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Headlined on 7/12/08:
A Work Force Betrayed; Watching Greed Murder the Economy
by Paul Craig Roberts Page 1 of 1 page(s)
The
collapse of world socialism, the rise of the high speed Internet, a
bought-and-paid-for US government, and a million dollar cap on
executive pay that is not performance related are permitting greedy and
disloyal corporate executives, Wall Street, and large retailers to
dismantle the ladders of upward mobility that made America an
"opportunity society." In the 21st century the US economy has been
able to create net new jobs only in nontradable domestic services, such
as waitresses, bartenders, government workers, hospital orderlies, and
retail clerks. (Nontradable services are "hands on" services that
cannot be sold as exports, such as haircuts, waiting a table, fixing a
drink.)
shareholder returns, and executive performance bonuses by arbitraging
labor across national boundaries. High value- added jobs in
manufacturing and in tradable services can be relocated from developed countries to developing countries where
wages and salaries are much lower. In the United States, the high
value-added jobs that remain are increasingly filled by lower paid
foreigners brought in on work visas.
education would be replaced with new high tech service jobs requiring
university degrees. The American work force would be elevated. The US
would do the innovating, design, engineering, financing and marketing,
and poor countries such as China would manufacture the goods that
Americans invented. High-tech services were touted as the new source
of value-added that would keep the American economy preeminent in the
world.
out high value-added service jobs. And that is exactly what US corporations have done.
Pacifica Advance Product Design Center in Southern California.
Pacifica's demise followed closings and downsizings of Southern
California design studios by Italdesign, ASC, Porsche, Nissan, and
Volvo. Only three of GM's eleven design studios remain in the US.
to Eric Noble, president of The Car Lab, an automotive consultancy,
"Advanced studios want to be where the new frontier is. So in China,
studios are popping up like rabbits."
the country ceases to make things. Research and product development
invariably follow manufacturing. Now even business schools that were
cheerleaders for offshoring of US jobs are beginning to wise up. In a
recent report, "Next Generation Offshoring: The Globalization of
Innovation," Duke University's Fuqua School of Business finds that
product development is moving to China to support the manufacturing
operations that have located there. [ https://offshoring.fuqua.duke.edu/orn_report.pdf ]
acknowledges that "labor arbitrage strategies continue to be key
drivers of offshoring," a conclusion that I reached a number of years
ago. Moreover, the study concludes, jobs offshoring is no longer mainly
associated with locating IT services and call centers in low wage
countries. Jobs offshoring has reached maturity, "and now the growth
is centered around product and process innovation."
to the Fuqua School of Business report, in just one year, from 2005 to
2006, offshoring of product development jobs increased from an already
significant base by 40 to 50 percent. Over the next one and one-half
to three years, "growth in offshoring of product development projects
is forecast to increase by 65 percent for R&D and by more than 80
percent for engineering services and product design-projects."
turns out that product development, which was to be America's
replacement for manufacturing jobs, is the second largest business
function that is offshored.
to the report, the offshoring of finance, accounting, and human
resource jobs is increasing at a 35 percent annual rate. The study
observes that "the high growth rates for the offshoring of core
functions of value creation is a remarkable development."
brief, the United States is losing its economy. However, a business
school cannot go so far as to admit that, because its financing is
dependent on outside sources that engage in offshoring. Instead, the
study claims, absurdly, that the massive movement of jobs abroad that
the study reports are causing no job loss in the US: "Contrary to
various claims, fears about loss of high-skill jobs in engineering and
science are unfounded." The study then contradicts this claim by
reporting that as more scientists and engineers are hired abroad,
"fewer jobs are being eliminated onshore." Since 2005, the study
reports, there has been a 48 percent drop in the onshore jobs losses
caused by offshore projects.
wonders at the competence of the Fuqua School of Business. If a 40-50
percent increase in offshored product development jobs, a 65 percent
increase in offshored R&D jobs, and a more than 80 percent increase
in offshored engineering services and product design-projects jobs do
not constitute US job loss, what does?
study adds more cover for corporate America's rear end by repeating the
false assertion that US firms are moving jobs offshore because of a
shortage of scientists and engineers in America. A correct statement
would be that the offshoring of science, engineering and professional
service jobs is causing fewer American students to pursue these
occupations, which formerly comprised broad ladders of upward
mobility. The Bureau of Labor Statistics' nonfarm payroll jobs
statistics show no sign of job growth in these careers. The best that can be surmised is that there are replacement jobs as people retire.
offshoring of the US economy is destroying the dollar's role as reserve
currency, a role that is the source of American power and influence.
The US trade deficit resulting from offshored US goods and services is
too massive to be sustainable. Already the once all-mighty dollar has
lost enormous purchasing power against oil, gold, and other
currencies. In the 21st century, the American people have been placed
on a path that can only end in a
substantial reduction in US living standards for every American except
the corporate elite, who earn tens of millions of dollars in bonuses by
excluding Americans from the production of the goods and services that
they consume.
The damage might not be reparable. Possibly, the American market and
living standards could be rescued by tariffs that offset the lower
labor and compliance costs abroad.
company's product in America, the lower the tax rate on the profits.
The
current recession with its layoffs will mask the continuing
deterioration in employment and career outlooks for American university
graduates. The highly skilled US work force is being gradually
transformed into the domestic service workforce characteristic of third
world economies
Paul Craig Roberts, a former Assistant
Secretary of the US Treasury and former associate editor of the Wall
Street Journal, has held numerous academic appointments. He has been
reporting shocking cases of prosecutorial abuse for two decades. A new
edition of his book, The Tyranny of Good Intentions, co-authored with
Lawrence Stratton, a documented account of how Americans lost the
protection of law, was published by Random House in March, 2008.
