Read Online How the Economy Was Lost: The War of the Worlds (Counterpunch) by Paul Craig Roberts - Free Book Online Page A
Authors: Paul Craig Roberts
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First World techno-logy, capital, and business know-how crowding into China, virtually free Chinese labor is as productive as U.S. labor. This should make it obvious to anyone who claims to be an economist that offshore production of goods and services is an example of capital seeking absolute advantage in lowest factor cost, not a case of free trade based on comparative advantage.
American economists have failed their country as badly as have the Republican and Democratic parties. The sad fact is that there is no leader in sight capable of reversing the rapid decline of the United States of America.
May 8, 2006
Chapter 11: Their Own Economic Reality (Or Why Even Jobs at McDonald’s Aren’t Safe)
W ho can forget the neocons’ claim that under their leadership America creates its own reality? Remember the neocons’ Iraq reality—a “cakewalk” war? After years of combat, thousands of casualties, and cost estimated at over $1 trillion, real reality must still compete with the White House spin machine.
One might think that the Iraq experience would restore sober judgment to policymakers. Alas, neocon “reality” has spread everywhere. It has infected the media and the new Federal Reserve Chairman, Ben Bernanke, who just gave Congress an upbeat report on the economy. The robust economy, he declared, could soon lead to inflation and higher interest rates.
Consumers deeper in debt and fresh from their first negative savings rate since the Great Depression show high consumer confidence. It is as if the entire country is on an acid trip or a cocaine trip or whatever it is that lets people create realities for themselves that bear no relation to real reality.
How can the upbeat views be reconciled with the Bureau of Labor Statistics’ payroll jobs data, the extraordinary red ink, and exploding trade deficit? Perhaps the answer is that every economic development, no matter how detrimental, is spun as if it were good news. For example, the worsening U.S. trade deficit is spun as evidence of the fast growth of the U.S. economy: the economy is growing so fast it can’t meet its needs and must rely on imports. Declining household income is spun as an inflation fighter that keeps mortgage interest rates low. Federal budget deficits are spun as letting taxpayers keep and spend more of their own money. Massive layoffs are spun as evidence that change is so rapid that the work force must constantly upgrade skills and re-educate itself.
The denial of economic reality has become an art form. Accurate economic reporting is not available in the “mainstream media.”
Occasionally, real information escapes the spin machine. The National Association of Manufacturers, one of outsourcing’s greatest boosters, has just released a report, “U.S. Manufacturing Innovation at Risk,” by economists Joel Popkin and Kathryn Kobe. The economists find that U.S. industry’s investment in research and development is rapidly being shifted overseas: “Funds provided for foreign-performed R&D have grown by almost 73 percent between 1999 and 2003, with a 36 percent increase in the number of firms funding foreign R&D.”
U.S. industry is investing in R&D but is not hiring Americans to do the R&D. U.S. manufacturers still make things, only less and less in America with American labor. U.S. manufacturers still hire engineers, only they are foreign ones, not American ones.
It should be obvious to policymakers that relocating the cutting edge of the economy abroad penalizes the U.S. economy and work force and benefits foreign ones. When manufacturing moves abroad, engineering follows. R&D follows engineering, and innovation follows R&D. The entire economy drains away. This is why the “new economy” has not materialized to take the place of the lost “old economy.”
The latest technologies go into the newest plants, and those plants are abroad. Innovations take place in new plants as new processes are developed to optimize the efficiency of
American economists have failed their country as badly as have the Republican and Democratic parties. The sad fact is that there is no leader in sight capable of reversing the rapid decline of the United States of America.
May 8, 2006
Chapter 11: Their Own Economic Reality (Or Why Even Jobs at McDonald’s Aren’t Safe)
W ho can forget the neocons’ claim that under their leadership America creates its own reality? Remember the neocons’ Iraq reality—a “cakewalk” war? After years of combat, thousands of casualties, and cost estimated at over $1 trillion, real reality must still compete with the White House spin machine.
One might think that the Iraq experience would restore sober judgment to policymakers. Alas, neocon “reality” has spread everywhere. It has infected the media and the new Federal Reserve Chairman, Ben Bernanke, who just gave Congress an upbeat report on the economy. The robust economy, he declared, could soon lead to inflation and higher interest rates.
Consumers deeper in debt and fresh from their first negative savings rate since the Great Depression show high consumer confidence. It is as if the entire country is on an acid trip or a cocaine trip or whatever it is that lets people create realities for themselves that bear no relation to real reality.
How can the upbeat views be reconciled with the Bureau of Labor Statistics’ payroll jobs data, the extraordinary red ink, and exploding trade deficit? Perhaps the answer is that every economic development, no matter how detrimental, is spun as if it were good news. For example, the worsening U.S. trade deficit is spun as evidence of the fast growth of the U.S. economy: the economy is growing so fast it can’t meet its needs and must rely on imports. Declining household income is spun as an inflation fighter that keeps mortgage interest rates low. Federal budget deficits are spun as letting taxpayers keep and spend more of their own money. Massive layoffs are spun as evidence that change is so rapid that the work force must constantly upgrade skills and re-educate itself.
The denial of economic reality has become an art form. Accurate economic reporting is not available in the “mainstream media.”
Occasionally, real information escapes the spin machine. The National Association of Manufacturers, one of outsourcing’s greatest boosters, has just released a report, “U.S. Manufacturing Innovation at Risk,” by economists Joel Popkin and Kathryn Kobe. The economists find that U.S. industry’s investment in research and development is rapidly being shifted overseas: “Funds provided for foreign-performed R&D have grown by almost 73 percent between 1999 and 2003, with a 36 percent increase in the number of firms funding foreign R&D.”
U.S. industry is investing in R&D but is not hiring Americans to do the R&D. U.S. manufacturers still make things, only less and less in America with American labor. U.S. manufacturers still hire engineers, only they are foreign ones, not American ones.
It should be obvious to policymakers that relocating the cutting edge of the economy abroad penalizes the U.S. economy and work force and benefits foreign ones. When manufacturing moves abroad, engineering follows. R&D follows engineering, and innovation follows R&D. The entire economy drains away. This is why the “new economy” has not materialized to take the place of the lost “old economy.”
The latest technologies go into the newest plants, and those plants are abroad. Innovations take place in new plants as new processes are developed to optimize the efficiency of
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