A Nobel Economist Says Globalism Is Costly For Americans

Must reading---rng from vdare.com Paul Craig Roberts Archive Paul Craig Robert's appeal on behalf of VDARE.COM

Email a Friend... Printer Friendly Version...

May 30, 2011

Offshoring has destroyed the economy

By Paul Craig Roberts

These are discouraging times, but once in a blue moon a bit of hope appears. I am pleased to report on the bit of hope delivered in March of 2011 by Michael Spence, a Nobel prize-winning economist, assisted by Sandile Hlatshwayo, a researcher at New York University. The two economists have taken a careful empirical look at jobs offshoring and concluded that it has ruined the income and employment prospects for most Americans.

To add to the amazement, their research report, "The Evolving Structure of the American Economy and the Employment Challenge," was published by the very establishment Council on Foreign Relations.

For a decade I have warned that US corporations, pressed by Wall Street and large retailers such as Wal-Mart, to move offshore their production for US consumer markets, were simultaneously moving offshore US GDP, US tax base, US consumer income, and irreplaceable career opportunities for American citizens.

Among the serious consequences of offshoring are the dismantling of the ladders of upward mobility that made the US an "opportunity society," an extraordinary worsening of the income distribution, and large trade and federal budget deficits that cannot be closed by normal means. These deficits now threaten the US dollar’s role as world reserve currency.

I was not alone in making these warnings. Dr. Herman Daly, a former World Bank economist and professor at the University of Maryland, Dr.Charles McMillion, a Washington, DC, economic consultant, and Dr. Ralph Gomory, a distinguished mathematician and the world’s best trade theorist, understand that it is strictly impossible for an economy to be moved offshore and for the country with the offshored economy to remain prosperous.

Even before this handful of economists capable of independent thought saw the ruinous implications of offshoring, two billionaires first recognized the danger and issued warnings, to no avail. One of the billionaires was Roger Milliken, the late South Carolina textile magnate, who spent his time on Capital Hill, not on yachts with Playboy centerfolds, trying to make our representatives aware that we were losing our economy. The other billionaire was the late Sir James Goldsmith, who made his fortune by correcting the mistakes of America’s incompetent corporate CEOs by taking over their companies and putting them to better use. Sir James spent his last years warning of the perils both of globalism and of merging the sovereignties of European countries and the UK into the EU.

Sir James book, The Trap, was published as long ago as 1993. His book,The Reponse, in which he replied to the "free trade" ideologues in the financial press and academia who denigrated his warning, was published in 1995. [ For readers who wish to hear a speech given by Sir James to the US Senate in 1994 warning of the perils of globalism, go here. Also here. ]

Sir James called it correct, as did Roger Milliken. They predicted that the working and middle classes in the US and Europe would be ruined by the greed of Wall Street and corporations, who would boost corporate earnings by replacing their domestic work forces with foreign labor, which could be paid a fraction of labor’s productivity as a result of the foreign country’s low living standard and large excess supply of labor. Anytime there is an excess supply of labor, or the ability of corporations to pay labor less than its productivity, the corporations bank the difference, Share prices rise, and Wall Street and shareholders are happy.

All of this was over the heads of "free trade" ideologues, who threw accusations such as "protectionist" at Sir James, Roger Milliken, Herman Daly, Ralph Gomory, Charles McMillion, and myself. These "free trade"ideologues are economically incompetent. They do not know that the justification for free trade is based on the principle of comparative advantage, which means that a country specializes in those economic activities in which it performs best and trades for those goods that other countries do best. Instead, the ideologues think that free trade means the freedom of capital to seek absolute advantage abroad in lowest factor cost. In other words, the free trade incompetents have never read David Ricardo, who formalized the case for free trade.

Other economists, especially those high profile ones in high profile academic institutions, were bought and paid for. In exchange for grants from offshoring corporations these hirelings invented "the New Economy," in which everyone would prosper as a result of getting rid of"dirty fingernail jobs." The New Economy wouldn’t make anything, but it would lead the world in innovation and in financing what others did make. The "new economists" were not sufficiently bright to realize that if a country didn’t make anything, it couldn’t innovate.

Let’s go now to Michael Spence and Sandile Hlatshwayo, who have provided an honest report for which we should give thanks. Professor Spence could have made many millions using the prestige of his Nobel Prize to lie for the Establishment, but he chose to tell the truth.

Here is what Spence and Hlatshwayo report:

to continue article

Mike Rowe: America Must Return to Dirty Jobs to Solve Unemployment

     About the only thing I can say is : I wish I had said this myself. 

     ------lee

By Mike Rowe

Posted: October 13, 2010

     I was invited by the Association of Equipment Manufacturers to help launch its new initiative called "I Make America" in Washington, D.C., recently. Sadly, the only thing I make is a mess, but I flew to D.C. anyway to share my vast understanding of America's manufacturing problems with a roomful of elected officials and staff. It was fun. Unlike actual experts, I don't need facts to support my opinion, just a few sweeping generalizations based on my invaluable perspective as a guy most often seen with his hand in a cow's bottom.
     Allow me to summarize.
     I have this nagging suspicion that our manufacturing problems are not really problems at all, but rather a symptom of a dysfunctional relationship with dirt. That's right, dirt—the eternal hallmark of skilled labor.
     The composition of our gross domestic product has always mirrored a willingness to get dirty. When agriculture dominated output, dirt was recognized as the essential ingredient to prosperity. Getting dirty was synonymous with jobs and food.
     Consequently, we valued our dirty farmers.
With the industrial revolution, manufacturing surpassed agriculture. Innovation and efficiency got all the glamour, but the willingness to get dirty was always there. It propelled our economy to new heights and made us the richest nation on Earth. And we loved our dirty tradesmen.
     Then our economy shifted again, in a truly seismic way. Financial services surpassed manufacturing. We began to lose our fascination with the way things were getting made and instead focused on the way things were getting bought.
     The dirty face of farming and manufacturing got a thorough scrubbing, and the definition of a "good job" began to change. Silicon Valley rolled out a sparkling new toolbox, full of gleaming possibilities, and for the first time in our history, the bulk of our output was tied to clean jobs. What do we have to show for it? Record unemployment, a looming skills gap, a crumbling infrastructure, and a dearth of manufacturing.
     Isn't it possible that we've become disconnected from the food we eat and the goods we buy because we no longer value the people who make them?
     Skilled tradesmen are now products of "alternative education." Valuable apprenticeships and on-the-job training serve as vocational consolation prizes for those not suited to a traditional sheepskin. We continue to promote the four-year degree at the expense of all other forms of knowledge, even as graduates move back home in record numbers, drowning in record debt. Meanwhile, the Future Farmers of America officially changed its name to FFA because the term "farmer" negatively impacted its ability to attract new members. Extraordinary.
     I'm no expert, but I do get around. I've worked as a fake apprentice in just about every industry, and I've dealt with feces from every species. And I'm here to tell you, with all the certainty of a guy on cable TV, that manufacturing and skilled labor are in the toilet because we have cultivated a dysfunctional relationship with dirt.

For more ...

The Amerikan Police State Strides Forward

A possible look at why it is so hard to get economic policies that benefit the people as a whole.---rng

From Vdare.com Paul Craig Roberts Archive (Please read the appeal.  Vdare is a great and necessary resource for national sanity.---rng) Paul Craig Robert's appeal on behalf of VDARE.COM

Email a Friend... Printer Friendly Version...

May 17, 2011

By Paul Craig Roberts 

The International Monetary Fund’s director, Dominique Strauss-Kahn, was arrested last Sunday in New York City on the allegation of an immigrant hotel maid that he attempted to rape her in his hotel room. A New York judge has denied Strauss-Kahn bail on the grounds that he might flee to France.  

President Bill Clinton survived his sexual escapades, because he was a servant to the system, not a threat. But Strauss-Kahn, like former New York Governor Eliot Spitzer, was a threat to the system, and, like Eliot Spitzer, Strauss-Kahn has been deleted from the power ranks.

Strauss-Kahn was the first IMF director in my lifetime, if memory serves, who disavowed the traditional IMF policy of imposing on the poor and ordinary people the cost of bailing out Wall Street and the Western banks. Strauss-Kahn said that regulation had to be reimposed on the greed-driven, fraud-prone financial sector, which, unregulated, destroyed the lives of ordinary people. Strauss-Kahn listened to Nobel economist Joseph Stiglitz, one of a handful of economists who has a social conscience.

Perhaps the most dangerous black mark in Strauss-Kahn’s book is that he was far ahead of America’s French puppet, President Sarkozy, in the upcoming French elections. Strauss-Kahn simply had to be eliminated.

It is possible that Strauss-Kahn eliminated himself and saved Washington the trouble. However, as a well-travelled person who has often stayed in New York hotels and in hotels in cities around the world, I have never experienced a maid entering unannounced into my room, much less when I was in the shower.

In the spun story...

to read complete article

Is The Information Industry Reviving Economies?

     So, as Joel sees it, for full job recovery we need a diversified industrial recovery that produces more than just hi-tech jobs. Sounds like good advice. ------lee

May. 16 2011 - 11:20 am
Joel Kotkin 

     For nearly a generation, the information sector, which comprises everything from media and data processing to internet-related businesses, has been ballyhooed as a key driver for both national and regional economic growth. In the 1990s economist Michael Mandell predicted cutting-edge industries like high-tech would create 2.8 million new jobs over 10 years. This turned out to be something of a pipe dream. According to a recent 2010 New America Foundation report, the information industry shed 68,000 jobs in the past decade.
     Yet this year, information-related employment finally appears to be on the upswing, according to statistics compiled for Forbes by Pepperdine University economist Michael Shires. The impact of this growth is particularly marked in such long-time tech hot beds as Huntsville, Ala., Madison, Wis., and San Jose-Sunnyvale-Santa Clara, Calif., in the heart of Silicon Valley, all of which have relatively high concentrations of such jobs.
     The San Jose area, home of Silicon Valley, arguably has benefited the most from the information job surge. Much of this gain can be traced to the increase in social networking sites such as Facebook, LinkedIn and Twitter, all of which have been incubated in the Valley. Good times among corporations have led many to invest heavily in software productivity tools, while those marketing consumer goods have boosted spending for software and internet-related advertising.
     The 5,000 mostly well-paying information jobs added this year was enough to boost San Jose’s standing overall among all big metros 20 places to a healthy No. 27 in Forbes’ ranking of the best cities for jobs.
     But as economists enthuse over the tech surge, we need to note the limitations of information jobs even in the Valley. Software and internet jobs, which have increased 40% over the past decade, have not come close to making up for the region’s large declines in other fields, notably manufacturing, construction, business and financial services. Overall, the region has lost 18% of its jobs in the past decade — about 190,000 — the second-worst performance, after Detroit, among the nation’s largest metros. It still suffers unemployment of close to 10%, well above the national average of 9.0%.
     This dual reality can also be seen in the local real estate industry. Office vacancies may be back in the low single digits in some markets popular with social networking firms, such as Mountain View, but they remain around 14 or higher throughout the region — 40% higher than in 2008. No matter how impressive reporters find a new headquarters for high-fliers like Facebook, the surplus of redundant space, particularly in the southern parts of the Valley, suggest we are still far from a 1990s style boom.
     Some observers also warn that the long-term prospects for the Valley may not be as good as local boosters assume. Analyst Tamara Carleton cites many long-term factors — like the financial condition of local cities and diminishing prospects for less skilled workers — that make it tougher on those who live below the higher elevations of the information economy. She also says that a precipitous decline in foreign immigration could slow future innovation. 

For more ...

Engineering process outsourcing

     If you want to know where the process of outsourcing starts, check this out. Engineers create the tools that create the products that provide jobs for workers of all types and wage scales. Unfortunately, for the America, they are shipping these engineers and processes overseas. 

-------lee

    

     Engineering process outsourcing (EPO) for the AEC industry is a vertical domain for the industries of the built environment.

     EPO industry is playing crucial role in efficiently supporting dynamic architecture, engineering and construction industries worldwide. EPO has made major contribution to the bottomline of majority of companies specially in developed nations. While at the other end it has opened up huge market for developing nations. EPO for AEC Industry is different from manufacturing and information technology for the simple reason that each project is unique. AEC industry has huge variations and immense complexity and one of the biggest factor of economic indicators. Its influence on economy is tremendous. Its history is as old as human race and its growth has been compounding with technological growth.

For more... http://en.wikipedia.org/wiki/Engineering_process_outsourcing  See also... http://www.thehindubusinessline.com/todays-paper/tp-economy/article1649442.ece?ref=archive n

Using TARP for Job Creation is a brilliant political move

The interesting thing about this older article is that, as usual, the solution to our problems, end outsourcing, end off shoring and end illegal immigration is not mentioned, but rather political maneuvering is seen as a game.  Do you ever wonder if the business class puts money ahead of patriotism?---rng

OK, now where are the jobs? 

  -----------lee

Business Insider Clusterstock

 Dec. 4, 2009, 7:56 AM

     The Democrats' proposal to use part of the $700 billion TARP program as funding for job creation is a brilliant political move.

Bloomberg: “Investments that we have in jobs should be paid for by TARP funds,” said Pelosi, a California Democrat. These include helping communities employ police officers, firefighters and teachers and help revive lending to small businesses, she said.

...

White House spokesman Robert Gibbs said today the administration is “actively looking at” ways to use TARP funds to spur job creation.

     It's brilliant because it takes spending that the public perceives as 'bailout money for the bankers' and ostensibly gives it to the unemployed and working class. Never mind the fact that the TARP doesn't represent money we actually have. Every dollar of TARP means another dollar of additional government debt.

     While in reality using TARP to fund job creation is essentially having all Americans take out a loan (via government debt) to fund even more government stimulus programs, it is likely to rather be perceived by the public as the Democrats 'taking from the bankers' and 'giving to the working class.' The fact that bankers don't even want TARP funds these days won't even be noticed.

     This idea will work wonders for the Obama administration, by helping separate themselves from the notion that they are currently in bed with Wall Street. It also puts the Republicans in the peculiar position of bemoaning high unemployment while opposing spending to alleviate it.

To read original article 

Transnational cinema

The other name for this is Treason cinema.  This is really scary stuff.---rng

News flashes from the propaganda front: Todays topic-Transnational cinema. This goes along way in explaining the pro-world, anti-american feel we see in our films lately. So when you read the paltry number of negative articles on outsourcing and the corresponding outsized pro-outsourcing articles touting how great India and China are doing courtesy of outsourcing american companies, this is one place to look.   ------lee

From Wikipedia, the free encyclopedia

     Transnational cinema is a developing concept within film studies that encompasses a range of theories relating to the effects of globalization upon the cultural and economic aspects of film. It incorporates the debates and influences of postnationalism, postcolonialism, consumerism and Third cinema^[1], amongst many other topics.
     Transnational cinema debates consider the development and subsequent effect of films, cinemas and auteurs which supersede national boundaries in becoming cultural products and representations.

For more ....

http://en.wikipedia.org/wiki/Transnational_cinema

Jobs on farms, not abroad High-tech companies are keeping jobs in the US by setting up offices in rural areas to cut costs.

By Patrik Jonsson, Staff writer of The Christian Science Monitor
February 23, 2006
LEBANON, VA.

     In a crook of Clinch Valley in Lebanon, Va., there are no counterculture coffeehouses, no art museums, and the "ginger" salad dressing at the town's only Japanese restaurant is really Thousand Island.
     Despite its country couture, Lebanon (pop. 3,300), once betrothed to King Coal, is on the cutting edge of a new business trend. The farmshoring phenomenon, in which high-tech companies choose to open offices in rural America as opposed to India, China, or Mexico, is coming to this mid-Appalachian plateau.
     Late last year, two major IT firms, CGI-AMS and Northrop-Grumman, announced they were bringing more than 700 technology jobs to Lebanon that pay around $50,000 a year. These positions are in the same class as the 112,000 IT jobs nationwide that were lost to overseas outsourcing in 2003, according to Global Insight in Boston.
     In a town where the average salary is around $27,000, many residents welcome the arrival of the IT revolution. It's also a subtle promise that the region's talented young people may stay where horses and mules graze behind rickety fences on sloping hillsides.
     Other technology companies are also putting high-level programming and data- crunching jobs in rural America locales with less traffic and lower rents to cut costs and remove the legal entanglements, cross-cultural differences, and time-zone hassles that come with overseas outsourcing.
     "When you look at [farmshore] communities that are becoming successful, they're saying, 'Yes, we can compete with offshore, and we add value to these companies,' " says John Allen, director of the Western Rural Development Center at Utah State University.
     Critics, meanwhile, worry that these jobs, which are often temporary, could give false hope to desperate communities.
     For CGI-AMS and Northrop-Grumman, the decision to set up in Lebanon was mostly driven by high labor costs in hot job markets such as Fairfax, Va., and neighboring Reston in northern Virginia. In another instance, DaimlerChrysler recently hired Lakota Express to do its Web design, which it is sending to a South Dakota Indian reservation. Even Dell, which recently announced another major offshoring gambit, is now shipping some of its work to Twin Falls, Idaho. In Cheyenne, Wy., transportation logistics firms, full of young people, dot the interstate.
     To be sure, with as many as 3 million IT jobs expected to go overseas in the next few years according to Forrester Research in Cambridge, Mass., only a handful of companies are setting up shop in rural areas in the US.
     That Appalachia is on the forefront of farmshoring is a result of massive investing in broadband, which connects wide, rural swaths to the Internet. The Department of Agriculture has handed out more than $800 million in low-interest loans for broadband expansion nationwide, a portion of which went to Virginia. Lebanon and Russell County, Va., received more than $4 million in grants from the Department of Commerce as well as from the state's tobacco settlement fund. The fiber optic cable through Russell County, Daniel Boone's old stomping grounds, officially went live last year. 

For more ....