- Gentle reader, if you prefer comforting
lies to harsh truths, don't read this column.
- The state of the union is disastrous.
By its naked aggression, bullying, illegal spying on Americans, and illegal
torture and detentions, the Bush administration has demonstrated American
contempt for the Geneva Convention, for human life and dignity, and for
the civil liberties of its own citizens. Increasingly, the US is isolated
in the world, having to resort to bribery and threats to impose its diktats.
No country any longer looks to America for moral leadership. The US has
become a rogue nation.
- Least of all did President Bush tell
any truth about the economy. He talked about economic growth rates without
acknowledging that they result from eating the seed corn and do not produce
jobs with a living wage for Americans. He touted a low rate of unemployment
and did not admit that the figure is false because it does not count millions
of discouraged workers who have dropped out of the work force.
- Americans did not hear from Bush that
a new Wal-Mart just opened on Chicago's city boundary and 25,000 people
applied for 325 jobs (Chicago Sun-Times, Jan. 26), or that 11,000 people
applied for a few Wal-Mart jobs in Oakland, California. Obviously, employment
is far from full.
- Neither did Bush tell Americans any of
the dire facts reported by economist Charles McMillion in the January 19
issue of Manufacturing & Technology News:
- During Bush's presidency the US has experienced
the slowest job creation on record (going back to 1939). During the past
five years private business has added only 958,000 net new jobs to the
economy, while the government sector has added 1.1 million jobs. Moreover,
as many of the jobs are not for a full work week, "the country ended
2005 with fewer private sector hours worked than it had in January 2001."
- McMillion reports that the largest sources
of private sector jobs have been health care and waitresses and bartenders.
Other areas of the private sector lost so many jobs, including supervisory/managerial
jobs, that had health care not added 1.4 million new jobs, the private
sector would have experienced a net loss of 467,000 jobs between January
2001 and December 2005 despite an "economic recovery." Without
the new jobs waiting tables and serving drinks, the US economy in the past
five years would have eked out a measly 64,000 jobs. In other words, there
is a job depression in the US.
- McMillion reports that during the past
five years of Bush's presidency the US has lost 16.5% of its manufacturing
jobs. The hardest hit are clothes manufacturers, textile mills, communications
equipment, and semiconductors. Workforces in these industries shrunk by
37 to 46 percent. These are amazing job losses. Major industries have shriveled
to insignificance in half a decade.
- Free trade, offshore production for US
markets, and the outsourcing of US jobs are the culprits. McMillion writes
that "every industry that faces foreign outsourcing or import competition
is losing jobs," including both Ford and General Motors, both of which
recently announced new job losses of 30,000 each. The parts supplier, Delphi,
is on the ropes and cutting thousands of jobs, wages, benefits, and pensions.
- If the free trade/outsourcing propaganda
were true, would not at least some US export industries be experiencing
a growth in employment? If free trade and outsourcing benefit the US economy,
how did America run up $2.85 trillion in trade deficits over the last five
years? This means Americans consumed almost $3 trillion dollars more in
goods and services than they produced and turned over $3 trillion of their
existing assets to foreigners to pay for their consumption. Consuming accumulated
wealth makes a country poorer, not richer.
- Americans are constantly reassured that
America is the leader in advanced technology and intellectual property
and doesn't need jobs making clothes or even semiconductors. McMillion
puts the lie to this reassurance. During Bush's presidency, the US has
lost its trade surplus in manufactured Advanced Technology Products (ATP).
The US trade deficit in ATP now exceeds the US surplus in Intellectual
Property licenses and fees. The US no longer earns enough from high tech
to cover any part of its import bill for oil, autos, or clothing.
- This is an astonishing development. The
US "superpower" is dependent on China for advanced technology
products and is dependent on Asia to finance its massive deficits and foreign
wars. In view of the rapid collapse of US economic potential, my prediction
in January 2004 that the US would be a third world economy in 20 years
was optimistic. Another five years like the last, and little will be left.
America's capacity to export manufactured goods has been so reduced that
some economists say that there is no exchange rate at which the US can
balance its trade.
- McMillion reports that median household
income has fallen for a record fifth year in succession. Growth in consumer
spending has resulted from households spending their savings and equity
in their homes. In 2005 for the first time since the Great Depression in
the 1930s, American consumers spent more than they earned, and the government
budget deficit was larger than all business savings combined. American
households are paying a record share of their disposable income to service
- With America hemorrhaging red ink in
every direction, how much longer can the dollar hold on to its role as
world reserve currency?
- The World Economic Forum in Davos, Switzerland,
is the cradle of the propaganda that globalization is win-win for all concerned.
Free trader Stephen Roach of Morgan Stanley reports that the mood at the
recently concluded Davos meeting was different, because the predicted "wins"
for the industrialized world have not made an appearance.
- Roach writes that "job creation
and real wages in the mature, industrialized economies have seriously lagged
historical norms. It is now commonplace for recoveries in the developed
world to be either jobless or wageless--or both."
- Roach is the first free trade economist
to admit that the disruptive technology of the Internet has dashed the
globalization hopes. It was supposed to work like this: The first world
would lose market share in tradable manufactured goods and make up the
job and economic loss with highly-educated knowledge workers. The "win-win"
was supposed to be cheaper manufactured goods for the first world and more
and better jobs for the third world.
- It did not work out this way, Roach writes,
because the Internet allowed job outsourcing to quickly migrate from call
centers and data processing to the upper end of the value chain, displacing
first world employees in "software programming, engineering, design,
and the medical profession, as well as a broad array of professionals in
the legal, accounting, actuarial, consulting, and financial services industries."
- This is what I have been writing for
years, while the economics profession adopted a position of total denial.
The first world gainers from globalization are the corporate executives,
who gain millions of dollars in bonuses by arbitraging labor and substituting
cheaper foreign labor for first world labor. For the past decade free market
economists have served as apologists for corporate interests that are dismantling
the ladders of upward mobility in the US and creating what McMillion writes
is the worst income inequality on record.
- Globalization is wiping out the American
middle class and terminating jobs for university graduates, who now serve
as temps, waitresses and bartenders. But the whores among economists and
the evil men and women in the Bush administration still sing globalization's
- The state of the nation has never been
worse. The Great Depression was an accident caused by the incompetence
of the Federal Reserve, which was still new at its job. The new American
job depression is the result of free trade ideology. The new job depression
is creating a reserve army of the unemployed to serve as desperate recruits
for neoconservative military adventures. Perhaps that explains the Bush
administration's enthusiasm for globalization.
- 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