, a former Associate Editor of the Wall Street Journal and a former Contributing Editor of National Review, was Assistant Secretary of the Treasury during the Reagan administration. He 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. Look also for Peter Brimelow’s Forbes Magazine interview with Roberts about the recent epidemic of prosecutorial misconduct.

[url]http://www.vdare.com/roberts/050808_crumble.htm[/url]

Angler

2005-08-19 11:03 | User Profile

Another great essay from PCR. The man just can't write a bad one.

One thing I fear is that if the economy gets bad enough, more and more Americans are going to feel the need to join the military just to make ends meet. Then they'll get sent to be maimed or killed in the Middle East for our enemy, Israel.

Sertorius

2005-08-19 11:57 | User Profile

Angler,

While one doesn' want to over estimate the degree that the Necons will go to have their way, one doesn't want to underestimate them either. One can almost wonder if that is one more of increasingly insane plans they have to "solve" another problem they have created due to their supreme stupidity, ignorance and arrogance and at the same time to "profit" by their demolition of the US manufacturing base. These guys are an absolute nightmare.

Quantrill

2005-08-19 12:42 | User Profile

Roberts is just about the only guy who consistently breaks down the economic reports from the government, particularly the jobs reports, to show them for what they are -- propaganda. You just can't hear this kind of stuff on CNBC, where they go on continually about the 'recovery' and 'new job creation.'

Sertorius

2005-08-19 13:08 | User Profile

Q,

The Wall Street Journal is notorious to some of us to hype this without the breakdown Roberts does. Wall Street may be doing well, but alot of folks aren't doing so well with this "sizzling Bush economy".

Bardamu

2005-08-19 13:13 | User Profile

Wait til the housing bubble pops, not only will workingclass people be thrown out of their jobs building houses, many of them will see their life savings vanish into thin air.

solutrian

2005-08-19 13:59 | User Profile

Paul C. Roberts just sees things in a clearer and more umcompromising light. Let's all hope that he carries his message far. The clock is ticking on this society, and hope that the bad guys get it in the neck for a change.

Ponce

2005-08-19 16:31 | User Profile

Mine is not to ask why but to do and die,?.

The was in Iraq is 80% lost and the economy in the US is 70% lost and there is nothing that anyone can do about it because we are not driving the bus.

Like Mark Twain (Clement) said "Every one is talking about the weather but no one is doing anything about it"........so, is anyone doing anything about the economy in the US? about the jobs going overseas?. :bash:

We do have Cindy doing something about the war in Iraq, GO CINDY GO.

Ponce

2005-08-20 03:59 | User Profile

If our oil supply is cut off from the Middle East for any reason then the closer supplyer would be Venezuela but thanks to king Bush that supply route is shot down the drain. =======================+++++++++++=====================

Iran, Venezuela discuss oil embargo TEHRAN — "Oil is the lifeline of the West, and most of the West's military industries are dependent on it,” the Tehran Times suggested in an editorial last week. Irritated by a recent resolution by the International Atomic Energy Agency (IAEA) that called for a halt to Iran’s uranium conversion program, the newspaper suggested that oil-rich states form a united front and use oil as a tool to confront "western neocolonialist countries."

In Venezuela, Pres. Hugo Chavez has taken the idea a step further, threatening to halt oil exports if alleged attacks on his country continue, according to Agence France Press. Appearing last week as a witness at a symbolic “anti-imperialist court” in Caracas, Chavez said, “Washington’s molestation may cause more serious problems; our two oil tankers going to the U.S. everyday may go to another country.” He added that the “Northern America market is not compulsory for us.” Venezuela exports 1.5 million barrels of oil to the United States daily.

According to the Islamic Republic News Agency, the Iranian newspaper’s editorial described oil as “the most potent economic weapon for settling scores,” and suggested an embargo on oil sales to the United States and European countries that are pressuring Iran to end its nuclear program. It also criticized what it sees as a double standard, noting that Israel, Pakistan and India have nuclear weapons, and that most of them have conducted tests.

In an interview with an Israeli TV station from his Texas ranch, Pres. Bush expressed doubts that the European Union’s diplomatic initiative to defuse the crisis over Iran’s nuclear activities would succeed, and refused to rule out the use of force. "All options are on the table," he said.

Israel has been prodding Washington to get tougher, charging that Iran resumed its nuclear activities because it sensed the "weakness" of the international community. "Iran made this decision because they are getting the impression that the United States and the Europeans are spineless," a senior official from Israeli Prime Minister Ariel Sharon's office told Agence France Press.