Paul Craig Roberts| To inform people is hard slugging. Everything is lined up against the public being informed, or the policymakers for that matter. The Mainstream Media News is contaminated by its service to special interests and hidden agendas.
Many scientists or their employers are dependent on federal money. Even psychologists and anthropologists were roped into the government’s torture and occupation programs. Economists tell lies for corporations and Wall Street. Plant and soil scientists tell lies for agribusiness and Monsanto.
Truth tellers are slandered and persecuted. However, persistence can eventually win out. In the long-run, truth sometimes emerges. But not always. And not always in time. And unfortunately, time is running out.
I have been trying to inform the American people, economists, and policymakers for more than a decade about the adverse impacts of jobs offshoring on the US economy.
The word has eventually gotten out. Last week I was contacted by 8th grade students competing for their school in CSPAN’s StudentCam Documentary Contest. They want to interview me on the subject of jobs offshoring for their documentary film.
America is a strange place. Here are eighth graders far ahead of the economics profession, the President, the Congress, the Federal Reserve, Wall Street, and the financial press in their understanding of one of the fundamental problems of the US economy. Yet, people say the public schools are failing. Obviously, not the one whose students contacted me.
Is it too late?
I know much, but not all. So this is not the final word. I think it might be too late. When skilled jobs are sent abroad, the skills disappear at home. So do the supply chains and the businesses associated with the skills. Things close down, and abilities are lost. Why take a major in collage for a job that is offshored. A culture disappears.
But we can start them back up, right? Perhaps not. When a First World country exports its technology and know-how abroad to a Third World country in order to benefit from lower cost labor, how does the First World country get the work back? Living standards and the cost of living in Third World countries are much lower than in First World countries. The populations of First World countries cannot pay their mortgages, car payments, student loans, medical care, and grocery bills with the wages of Third World countries.
When First World wages drop, mortgage, car, credit card, and student loan payments do not drop. Americans cannot live on Chinese, Indian, and Indonesian wages. Once the technology and know-how is transferred, the low wage country has the advantage in the absence of tariff protection.
For America to revive, our economy would have to be walled off with high tariffs, and subsidies would have to be provided in order to recreate US industry and manufacturing. But many corporations now produce offshore, and America is broke. The government has been $1 trillion dollars in the hole each year for the last 5 years.
Jobs offshoring diminished the US tax base. When a job is sent abroad, so is that job’s contribution to US GDP and tax base. When millions of jobs are sent abroad, US GDP and tax base cannot support government spending levels. To the extent that there are any replacement jobs, they are in lowly paid domestic services, such as waitresses, bartenders, retail clerks, and hospital orderlies. These jobs do not provide a tax base or consumer spending power comparable to manufacturing jobs and tradable professional services such as software engineering and information technology.
Both Republicans and Democrats, as both parties are dependent on the same sources of campaign contributions, blame “entitlements.” By entitlements they mean welfare.
In fact, entitlements consist of Social Security and Medicare. Entitlements are funded by the payroll tax, approximately 15% of payroll. The fact that a person pays the payroll tax all his working life is why the person is entitled to Social Security and Medicare if they live to retirement age. Welfare, such as food stamps and housing subsidies, are a small part of the federal budget and are not entitlements.
Every since President Reagan was betrayed three decades ago by Alan Greenspan and David Stockman, both of whom sold out to Wall Street and raised the Social Security payroll tax above what was needed to pay Social Security benefits in order to protect Wall Street’s stock and bond portfolios from exaggerated deficit fears, Social Security payroll tax revenues have exceeded Social Security payments.
As of today, Social Security revenues exceed payments to beneficiaries by an accumulated $2 trillion. The money was used by the federal government to pay for its wars and other spending programs. The Social Security Trust Fund holds non-marketable IOUs from the Treasury. These IOUs can only be made good from an excess of tax revenues over expenditures or by the Treasury selling $2 trillion in bonds, notes, and bills and paying off its IOUs to the Social Security Trust Fund. This is not going to happen.
The Federal Reserve could not care less about the US population. The Fed was established for the purpose of protecting and aiding banks. Currently, the Fed, as if America were a Banana Republic which America appears to be becoming, is printing one thousand billion dollars per year in order to support the banks and to finance the federal deficit.
This is bad news for Americans, as it means that their fiat money is being created at a far greater rate than the demand for the dollar. The implication for our future is a drop in the dollar’s value. As there are no jobs, a drop in the dollar’s value means high inflation on top of unemployment and double the misery of the Great Depression.