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By Paul Craig Roberts on January 6, 2012 at 8:58pm
[Paul Craig Roberts has a new website at www.paulcraigroberts.org]
Jobs offshoring, financial deregulation, and ten years of wars have severely damaged the US economy and the economic prospects of 90% of the American population. The signs are everywhere in front of our eyes. They are in the income distribution data, the BLS jobs data, the Census data, the poverty figures, and the high number of food stamp recipients.
The signs are in the foreclosed and boarded up homes and the accompanying homelessness. They are in closed strip malls, in office building, warehouse, and shopping mall vacancies, and in the huge population losses of Americas manufacturing cities.
The New Economy was a hoax, like Saddam Husseins weapons of mass destruction and the war on terror. Americans were deceived by their corrupt government, by greed-driven corporations, and by corporate shills among economists and the pundit class into believing that they were trading middle class dirty fingernail jobs in manufacturing for better middle class clean fingernail high-tech service jobs. Instead, reasonably paid manufacturing and professional skill jobs, such as software engineering and information technology, were traded for lowly paid jobs as waitresses and bartenders and for jobs in ambulatory health care.
Consequently, real median US income fell for the vast majority of the population. To keep consumers spending when they had no raises, the Federal Reserve used low interest rates to create a real estate and credit bubble. The low interest rates drove up housing prices, and Americans refinanced their mortgages and spent the equity in their homes. Americans maxed out credit cards. The rise in consumer indebtedness kept consumer demand growing and the economy afloat.
But there is a limit to how far debt can outpace income, and the bubble burst. And when it burst the financial fraud that had been hidden in the euphoria was revealed. That set off the financial crisis.
As the US government is controlled by financial and armaments interests and not by the people, the government responded to the financial crisis by shoveling more debt and more hardships on the American people in order that financial interests did not have to pay for their own mistakes and crimes. Instead of blaming the responsible parties, our government handed the bill to the American people.
An important part of the bill is the huge number of new dollars being created in order to keep banks too big to fail afloat and in order to finance the federal governments enormous budget deficit from its illegal wars. Sooner or later, the proliferation of dollars will cost the American people sharply higher prices.
We will return to the dollar crisis later in this column. First, lets look at what the loss of manufacturing and manufacturing related jobs have done to the economy and the prospects of US citizens.
In the first decade of the 21st century, Detroit, Michigan, lost 25% of its population. Gary, Indiana, lost 22%. Flint, Michigan, lost 18%. Cleveland, Ohio, lost 17%. In St. Louis, Missouri, 19% of the housing is vacant. These population losses were not the result of the Black Plague or killer viruses or a nuclear attack. They were the result of corporate CEOs, pushed by their own greed, by the greed of Wall Street and that of large retailers such as Wal-Mart, aided and abetted by our government, into moving millions of manufacturing, software engineering, information technology, engineering, research, development, and design jobs offshore.
The process of moving American jobs offshore left cities, counties, and states with shrunken tax base.The resulting state and local budget deficits are being used to dismantle public sector unions and to cut social services. Public assets, such as water companies, and future income streams from parking meters, toll roads and bridges, are being sold off to foreign buyers in order to insure another year of local and state government solvency.
In the first decade of the 21st century, Americans lost 5,500,000 manufacturing jobs. US employment in the manufacture of computer and electronic products fell by 40%; in the production of machinery by 30%, in motor vehicles and parts by 44%, and in the manufacture of clothing by 66%.
In other words, in ten years the US economy was decimated by jobs offshoring for the sole purpose of higher rewards to capital in the form of multi-million dollar executive bonuses and large shareholder capital gains. A few hedge fund executives were paid a billion dollars in annual renumeration and a couple of dozen of them were paid $500 million in annual compensation. What sense does that make? Huge fortunes paid for one years work, not in productive activity but in destroying the financial system and the value of pensions that tens of millions of Americans had worked their lives to achieve.
While this was happening, our government squandered several trillion dollars in Iraq and Afghanistan on wars based on lies and deception. The American people were lied to and deceived, and continue to be, in order that arms industries can enjoy record profits and in order that crazed neoconservative war criminals could pursue their ideology of world hegemony and empire. We were even lied to about US war casualties. As Dennis Loo points out in his book, Globalization and the Demolition of Society (2011), the 4,801 Americans killed in action in Iraq leaves out the 50,000 suicides of veterans and active duty US troops. The truth of the matter is that the casualties of the Iraq war are as high as those of the Vietnam war.
With all income gains redirected to the financial and war sectors, the distribution of income in the US has become, according to the Organization for Economic Co-operation and Development (OECD), the worst of all developed countries. The Central Intelligence Agency--yes, the CIA--concluded that America had achieved not only the worst income distribution of all developed countries but also a worse income distribution than Iran, Cambodia, Uganda, Nicaragua, Russia, and China.
The economic recovery that Washington and the financial press hype is all talk and no reality. The recovery is produced by understating the inflation rate, which overstates GDP growth, and by dropping the long-term unemployed out of the measurement of unemployment. An economy, the driving engine of which has been moved offshore, cannot recover unless the economy is brought back home, and that requires the repeal of Globalism.
Overstatement is common in order to produce good news, but eventually it catches up with the spinmeisters. Last month the National Association of Realtors reported that it had overstated home sales by 3.5 million. Statistician John Williams (shadowstats.com) reports that the birth/death model, which the Bureau of Labor Statistics uses to estimate the net affect on jobs data of unreported business closures and new start-ups, overstates the annual number of new jobs during troubled economic times by approximately one million jobs annually. Each year the accumulated monthly overstatements are quietly revised away by BLS.
read more The Dismal Economic Outlook For The New Year | VDARE.com
[Paul Craig Roberts has a new website at www.paulcraigroberts.org]
Jobs offshoring, financial deregulation, and ten years of wars have severely damaged the US economy and the economic prospects of 90% of the American population. The signs are everywhere in front of our eyes. They are in the income distribution data, the BLS jobs data, the Census data, the poverty figures, and the high number of food stamp recipients.
The signs are in the foreclosed and boarded up homes and the accompanying homelessness. They are in closed strip malls, in office building, warehouse, and shopping mall vacancies, and in the huge population losses of Americas manufacturing cities.
The New Economy was a hoax, like Saddam Husseins weapons of mass destruction and the war on terror. Americans were deceived by their corrupt government, by greed-driven corporations, and by corporate shills among economists and the pundit class into believing that they were trading middle class dirty fingernail jobs in manufacturing for better middle class clean fingernail high-tech service jobs. Instead, reasonably paid manufacturing and professional skill jobs, such as software engineering and information technology, were traded for lowly paid jobs as waitresses and bartenders and for jobs in ambulatory health care.
Consequently, real median US income fell for the vast majority of the population. To keep consumers spending when they had no raises, the Federal Reserve used low interest rates to create a real estate and credit bubble. The low interest rates drove up housing prices, and Americans refinanced their mortgages and spent the equity in their homes. Americans maxed out credit cards. The rise in consumer indebtedness kept consumer demand growing and the economy afloat.
But there is a limit to how far debt can outpace income, and the bubble burst. And when it burst the financial fraud that had been hidden in the euphoria was revealed. That set off the financial crisis.
As the US government is controlled by financial and armaments interests and not by the people, the government responded to the financial crisis by shoveling more debt and more hardships on the American people in order that financial interests did not have to pay for their own mistakes and crimes. Instead of blaming the responsible parties, our government handed the bill to the American people.
An important part of the bill is the huge number of new dollars being created in order to keep banks too big to fail afloat and in order to finance the federal governments enormous budget deficit from its illegal wars. Sooner or later, the proliferation of dollars will cost the American people sharply higher prices.
We will return to the dollar crisis later in this column. First, lets look at what the loss of manufacturing and manufacturing related jobs have done to the economy and the prospects of US citizens.
In the first decade of the 21st century, Detroit, Michigan, lost 25% of its population. Gary, Indiana, lost 22%. Flint, Michigan, lost 18%. Cleveland, Ohio, lost 17%. In St. Louis, Missouri, 19% of the housing is vacant. These population losses were not the result of the Black Plague or killer viruses or a nuclear attack. They were the result of corporate CEOs, pushed by their own greed, by the greed of Wall Street and that of large retailers such as Wal-Mart, aided and abetted by our government, into moving millions of manufacturing, software engineering, information technology, engineering, research, development, and design jobs offshore.
The process of moving American jobs offshore left cities, counties, and states with shrunken tax base.The resulting state and local budget deficits are being used to dismantle public sector unions and to cut social services. Public assets, such as water companies, and future income streams from parking meters, toll roads and bridges, are being sold off to foreign buyers in order to insure another year of local and state government solvency.
In the first decade of the 21st century, Americans lost 5,500,000 manufacturing jobs. US employment in the manufacture of computer and electronic products fell by 40%; in the production of machinery by 30%, in motor vehicles and parts by 44%, and in the manufacture of clothing by 66%.
In other words, in ten years the US economy was decimated by jobs offshoring for the sole purpose of higher rewards to capital in the form of multi-million dollar executive bonuses and large shareholder capital gains. A few hedge fund executives were paid a billion dollars in annual renumeration and a couple of dozen of them were paid $500 million in annual compensation. What sense does that make? Huge fortunes paid for one years work, not in productive activity but in destroying the financial system and the value of pensions that tens of millions of Americans had worked their lives to achieve.
While this was happening, our government squandered several trillion dollars in Iraq and Afghanistan on wars based on lies and deception. The American people were lied to and deceived, and continue to be, in order that arms industries can enjoy record profits and in order that crazed neoconservative war criminals could pursue their ideology of world hegemony and empire. We were even lied to about US war casualties. As Dennis Loo points out in his book, Globalization and the Demolition of Society (2011), the 4,801 Americans killed in action in Iraq leaves out the 50,000 suicides of veterans and active duty US troops. The truth of the matter is that the casualties of the Iraq war are as high as those of the Vietnam war.
With all income gains redirected to the financial and war sectors, the distribution of income in the US has become, according to the Organization for Economic Co-operation and Development (OECD), the worst of all developed countries. The Central Intelligence Agency--yes, the CIA--concluded that America had achieved not only the worst income distribution of all developed countries but also a worse income distribution than Iran, Cambodia, Uganda, Nicaragua, Russia, and China.
The economic recovery that Washington and the financial press hype is all talk and no reality. The recovery is produced by understating the inflation rate, which overstates GDP growth, and by dropping the long-term unemployed out of the measurement of unemployment. An economy, the driving engine of which has been moved offshore, cannot recover unless the economy is brought back home, and that requires the repeal of Globalism.
Overstatement is common in order to produce good news, but eventually it catches up with the spinmeisters. Last month the National Association of Realtors reported that it had overstated home sales by 3.5 million. Statistician John Williams (shadowstats.com) reports that the birth/death model, which the Bureau of Labor Statistics uses to estimate the net affect on jobs data of unreported business closures and new start-ups, overstates the annual number of new jobs during troubled economic times by approximately one million jobs annually. Each year the accumulated monthly overstatements are quietly revised away by BLS.
read more The Dismal Economic Outlook For The New Year | VDARE.com
