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A Threat Greater Than Terrorism

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HAY MAKER

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A Threat Greater Than Terrorism



By PAUL CRAIG ROBERTS



Delusion has settled over America. Washington cannot tell fact from fantasy. Neither can sycophantic media nor nothink economists.



One might easily conclude that Bush is first among the deluded, but the more one observes economists' romance with outsourcing, the more one wonders if economists are not the most deluded of all.



Outsourcing converts domestic supplied goods and services into imports. It divorces Americans from the incomes and careers associated with the production of the goods and services that Americans consume.



That divorce is highly detrimental for Americans. As foreign labor is substituted for US labor in the production of tradable goods and services, the displaced US work force seeks employment in domestic services that cannot be outsourced. This increases the supply of labor, thus depressing wages, in those labor markets already impacted by the entry of high rates of legal and illegal immigration.



By turning domestic production into imports, outsourcing increases the trade deficit. America pays the import bill by turning over the ownership of her wealth, and the income streams that wealth produces, to foreigners. Thus, Americans not only lose jobs and careers but also the ownership of their companies, real estate, corporate and government bonds. The incomes from these lost assets pass from Americans to foreigners.



Today America's consumption and the government's budget deficits are financed by foreigners, principally Asians. There are now so many dollars in foreign hands that the willingness of foreigners to hold more is declining. For the past three years foreign central banks have been diversifying their reserve holdings away from dollars into other currencies.



The result has been to drive the value of the dollar down sharply against many other currencies. As prices adjust to the changed currency values, Americans become poorer.



When economists preach that America benefits from outsourcing, they deny all the hard facts, just as do Republicans when they proclaim "success" in Iraq. How does America benefit from a process that destroys jobs, lowers incomes, and reduces the exchange value of the dollar?



What outsourcing is doing for America is destroying entire sectors of US manufacturing, entire high tech occupations, the value of a college education, the design and innovative capabilities of the US economy, and the dollar as reserve currency. This is a lot of destruction. It goes far beyond what terrorists can inflict.



So far in the 21st century, the US has experienced a net loss of jobs. Fewer Americans are employed today than when President Bush was first inaugurated. This has not happened since the Great Depression in the 1930s.



When economists claim that the US is made better off by outsourcing, they ignore the evidence of job loss, stagnant incomes, and a collapsing dollar.



A perfect example is a recent "study" by three economists reported in the March 21 issue of Barron's. The economists used economic models to calculate the benefits to Americans of outsourcing. An economic model is comprised of assumptions about relationships. Many relationships are historical and reflect America's post-World War II economic dominance, which is no longer the reality.



The economists concluded that the benefits to Americans from outsourcing ranged from $7,100 to $12,900 per household.



According to the Bureau of Labor Statistics, the average hourly wages of private, nonfarm, nonsupervisory production workers produced an annual income of $33,072 as of February 2005.



Only economists completely detached from reality could believe that American households owe such a large percentage of income to outsourcing, which is threatening them with a depreciating currency and the loss of their jobs and careers.



One of the dumbest defenses of outsourcing is the claim that history shows that America benefits from free trade. First of all, there has been precious little free trade. Economists mean that America has benefitted from trade during the decades following World War II when the rest of the world was recovering from war or smothered in socialism. It is easy to benefit from trade when you are the only economy.



Second, outsourcing is not trade; it is labor arbitrage. Outsourcing is a new phenomena birthed by the collapse of world socialism and the rise of the high speed internet. It reflects the operation not of "comparative advantage" but of "absolute advantage" --the flow of capital and technology across borders to the cheapest labor. Outsourcing is the substitution of foreign labor for domestic labor. It reduces the demand for domestic labor and drives down incomes.



The Great Depression took a terrible toll on the credibility of economists, who failed to grasp that the Federal Reserve had shrunk the supply of money by one-third. Outsourcing the American economy will take a larger toll on economists' reputations. Once the economy is outsourced, America is a third world country.





Paul Craig Roberts was Assistant Secretary of the Treasury in the Reagan administration. He was Associate Editor of the Wall Street Journal editorial page and Contributing Editor of National Review. He is coauthor of The Tyranny of Good Intentions.He can be reached at: [email protected]
 

Cal

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Okay HAYMAKER, I have a question for you; how much foreign investment if held by US companies, since you are against foreigners investing in the US?

I would also urge you to lead the charge against imports! From now on DO NOT use any imported oil, DO NOT use any imported computer components, and DO NOT wear anything imported. Will you take the lead, HAYMAKER? According to you, we're better off without trade, so please set an example for us. Also, please BE ABSOLUTELY CERTAIN that nothing you ever produce is exported, because, you know, that would just be un-American.

Oh, and what about in-sourcing? Is that somehow bad as well?
 

HAY MAKER

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Cal,people like you are better off some where in town ,out of the country side.I dont think you or your kind will ever understand what small town AMERICA means to some of us.I do some share cropping for some old ww2 vets and if you show up on their place with a jap tractor you are chased off the place,maybe worse.As a matter of fact I remember the day that if you owned a jap pickup you had very few friends around here,and it aint changed a whole lot,folks like you keep trying and folks like me keep fighting it.You like change,I dont, been lots of good men die for the life style some of us lead.............good luck
 

Silver

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Haymaker, your country has been changing since 1492. Get used to it. If you want to do something positive, help it change for the better rather than trying to drag it to the past.
 

Bill

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Cal said:
Okay HAYMAKER, I have a question for you; how much foreign investment if held by US companies, since you are against foreigners investing in the US?

I would also urge you to lead the charge against imports! From now on DO NOT use any imported oil, DO NOT use any imported computer components, and DO NOT wear anything imported. Will you take the lead, HAYMAKER? According to you, we're better off without trade, so please set an example for us. Also, please BE ABSOLUTELY CERTAIN that nothing you ever produce is exported, because, you know, that would just be un-American.

Oh, and what about in-sourcing? Is that somehow bad as well?
Good post Cal but of course Haymaker and those like him won't answer but start waving the flag of patriotism and trying to degrade anyone with a different view than them and then try portray you as "unAmerican". SO old and predictable. Throw up them walls Haymaker and better put a roof on as well. Nothing gets in nothing gets out. The USSR and East Germany have even gotten over that ideology.
 

Cal

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HAY MAKER said:
Cal,people like you are better off some where in town ,out of the country side.I dont think you or your kind will ever understand what small town AMERICA means to some of us.I do some share cropping for some old ww2 vets and if you show up on their place with a jap tractor you are chased off the place,maybe worse.As a matter of fact I remember the day that if you owned a jap pickup you had very few friends around here,and it aint changed a whole lot,folks like you keep trying and folks like me keep fighting it.You like change,I dont, been lots of good men die for the life style some of us lead.............good luck

Gotta admit, the way you avoid facts and questions is good for a laugh! And a mini-dissertation on what "small town America means..." is just too good! Just for the record, the only Jap vehicles we have is a shed of ATV's, and I believe you have an ATV as well. Has that hurt your popularity with the locals? You all wouldn't think of running your outfits on imported oil now, would you? I mean, it would be just wrong if you were somehow making a profit off of something imported, wouldn't it? Do you somehow think that here in the US we might be supplying raw materials for some of the imported items, as well as items being shipped to other parts of the world? We must stop that, don't you think??!!
 

HAY MAKER

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Cal ILL be the first to admitt I dont give a damn about trade.I will also say I understand trade is necessary,as long as its fair. Let me ask you a question,you like to be reckonized as a smart boy,whats small town america worth?what will you trade for it? Maybe being a big city boy,sitting in your office all day talking on the phone is your idea of a hards days work.People like that could care less about small town america,if you dont believe it just read agmans and ~SH~ posts for a while ,it will become clear they think small towns are ineffcient,unworthy of existence,what would you do tear em down build apartments and walmarts,and black top every thing so you wouldnt get mud on your patent leather shoes?Then import all we need from south america or asia where labor is cheap......what are you gonna use to pay for these imports ,small town america?................good luck
 

Maple Leaf Angus

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Silver said:
Haymaker, your country has been changing since 1492. Get used to it. If you want to do something positive, help it change for the better rather than trying to drag it to the past.

:clap: :clap: :clap:
 

HAY MAKER

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Maple Leaf Angus said:
Silver said:
Haymaker, your country has been changing since 1492. Get used to it. If you want to do something positive, help it change for the better rather than trying to drag it to the past.

:clap: :clap: :clap:

You are for change I find nothing wrong with the past,when a dollar was a dollar and a mans word was all you needed to trade.And the fact that you are opposed to these ideals and values of the past only confirms my suspicions of you,that is unless you can come up with a example of this positive change you are crowing about.............good luck :wink:
 

don

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haymaker: You are for change I find nothing wrong with the past,when a dollar was a dollar and a mans word was all you needed to trade.And the fact that you are opposed to these ideals and values of the past only confirms my suspicions of you,that is unless you can come up with a example of this positive change you are crowing about.............good luck

i don't think any of us are going back to the future. too many producers waste time waiting for the good old days to come back when they should be thinking about how to cope in the current environment and trying to position themselves for the future conditions.
 

HAY MAKER

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don said:
haymaker: You are for change I find nothing wrong with the past,when a dollar was a dollar and a mans word was all you needed to trade.And the fact that you are opposed to these ideals and values of the past only confirms my suspicions of you,that is unless you can come up with a example of this positive change you are crowing about.............good luck

i don't think any of us are going back to the future. too many producers waste time waiting for the good old days to come back when they should be thinking about how to cope in the current environment and trying to position themselves for the future conditions.

I dont have any problems coping,and dont know very many people that do.Funny thing about the past ,all I have to do is head south to recapture it.Some of the places I visit havent changed much and I doubt they will in my life time,one inlaw of mine in particular comes to mind when the old days are mentioned ,you go through that old mans gate and you wouldnt know past from present,no running water ,no eletricity and no indoor plumbing,that old house was built by his grand father and he has no plans of changing any thing,like he says "been getting long just fine the way it is"..............good luck PS this is one place you definetly would not want to take a jap tractor
 

Northern Rancher

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I wonder where the computer that Haymaker the paragon of virtue,thrift and hard work uses was made. Fair trade to him is obvious you buy from us we sell to you-tails I win -heads you lose. Obviously another thing that he doesn't want to import into his abode is common sense and clearer thinking.
 

Cal

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HAY MAKER said:
Cal ILL be the first to admitt I dont give a damn about trade.I will also say I understand trade is necessary,as long as its fair. Let me ask you a question,you like to be reckonized as a smart boy,whats small town america worth?what will you trade for it? Maybe being a big city boy,sitting in your office all day talking on the phone is your idea of a hards days work.People like that could care less about small town america,if you dont believe it just read agmans and ~SH~ posts for a while ,it will become clear they think small towns are ineffcient,unworthy of existence,what would you do tear em down build apartments and walmarts,and black top every thing so you wouldnt get mud on your patent leather shoes?Then import all we need from south america or asia where labor is cheap......what are you gonna use to pay for these imports ,small town america?................good luck

HAYMAKER, you make about as much sense as a bunch of radical feminists screaming for equal rights, as long as it leans hard toward their favor. You want prosperity in small town America, yet you don't want it to prosper or grow? Huh? You totally ignore facts and common sense, yet accuse anyone who doesn't support protectionist policies as wanting to, regarding small towns, "tear em down build apartments and walmarts,and black top every thing so you wouldnt get mud on your patent leather shoes?Then import all we need from south america or asia where labor is cheap". The protectionist policies that you favor would be devestating to rural America, and we would be living an existence more reminiscent of the 1930's.
 

HAY MAKER

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Cal said:
HAY MAKER said:
Cal ILL be the first to admitt I dont give a damn about trade.I will also say I understand trade is necessary,as long as its fair. Let me ask you a question,you like to be reckonized as a smart boy,whats small town america worth?what will you trade for it? Maybe being a big city boy,sitting in your office all day talking on the phone is your idea of a hards days work.People like that could care less about small town america,if you dont believe it just read agmans and ~SH~ posts for a while ,it will become clear they think small towns are ineffcient,unworthy of existence,what would you do tear em down build apartments and walmarts,and black top every thing so you wouldnt get mud on your patent leather shoes?Then import all we need from south america or asia where labor is cheap......what are you gonna use to pay for these imports ,small town america?................good luck

HAYMAKER, you make about as much sense as a bunch of radical feminists screaming for equal rights, as long as it leans hard toward their favor. You want prosperity in small town America, yet you don't want it to prosper or grow? Huh? You totally ignore facts and common sense, yet accuse anyone who doesn't support protectionist policies as wanting to, regarding small towns, "tear em down build apartments and walmarts,and black top every thing so you wouldnt get mud on your patent leather shoes?Then import all we need from south america or asia where labor is cheap". The protectionist policies that you favor would be devestating to rural America, and we would be living an existence more reminiscent of the 1930's.


PERFECT..............GOOD LUCK
 

Bill

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HAY MAKER said:
Maple Leaf Angus said:
Silver said:
Haymaker, your country has been changing since 1492. Get used to it. If you want to do something positive, help it change for the better rather than trying to drag it to the past.

:clap: :clap: :clap:

You are for change I find nothing wrong with the past,when a dollar was a dollar and a mans word was all you needed to trade.And the fact that you are opposed to these ideals and values of the past only confirms my suspicions of you,that is unless you can come up with a example of this positive change you are crowing about.............good luck :wink:
Read your post Haymaker. Some have shown on this site what a "mans word" is worth when it comes to trade. Small town America has changed and it hasn't all been influenced by outside forces.
 

Cal

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passin thru said:
what about unions in this equation?
If you search the numbers I'm sure that you are going to find that labor union membership has steadily decreased and is at an all-time low. I can't imagine anyone worth their salt wanting to to be paid as part of the herd rather than on their own abilities and output, nor should a company want to operate in that mode. If you take a look at the industries that are having problems, I think you're going to find the majority of the hard hit companies as having the strongest ties to unions. If you're company goes tits-up, what good is the life-long retirement and health benefits that the union negotiated for that were tied to future company growth and profitability, which, of course, was retarded by the obligation for lifelong retirement and health benefits? Seems to me that a higher salary and taking care of your own future needs is a safer bet. IMO
 

agman

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HAY MAKER said:
Cal ILL be the first to admitt I dont give a damn about trade.I will also say I understand trade is necessary,as long as its fair. Let me ask you a question,you like to be reckonized as a smart boy,whats small town america worth?what will you trade for it? Maybe being a big city boy,sitting in your office all day talking on the phone is your idea of a hards days work.People like that could care less about small town america,if you dont believe it just read agmans and ~SH~ posts for a while ,it will become clear they think small towns are ineffcient,unworthy of existence,what would you do tear em down build apartments and walmarts,and black top every thing so you wouldnt get mud on your patent leather shoes?Then import all we need from south america or asia where labor is cheap......what are you gonna use to pay for these imports ,small town america?................good luck

Haymaker, don't attempt to put words in my mouth concerning your perception of my views of rural America. I love rural America. But change is inevitable. In some regions people are moving back to rural America. You choose to point the fingers at corporations and trade as the root cause of the decline of rural America. You are dead wrong. Technological advances and gains in productivity are the root cause. But I expect you think reverting to plowing with a mule is progress.

I would also like for you to think about the development of the interstate highway system and how it may have altered and accelerated the decline in rural America. Before you respond to this give it some serious thought. List the numerous ways the development of the interstate highway system was both good for some parts of rural America and bad for other parts.
 

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