The myth of the war economy Markets loathe uncertainty and volatility. Conflict brings both

Yet another prescient past prophet.  This one, Joseph Stiglitz, was foretelling the economic consequences of our foreign adventures with chilling accuracy even before the Second Iraq War began.  Great article from 2003, more timely than ever.---rng

     

It is now March 23, 2011. We have been at war since 2001. We are now fighting three wars. Count 'em---three wars. Forget all that talk about the peace dividend or war dividend, where's my job? Just a little prophecy in the making. -----lee    

from The Guardian

Wednesday 22 January 2003

     War is widely thought to be linked to economic good times. The second world war is often said to have brought the world out of depression, and war has since enhanced its reputation as a spur to economic growth. Some even suggest that capitalism needs wars, that without them, recession would always lurk on the horizon.

     Today, we know that this is nonsense. The 1990s boom showed that peace is economically far better than war. The Gulf war of 1991 demonstrated that wars can actually be bad for an economy. That conflict contributed mightily to the onset of the recession of 1991 (which was probably the key factor in denying the first President Bush re-election in 1992).

     The current situation is far more akin to the Gulf war than to wars that may have contributed to economic growth. Indeed, the economic effects of a second war against Iraq would probably be far more adverse. The second world war called for total mobilisation, requiring a country's total resources, and that is what wiped out unemployment. Total war means total employment.

     By contrast, the direct costs of a military attack on Saddam Hussein's regime will be minuscule in terms of total US spending. Most analysts put the total costs of the war at less than 0.1% of GDP, the highest at 0.2% of GDP. Much of that, moreover, includes the usage of munitions that already exist, implying that little or no stimulus will be provided to today's economy.

      Bush's (admittedly wavering) commitment to fiscal prudence means that much, perhaps most, of the war costs will be offset by cuts elsewhere. Investments in education, health, research, and the environment will almost inevitably be crowded out. Accordingly, war will be unambiguously bad in terms of what really counts: ordinary people's standard of living.

       America will thus be poorer, both now and in the future. Obviously, if this military adventure were necessary to maintain security as its advocates claim - and if it were to prove as successful as its boosters hope - then the cost might be worth it. But that is another matter. I want to debunk the idea that it is possible both to achieve the war's ends and benefit the economy.

       There is also the uncertainty factor. Of course, this is no reason to invade Iraq prematurely, for the costs of any war are high, and are not to be measured primarily in economic terms. Lives will be lost - possibly far more than were lost on September 11. But the wait for war adds to uncertainties that already weigh on the US, and the global, economy: uncertainties arising from America's looming fiscal deficit and a tax cut that the country cannot afford; uncertainties arising from the unfinished "war on terrorism"; uncertainties associated with the corporate accounting and banking scandals, and the Bush administration's half-hearted efforts at reform, as a result of which no one knows what America's corporations are worth; uncertainties connected to America's massive trade deficit, which has reached all-time highs - will foreigners be willing to continue to lend to the US at a rate in excess of a billion dollars a day? Uncertainties associated with Europe's stability pact. Will it survive, and will it be good for Europe if it does? Finally, uncertainties associated with Japan: will it at long last fix its banking system, and if it does, how negative will be the short-term impact?

     Some suggest that the US may be going to war to advance its oil interests. Few can doubt the influence that oil interests have on President Bush - witness the administration's energy policy, with its emphasis on expanding oil production rather than conservation. But even from the perspective of oil interests, war against Iraq is a risky venture: not only is the impact on price highly uncertain, but other oil producers, will not easily be ignored.

     Indeed, should the US go to war, no one can predict the effect on oil supplies. A peaceful, democratic Iraqi regime could be established. Desperate for funds for reconstruction, that new regime could sell large amounts of oil, lowering global oil prices. Or the turmoil throughout the Muslim world could lead to disruptions of oil supplies, with high prices the result. This will please oil producers in other parts of the world, but will have adverse consequences for the global economy, akin to those resulting from the oil hikes in 1973.

       Whichever way one looks at it, the economic effects of war with Iraq will not be good. Markets loathe uncertainty and volatility. War, and anticipation of war, bring both. We should be prepared for them.

to read original article

     Joseph Stiglitz is professor of economics and finance at Columbia University, the winner of the 2001 Nobel Prize in economics, and author of Globalization and its Discontents. He was formerly chairman of the council of economic advisers to President Clinton and chief economist at the World Bank. 

Why the World Is Financially Doomed in Four Charts

"In essence, the Financial Power Elites profited immensely from creating this illusory wealth which gave the bottom 90% the false sensation that their declining earnings and purchasing power were being offset by the "magic" of asset bubbles."


Charles Hugh Smith, Of Two Minds | 

Jan. 6, 2011, 11:21 AM

The global economy is doomed to implosion, and here are four charts which explain why.

Though the complexities may appear endless, the global economy's coming implosion is really fairly easy to understand: here are four charts which do the heavy lifting. It boils down to these basics:

1. When money is dear and difficult to borrow, then productivity and capital accumulation are encouraged, speculation, malinvestment and debt-based consumption are discouraged.

2. When money is "free" (zero-interest rate policy) and liquidity is unlimited, then the opposite conditions hold: speculation in risk assets, malinvestment and debt-based consumption are all encouraged, and productivity and capital accumulation are heavily discouraged.

3. When debts exceed the value of the underlying assets, the only way out of the Tyranny of Debt is to write off the debt on both the borrower and lender's balance sheets, wiping out their capital via liquidation and bankruptcy.

4. The "extend and pretend" policy pursued by all major nations is simply transferring the impaired debt from private hands to the taxpayers (public debt), crippling the economy with higher taxes and higher debt service.

5. The Central State's "extend and pretend" policy requires heavy borrowing every year to prop up the status quo, pushing the Central State (or equivalent, i.e. the Eurozone) in an inescapable double-bind: either continue increasing public debt and cripple the economy with high taxes and high public-debt servicing costs, or let the financial status quo of "profits are private, losses are public" implode.

The first path leads to default, as the Tyranny of Debt cannot be masked for long, while the second path wipes out the Financial Power Elite which feeds the politicians.

Here are the charts. Note how the speculative economy created the illusion of rising wealth for the bottom 90%, an illusion stripped away by the Default Economy.

In essence, the Financial Power Elites profited immensely from creating this illusory wealth which gave the bottom 90% the false sensation that their declining earnings and purchasing power were being offset by the "magic" of asset bubbles.

Then, when the bubble popped, the Financial Power Elites transferred the impaired assets to the taxpayers, a process which is still underway. The politicos of both parties are complicit; behind the simulacra of toothless "reforms," this process proceeds in myriad ways (Bank of America transferring toxic debt to Fannie/Freddie, etc.) Behind the smokescreen of conjuring a "wealth effect" to foster more consumption, the Fed's purchase of Treasuries (QE2) serves this transfer-of-debt-to-the-public process.

This same process is playing out throughout the global economy: Greece, Ireland, the U.S., and eventually, in China when its monumental property bubble pops.

Read more: 

Reviving full employment policy

"The implication is that full employment must be restored as a primary goal of macroeconomic policy..."


from sharedprosperity.org

June 22, 2007 | EPI Briefing Paper #191

EPI Agenda for Shared Prosperity

Challenging the Wall Street paradigm

by Thomas Palley

Download print-friendly PDF version 

Economic Policy and the Challenge of Shared Prosperity

Over the last 30 years the American economy has exhibited a systematic disconnection between wages and productivity growth. This disconnection means that ordinary Americans are not properly sharing in the economy’s growth, thus contributing to rising income inequality.

Rising inequality and the failure of wages to rise with productivity has triggered a fundamental debate among Democrats. One position argues that the underlying structure of the economy is sound, but workers must be offered a “helping hand” in the form of enlightened social policy, in the form of income supports, tax credits, educational assistance, and wage insurance. Policy would thereby ameliorate the effects of the disconnection between wages and productivity growth.

A second position is that the underlying structure of the economy is flawed, and policy needs to address the flaws. From this perspective, it is not enough to address “symptoms:” policy must address underlying “causes.” Enlightened social policy is always welcome, but it is not adequate to the scale of the problem and therefore cannot produce the desired outcome—an economy in which productive work is appropriately rewarded and provides the means for participating in the American dream.

There is a further analytical twist, which is that economic policy has itself contributed to the disconnection of wages and productivity growth. That calls for changing the existing policy paradigm. There are many dimensions of policy that must change, including labor market policy (Kochan and Shulman 2007) and globalization policy (Faux 2007). This briefing paper examines needed changes in macroeconomic policy—monetary policy, exchange rate policy, and fiscal policy.

The argument is that existing macroeconomic policy has paid inadequate attention to delivering full employment for the U.S. economy. In doing so, current policy has contributed to undermining the link between wages and productivity growth because full employment is an essential condition for workers to be able to bargain for a fair share of productivity. Moreover, as documented by Bernstein and Baker (2003), the benefits of full employment go beyond higher wages and more jobs to include reduced poverty and crime rates. The implication is that full employment must be restored as a primary goal of macroeconomic policy, and this briefing paper describes policies that can bring about that outcome.

The Erosion of Shared Prosperity

Over the last 30 years the U.S. economy has experienced a sea change in performance defined by the emergence of a disconnection between wages and productivity growth. The disconnection is captured in Figure A, which shows growth of productivity and hourly compensation for production and non-supervisory workers (who constitute over 80% of wage and salary employment). From 1959 to 1979 compensation moved with productivity. Since 1979 productivity has kept growing but hourly compensation has essentially flat-lined.

The flipside of the wage/productivity-growth disconnection is increasing income inequality. Figure B shows how family incomes at the top (95th percentile) and the bottom (20th percentile) of the scale grew together between 1947 and 1973. Indeed, family incomes at the bottom of the distribution actually grew fractionally faster than those at the top. Since 1973, however, this situation has been transformed: instead of growing together, the nation has grown apart, with the productivity growth dividend accumulating almost entirely to those in the top 20%—and especially the top one percent—of the family income distribution.

These developments occurred in two stages. Stage one involved widening of wage inequality, exemplified by the CEO-pay explosion. Figure C shows that between 1979 and 2005 CEO pay went from being 38 times average worker pay to 262 times. Stage two has occurred post-2000 and has been marked by a jump in the profit share of national income.

to continue article

Is opera good for growth?

I didn't realize it was so easy to create more jobs, why didn't anyone think of this before? -----lee 

March 18, 2011 19:33 by R.A. Washington

TODAY'S "Oh, really?" moment comes courtesy of Jack Ewing at Economix:

     Modern Germans may still be harvesting significant economic benefits from extravagant opera houses built by spendthrift Baroque princes, according to a study published this month by the Ifo Institute for Economic Research in Munich.
     The economists behind the study, Oliver Falck, Michael Fritsch and Stephan Heblich, argued that Baroque opera houses attract well-educated workers who prefer to live near cultural amenities. Proximity to an opera house can increase regional growth by as much as 2 percentage points, they wrote.
     They concluded that political leaders should think twice before reducing culture spending.

Oh, really?

     The study by Mr. Falck and the other economists examined 29 opera houses built before 1800 or just afterward. By limiting themselves to venues constructed before the advent of the industrial revolution, the authors sought to eliminate the possibility that opera houses were a result, rather than a cause, of regional economic growth.
     The study corrected for other factors that might explain higher growth, like the presence of a university or seaport. Some opera venues were in major cities like Berlin, Munich and Hamburg, but others were in smaller cities like Bautzen, Passau and Stralsund.
The authors also looked at regions with similar characteristics, minus the opera house.

     Ok, maybe there's something to this. Maybe most smart people really like opera enough to move to cities that have opera houses, thereby making those cities more productive. But colour me sceptical.
     The authors of the paper go to great lengths to control for other factors that might bias their results. They only look at opera houses built before or immediately after 1800, that is, prior to the industrial revolution. And they control for local economic conditions at the time of construction of the opera house. But does that necessarily mean that it's the present impact of the opera houses that's driving growth?
     Here's my alternative explanation: education levels are persistent. It's quite possible that courts built opera houses in the 18th century for reasons of prestige, and those opera houses attracted skilled musicians and music lovers in the decades thereafter. And it's those 19th century concentrations of educated individuals that are responsible for high skill levels and growth now. Not the opera.
Seem strange? Have a look at this:

     As you can see, there's a tight relationship between school enrolment in 1900 and income a century later. Ed Glaeser wrote on this back in 2009:

One reason that historical education levels have such predictive power is that educational investment is extremely persistent. School enrollments in 1900 can explain more than 72 percent of the variation in years of schooling across countries today, as measured by data collected by Robert J. Barro and Jong-Wha Lee; a similar degree of persistence occurs  across United States cities.

Educated parents and teachers produce educated children; societies that invested in schooling a century ago still generally do so today. Moreover, education has an extraordinarily high contemporaneous relationship with national income levels.

     Before I sign off on job-creating opera-construction initiatives, I'd like to see an effort to control for education levels a century ago.

to read original article

http://www.economist.com/blogs/freeexchange/2011/03/culture

CBO: Health law to shrink workforce by 800,000

Need I say anything more. Obamacare is bad news and has to be repealed. ------lee

By J. LESTER FEDER & KATE NOCERA | 2/10/11 5:18 PM EST

     CBO Director Douglas Elmendorf told the House Budget Committee on Thursday that the health care law will reduce employment by 0.5 percent by 2021 because some people will no longer have to work just to afford health insurance.

     “That means that if the reduction in the labor used was workers working the average number of hours in the economy and earning the average wage, that there would be a reduction of 800,000 workers,” Elmendorf said in an exchange with Rep. John Campbell (R-CA).

     The report, published in August, said, "The Congressional Budget Office estimates that the legislation, on net, will reduce the amount of labor used in the economy by a small amount—roughly half a percent—primarily by reducing the amount of labor that workers choose to supply … That net effect reflects changes in incentives in the labor market that operate in both directions: Some provisions of the legislation will discourage people from working more hours or entering the workforce, and other provisions will encourage them to work more.”

     Republicans gleefully seized on the admission, eagerly promoting it as evidence of what they call the law’s job-killing effect.

     “More bad news for American families,” was how Budget Committee

     Chairman Paul Ryan’s office described the report in a release.

     “Since day one Republicans have opposed Obamacare for a simple reason: it would destroy jobs. Minority Leader Pelosi, Leader Reid and others said we were wrong. Guess not," said John Murray, deputy chief of staff for Majority Leader Eric Cantor.

For more .....

http://www.politico.com/news/stories/0211/49273.html

Long-Run American Worker Displacement Continues

March 05, 2011 
from vdare.com

February Jobs: Statistical Noise, Better Data, Long-Run American Worker Displacement Continues

Non-farm payrolls rose by 192,000 in February, the fastest pace since May according to the Labor Department. But Wall Street was expecting even more robust growth—and, in fact, got it if you accept the less-widely publicized employment survey.

We refer, of course, to the survey of households rather than businesses. Exactly 250,000 new positions were created last month according to that survey—but in a radical departure from the long-term trend, Hispanic workers lost ground to non-Hispanics:

In February 2011:

• Total employment: rose 250,000  (+0.2 percent)
• Hispanic employment: fell 193,000 (-0.9 percent)
• Non-Hispanic employment: rose 437,000 (+0.4 percent)

Accordingly, VDARE.COM’s American Worker Displacement Index (VDAWDI) fell to 125.6 in February from the record 127.2 reached in January.

February Jobs: Statistical Noise, Better Data, Long-Run American Worker Displacement Continues

Non-farm payrolls rose by 192,000 in February, the fastest pace since May according to the Labor Department. But Wall Street was expecting even more robust growth—and, in fact, got it if you accept the less-widely publicized employment survey.

We refer, of course, to the survey of households rather than businesses. Exactly 250,000 new positions were created last month according to that survey—but in a radical departure from the long-term trend, Hispanic workers lost ground to non-Hispanics:

In February 2011:

• Total employment: rose 250,000  (+0.2 percent)
• Hispanic employment: fell 193,000 (-0.9 percent)
• Non-Hispanic employment: rose 437,000 (+0.4 percent)

Accordingly, VDARE.COM’s American Worker Displacement Index (VDAWDI) fell to 125.6 in February from the record 127.2 reached in January.

Statistical noise? Of course.  Since the official end of the recession in June 2009 non-Hispanics have lost 1.2 million jobs while Hispanics have gained 490,000 positions.

• For every 1,000 Hispanics employed in June 2009 there were 1,015 employed in February 2011.
• For every 1,000 non-Hispanics employed in June 2009 there were 997 employed in February 2011

As VDARE.com readers know, our focus on Hispanic job growth is rooted in necessity rather than choice. Our interest is immigration, and Hispanics are disproportionately foreign-born. They are a convenient (if conservative) proxy. Back in 2004, when we unveiled VDAWDI, data on foreign-born workers was only published annually.

Early in 2010, the Federal government mysteriously did begin publishing monthly foreign-born data—but not in a seasonally-adjusted format, making month to month comparisons difficult. 

We are thinking about this problem—if you have suggestions, please email me

But we do now have the very telling year-to-year comparisons of foreign- and native-born employment in the monthly Department of Labor report. IT confirms the long-run displacement trend:

Employment Status by Nativity, Feb. 2010-Feb. 2011 (numbers in 1000s; not seasonally adjusted)
	Feb-10	Feb-11	Change	% Change
	Foreign born, 16 years and older
Civilian population	35,315	36,026	711	2.0%
Civilian labor force	23,854	23,958	104	0.4%
Employed	21,102	21,614	512	2.4%
Employment/population ratio	59.8	60.0	0.2	0.3%
Unemployment rate (%)	11.5	9.8	-1.7	-14.8%
Not in labor force	11,461	12,068	607	5.3%
	Native born, 16 years and older
Civilian population	201,683	202,825	1,142	0.6%
Civilian labor force	129,341	128,676	-665	-0.5%
Employed	116,102	116,478	376	0.3%
Employment/population ratio	57.6	57.4	-0.2	-0.3%
Unemployment rate (%)	10.2	9.5	-0.7	-6.9%
Not in labor force	72,342	74,148	1,806	2.5%
Source: BLS, "The Employment Situation - February 2011," March 4, 2011. Table A-7. PDF

For more statistics and complete article click link below.

http://vdare.com/rubenstein/110305_nd.htm

Obama administration penalizes employer, gives illegal workers a pass

I know this is a novel idea to the feds, but why don't we penalize the BOTH the illegal workers and their law-breaking employers.
-----lee
Beware of the push for a national ID card.  In the past immigrants have been deported and immigration controlled without putting all citizens into a government data bank.---rng

from examiner.com
Kimberly Dvorak
August 23rd, 2010 9:56 am PT

     New illegal immigration numbers reveal that the Obama administration is targeting employers who hire illegal immigrants with substantial fines while letting the illegal employees walk out the door, free to get a job elsewhere.

     Opponents contend that many of these illegal immigrants use fraudulent or stolen identification to procure jobs that could be going to legal residents or U.S. citizens.

     New numbers from the Department of Homeland Security indicates in FY2007 former President George W. Bush arrested 4,077 illegals during a raid of 863 employers and in FY2008 the Bush White House arrested 5,184 illegal immigrants while targeting 1,103 businesses.

     Compare those numbers to President Obama and there is a big difference. In FY 2009 410 businesses were successfully raided and 1,644 illegal immigrants arrested and so far FY 2010 has seen 181 businesses raided and only 603 illegal immigrants taken into custody.

     Critics say many of these illegal immigrants commit a couple of crimes by illegally entering the country as well as obtaining a job using fraudulent identification and Immigration and Customs Enforcement (ICE) should be arresting all parties involved or face another magnet for illegal immigrants to obtain employment.

     

For more...

More Jobs Mirage In February—BLS Continues To Overestimate Job Growth

     A gem from my current favorite honest economist. Check out the BLS sometime, it can be quite an eye-opener.
-----lee

By Paul Craig Roberts
March 05, 2011 

     The announcement on March 4 that 192,000 new jobs were created in February was greeted with a sigh of relief. But the number is just more smoke and mirrors, as I will show shortly. First, let’s pretend the jobs are real. What areas of the economy produced the jobs?

     According to the Bureau of Labor Statistics, 152,000 of the jobs or 79% are in private services, consisting of: 11,700 jobs in wholesale trade, 22,000 in transportation and warehousing, 36,400 in administration and waste services (of which 15,500 are temporary help services), and 36,200 in ambulatory health care services and nursing and residential care facilities. Entertainment, waitresses and bartenders accounted for 20,000. Repair and maintenance, laundry services, and membership associations accounted for 14,000.

     As one who has often reported the monthly payroll jobs breakdown, I am struck by the fact that these categories are the ones that have accounted for job growth for year after year. How can this be? How can Americans, who have had no growth in their real incomes and who are foreclosed from their homes and maxed out on credit card debt, car payments, and student loans, spend more every month in bars and restaurants? How can a few service areas of the economy grow when nothing else is?

     The answer is that there were not 192,000 new jobs. Statistician John Williams estimates the reported gain was overstated by about 230,000 jobs. In other words, about 38,000 jobs were lost in February.

There are various reasons that job gains are overstated and losses understated. One is the BLS’s "birth-death model." This is a way of estimating the net of non-reported new jobs from business start-ups and job losses from business shut-downs. During recessions this model doesn’t work, because the model is based on good times when new jobs always exceed lost jobs. On the "death" side, if a company goes out of business because of recession and, therefore, doesn’t report its payroll, the BLS assumes the previously reported employees are still in place. On the "birth" side, the BLS adds 30,000 jobs to the monthly numbers as an estimate of new start-ups.


to read complete article  

Layoffs At Pre-Recession Level; Job Openings Down 30%

By SCOTT STODDARD

INVESTOR'S BUSINESS DAILY

Posted 03/02/2011 06:50 PM ET

     Twenty months after the worst recession in decades, job creation remains anemic, weighing on economic growth and making it even harder for the long-term jobless to find work.
     Don't blame layoffs. They spiked in 2009 but have returned to pre-slump levels, according to Labor Department data. But job openings remain 30% below their level when the downturn hit in December 2007. Gross hiring is down by 843,000 jobs.
     While the economy has grown modestly in recent quarters, hiring remains depressed due to uncertainty about future demand, concerns about government policies and efficiency gains that have let companies do more with less.
     "It's the drop in job openings, not the increase in job losses that is responsible for so much of the increase in unemployment," said James Sherk, a labor policy analyst at the Heritage Foundation.
     Labor is expected to report Friday that the U.S. added a net 183,000 jobs in February, the most since last May. The jobless rate is seen ticking up 0.1 point to 9.1% as more people entered the labor force. Many of those new or returning job-seekers will likely find only disappointment.
     December job openings fell by 139,000 to 3.06 million, the third straight decline, according to Labor's Job Openings and Labor Turnover Survey. January's JOLTS survey is due March 11.
     There were 4.7 job-seekers for each opening in December, off a peak of 6.3 in July 2009 but still far above the 1.15 ratio typical before the recession, according to the Economic Policy Institute.
     "We are still very near the bottom of a very huge crater," said Heidi Shierholz, an EPI labor economist.
     The U.S. has expanded for six quarters, but growth has been modest by historical standards. Strong head winds remain, from a still-moribund housing market to $100 oil and looming fiscal tightening at all levels of government.
     Uncertainty about ObamaCare costs have also made firms cautious about hiring, analysts said.

Never Coming Back?

     "The job market is doing better, but it's not getting better fast enough to soak up those who are unemployed and particularly those who have been unemployed for a long time," said Jeff Joerres, CEO of Manpower.
     Average time out of work has hit a record 36.9 weeks from 16.6 weeks at the recession's start.
Many lost factory and construction jobs will never return, leaving those workers ill-equipped for jobs in faster-growing industries such as health care, information technology and software.

For more and graphs...

Jobless rates of minorities linked to illegals

It's all about supply and demand.  The more supply, relative to demand, the lower the price.  That includes your hourly wage.  An oversupply of labor means smaller paychecks, less being spent, and even less demand, leading to the downward spiral into depression.  End outsourcing, offshoring and illegal immigration and the other problems take care of themselves.  But that means less power for Congress in handing out the largesse.  Tell your congressman, end offshoring, outsourcing and illegal immigration.  Now!---rng

By Seth McLaughlin

The Washington Times

7:59 p.m., Tuesday, March 1, 2011

     Calling for stricter enforcement of existing laws, House Republicans said Tuesday the nation’s broken immigration system is making it more difficult for minorities to land jobs because they are competing with illegals willing to work longer hours for less pay.
     Democrats, though, countered that the GOP was using immigration to pit blacks against Hispanics while ignoring the “real” problems in minority communities, including the lack of education and job-training resources, that drive unemployment.
    The sniping came during a hearing of the House Judiciary immigration policy and enforcement subcommittee as Republicans sought to highlight potential conflicts that could break the coalition that Democrats put together to try to pass broad immigration reform in recent years.
     It also served as the latest reminder of the Republican takeover of the House, where the GOP is now in position to shape the agenda and appears determined to make immigration enforcement part of the debates over federal spending and the nation’s 9 percent unemployment rate.
     Reading from a prepared statement, House Judiciary Chairman Lamar Smith, Texas Republican, pointed to a Pew Hispanic Center report that showed more than 7 million people are working in the country illegally and noted that the unemployment rates in minority communities - about 12 percent among Hispanics and nearly 16 percent among blacks - are well above the national average.
     “These jobs should go to legal workers, many of whom would be minorities,” Mr. Smith said.
But Rep. John Conyers Jr., Michigan Democrat, the ranking member of the committee, said that instead of tackling the “deeper issues underlying our weakened economy, high unemployment and continued inequities, we seem to be blaming all of our problems on undocumented workers.”
     “If my colleagues really care about minorities, they should focus on policies and programs that will actually help them,” Mr. Conyers said, noting that some economists contend the gloomy jobs picture in minority communities can be attributed more to a lack of educational opportunities, high crime rates and the loss of factory and other blue-collar jobs than to the influx of immigrants.
     “Yet Republicans consistently oppose programs aimed at addressing those problems such as increasing the minimum wage, health care reform, equal pay for women, and foreclosure relief.”
The three witnesses Republican called for the hearing were black and Hispanic.

For more....

Manufacturing's Dismal Decade

"Is it possible America could become again the dominant manufacturing nation she was from 1880 to 1980? Not only possible but easy to accomplish -- and within a decade."

from vdare.com

Patrick Buchanan

February 24, 2011

     Last year, Barack Obama committed his administration to doubling U.S. exports in half a decade. The good news: He is on the way. U.S. exports of goods and services grew in 2010 by 16.6 percent. Bad news: U.S. imports, starting from a higher base, surged by 19.7 percent.

     Result: The U.S. trade deficit in 2010 worsened by 33 percent, rising from $375 billion to $498 billion, the largest percentage increase in a decade. If Obama keeps this up, he may prove as big a disaster for U.S. manufacturing as his predecessor, although these are big shoes to fill.

     As he has each February for years, Charles W. McMillion of MBG Information Services has compiled the stats on the industrial decline of his country under our free trade presidents. Here are but a few numbers for the decade from December 2000, the month before George W. Bush took the oath, to December 2010, the end of Obama's second year.

     In that decade, America ran a total of $6.1 trillion in trade deficits, more than our entire economic growth. To finance those 10 years of deficits, America had to borrow $1.553 billion every day. And we wonder why China owns America.

     In 2010, our trade deficit in manufactures alone rose 27 percent to $416 billion, far exceeding our trade deficit in crude oil. A decade of such deficits in manufactures has devastated the industrial states.

     From December 2000 to December 2010, 22 states lost a third or more of their manufacturing jobs. Massachusetts, New York and Ohio lost 38 percent of their manufacturing jobs, New Jersey 39 percent, North Carolina 42 percent, Rhode Island 44 percent, Michigan 48 percent. Political result: Free trader John McCain lost all seven, including the formerly "red" states of Ohio and North Carolina.

    

     Trade in autos, trucks and parts, an industry in which America was dominant in the lifetime of many of us, tells the story.

    

     Last year, the United States ran a trade deficit in autos, trucks and parts of $110 billion. The deficits with Germany, Japan, South Korea and Mexico account for that entire total.

     Consider South Korea. Though she has an economy one-fifteenth the size of ours, she exported to us 12 times the dollar volume of trucks, cars and parts that we exported to her.

     Rather than make a free trade agreement with South Korea, why not tell our friends in Seoul: We are tired of arguing with you folks about opening your markets to our goods. Since you folks buy less than $1 billion in autos, etc., from us, while you sell almost $12 billion in your cars and trucks to us, you keep your market. We're taking back ours.

     The point: Despite all the propaganda about exports being the future, the foreigners' share of the U.S. market is $500 billion more than America's entire share of the world market.

     If, as we once did, we produced here all the manufactured goods we consume and gave up every other manufacturing market in the world, we would add millions of jobs and our gross domestic product would surge.

     And it is not only traditional manufacturing where America is getting her clock cleaned.

     In the critical items identified as "advanced technology products," the United States has been running a deficit with the world, beginning in Bush's second year, soaring from $16 billion in 2002 to $82 billion in 2010.

     With China, the U.S. trade deficit in advanced technology products alone in the past four years has totaled more than $300 billion, with the 2010 deficit in ATP with China reaching an astonishing $92 billion.

Does it matter that manufacturing in America now accounts for one-tenth of our economy and one-tenth of our labor force, figures unseen since before the Civil War?

     If you read the history of Britain in the industrial age, of America from 1865-1945 and of Bismarck's Germany, you will think it does. If you listen to the scores of thousands of economists, none of whom ever built a great nation, you may think it does not matter who produces what where.

     Is it possible America could become again the dominant manufacturing nation she was from 1880 to 1980? Not only possible but easy to accomplish -- and within a decade.

     Paul Otellini, CEO of Intel, has half the answer. "We should offer tax credits or a five- to 10-year tax holiday to companies, domestic or foreign, that want to set up or expand a factory in the U.S."

How would we finance it? As most foreign nations impose value-added taxes averaging 20 percent on U.S.-made goods that enter their countries, put a tariff of 20 percent on all foreign goods.

Hundreds of billions would suddenly pour into the U.S. treasury. Imports would slowly shrink. Production in America would soar.

     That's how Hamilton, Madison, Clay, Lincoln, McKinley and T.R. did it, before America forgot how she became great. 

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