- Delusion has settled over America. Washington cannot
tell fact from fantasy. Neither can sycophantic media nor nothink economists.
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- The Bush administration is the first government in history
to initiate a war based entirely on fantasy--fantasy about nonexistent
"weapons of mass destruction," fantasy about nonexistent "terrorist
links," fantasy about "liberating" a people from their culture,
fantasy about a "cakewalk" invasion, fantasy about America's
omnipotence.
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- Reality has yet to penetrate the Oval Office or America's
"red state" consciousness. The gratuitous invasion of Iraq, the
torture and the war crimes have made America despised the world over. Our
once formidable alliances are shattered.
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- The Muslim world, which perceives America as Israel's
enabler of Palestine's oppression, has uniformly turned against us.
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- $300 billion--red ink to the last cent--has been wasted
in a pointless war and occupation that has emboldened Islamic revolutionaries,
who will be more successful than the US in changing the face of the Middle
East.
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- Bush's invasion of Iraq has proved the limits of America's
"hegemonic" military power: Eight heavily armored high tech US
divisions are tied down by a few thousand lightly armed insurgents who
control most of the roads and many towns and cities.
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- Any Iraqi collaborator with the US occupation who is
foolish enough to leave the heavily fortified "Green Zone" is
shot down or blown up in the streets.
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- Such an outcome is proclaimed a "success" by
the White House, Republican politicians and a cheerleading media.
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- The reality is that an ignorant and blundering Bush administration
has created a Shi'ite crescent from Iran to Lebanon that is revolutionizing
the Middle East. The reality will not penetrate the Bush administration.
Reality contradicts Bush fantasy and is "against us." Facts that
don't support Bush fantasy are "liberal" and "anti-American."
Truth is dismissed as anti-Bush propaganda.
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- It is America that has undergone regime change. The Bush
administration constitutes a Jacobin revolution. Its fanatics have declared
world war on political diversity. The first victim of Bush's "war
on terror" is the Bill of Rights. In its place we have an incipient
police state.
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- 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.
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- 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.
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- 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.
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- 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.
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- 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.
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- 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.
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- 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?
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- 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.
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- 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.
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- 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.
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- 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.
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- The economists concluded that the benefits to Americans
from outsourcing ranged from $7,100 to $12,900 per household.
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- 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.
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- 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.
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- 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.
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- 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.
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- 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.
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- - 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: pcroberts@postmark.net
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- http://goldmarkets.homestead.com/
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