From: Rakesh Bhandari (bhandari@BERKELEY.EDU)
Date: Wed Sep 07 2005 - 00:56:45 EDT
What does Marx have to do with this (including the rant against foreign born teachers) other than it is written by a person who once wrote a bad book on Marx? Perhaps this should have been sent to a list dedicated to the completion of List's poltical economy? What a way to celebrate the tenth anniversary of this list. RB At 7:37 AM -0400 9/6/05, glevy@PRATT.EDU wrote: ><http://www.counterpunch.org/roberts09052005.html> > >Labor Day Edition >September 5, 2005 > >The Vicious Downward Cycle of the American Economy > >Resurrecting Karl Marx > >By PAUL CRAIG ROBERTS > >Libertarians and free trade economists don't realize it, but they are >pulling Marx out of his grave. > >Free traders are resurrecting class war, not because they are >Marxists but because they confuse free trade with global labor >arbitrage. Free traders turn cold shoulders to US job losses from >offshore outsourcing, because they mistake the losses for the >beneficial workings of comparative advantage. Committed to a 200 year >old theory that they no longer understand, free traders are cheering >on the destruction of middle class jobs and the dismantling of the >ladders of upward mobility that make large income disparities >politically acceptable. > >The destruction of the stabilizing middle class is occurring >simultaneously with an extraordinary increase in income inequalities. >Not so long ago CEOs were paid 20 times more than the average >employee; now some are paid hundreds of times more. The "gilded age" >is returning while the value of a college degree is declining. > >According to the Bureau of Labor Statistics' 10-year jobs forecast, >the majority of US jobs that will be created in the coming decade >will be in domestic services that do not require a college education. >This is a strange job outlook for a high tech economy allegedly >benefitting from free trade. Domestic services are nontradable. The >US economy has not created a net new job in tradable goods and >services in the 21st century. > >Free trade economists have forgotten that not all trade reflects the >beneficial workings of comparative advantage. For comparative >advantage to function, a country's capital must stay at home and be >allocated to activities in which the country has comparative >advantage. The other necessary condition is that countries have >different internal cost ratios of producing different goods. > >When the principle of comparative advantage was discovered, capital >was mainly kept at home under the watchful eye of the owners and >protected by the country's laws. Tradable commodities were primarily >products influenced by climate and geography, guaranteeing that the >cost of a yard of wool in terms of a bottle of wine would vary among >countries. > >Today capital is more mobile than tradable goods. Modern production >functions are based on acquired knowledge and produce identical >results regardless of location. When a US corporation closes a >factory in Ohio and relocates its production for US markets to China, >the loss of US jobs is not the result of a Chinese firm gaining a >comparative advantage over the Ohio one. It is the result of US >capital seeking absolute advantage in lower cost Chinese labor. > >Free trade economists have completely forgotten that the flow of >resources to where they have absolute advantage does not result in >mutual benefit. The country that receives the resources gains and the >other country loses. > >When capital and technology flow from the US to China and India, the >productivity of labor in China and India rises. In the US it falls. > >Outsourcing is eliminating entire American occupations in engineering >and information technology. As there are fewer jobs for graduates, >engineering enrollments in the US are declining. Libertarians and >free traders are so emotionally enamored of the market that they have >forgotten that markets can as easily work against a country as for >it. In the US, markets are working to reduce the supply of American >engineers as US corporations lay off their American employees and >replace them with cheaper Chinese and Indians. > >Product development, or research and development, follows >manufacturing. As US manufacturing moves offshore, so does R&D. > >Innovation follows R&D, with the consequence that US science is also >in relative decline. In brief, the US is developing the labor force >characteristics of a third world country in which jobs are available >only in lower productivity, lower paid "hands on" domestic services. > >For engineering and IT jobs that remain in the US, fewer are filled >by Americans. US firms have learned that they can pay foreigners on >H-1B and L-1 work visas lower salaries, force their American >employees to train their foreign replacements, and then discharge >their American workers. Consequently, there is double-digit >unemployment among American software engineers, IT professionals and >computer programmers. > >As Lou Dobbs exposed recently on CNN, the US Department of Labor is >currently reserving some 52,000 high tech job openings in US firms >for H-1B visa holders. "Bodyshops" use the visas to bring in >foreigners who take Americans' jobs by undercutting their pay. > >American firms advertise openings for H-1B visa holders only. No >Americans need apply. Gene Koprowski in TechNewsWorld (August 20) >reports that "in excess of 600,000 new visas have been granted during >the last five years. Thirty-nine percent of H-1B visas were for >workers in computer-related occupations." > >In other words, 600,000 Americans lost the occupations in which they >have invested their human capital. You can be assured that these >600,000 did not move up to better jobs. > >As bad as it is for the individuals, it is even more costly for the >country. The outsourcing of jobs and the importation of foreigners on >work visas are emptying the pipeline of qualified Americans and >destroying US technical occupations. It is paradoxical to hear the >very executives who replaced their US employees with foreigners now >complain about the declining interest of Americans in science and >engineering. Last July Bill Gates expressed his worries about the >precipitous decline in the number of students entering computer >science. Why is Bill surprised when he helped to lead the offshore >outsourcing movement? > >Obviously, it is a vicious cycle. As Americans are discouraged from >the occupations, the corporations lobby for more work visas, which >discourages more Americans. > >Seeking to protect their careers from being outsourced, Americans are >turning to domestic services, such as nursing and teaching. However, >H-1B visas threaten these occupations, too. Hospitals struggling with >costs and school systems struggling with budgets are importing lower >cost foreigners to teach American kids and care for American patients. > >In Nevada the Clark County School District has imported teachers from >the Philippines. Arizona has imported teachers from New Delhi, India. >The New York Department of Education has brought teachers in from >Jamaica. Cleveland, Ohio, has imported teachers from India. It goes >on and on. > >Joe Guzzardi has a good article posted on vdare.com about the use of >foreign teachers in US schools. This practice raises many questions: >Does the money saved on teachers' salaries go to administrators as >bonuses for cost-cutting? How can foreigners from outside our culture >enculturate American students? What happens to enrollments in US >education and nursing curriculums as imported foreigners fill >available positions? What happens to the laid off US engineers and >technical people who are displaced again, this time from teaching >math and science in our schools? > >The pressure on school budgets comes from the lost middle class jobs. >As manufacturing and now white collar work move out of US >communities, tax revenues become more scarce. Administrators seek >foreign employees who will work for less. > >Eventually, all Americans will be working for less except the fat >cats at the top, who will earn large bonuses by substituting >foreigners for Americans. > >What occupations will be left to native citizens? This question comes >to me from many frustrated parents who are trying to give their >children some career counseling. It is possible for Americans still >to earn good incomes from being dentists and lawyers (if they are in >the top 20% of their class). Next one thinks of skilled trades such >as electrician, plumber and auto mechanic. However, Mexican >immigrants are crowding Americans out of the construction trades and >may soon dominate other trades as well. > >Opportunity for native born Americans is collapsing. The loss of >opportunity is showing up in declining median household income and >rising poverty rate. On September 1, Edwin Rubenstein reported >(vdare.com) that according to the Census Bureau's August 30 report, >"median household income declined for an unprecedented fifth straight >year in 2004." The main reason for declining household income, says >the Economic Policy Institute, is "ongoing weakness in the job >market." > >HIgher paying jobs are being lost to outsourcing and to work visas. >Lower paying jobs are being lost to Mexicans. With real income >falling for five years (despite an economic recovery), the US poverty >rate has climbed from 11.3% in 2000 to 12.7% in 2004, adding 5.4 >million more persons to the poverty roll. > >Yet, nothink free trade economists and libertarians--like LBJ who >promised us light at the end of the tunnel in Vietnam and Bush who >promises light at the end of the tunnel in Iraq--still promise that >outsourcing and H-1B visas mean increased wealth for Americans. > >Economic science no longer exists in America. Its place has been >taken by emotional commitments to dogmas. Americans and their hopes >are daily paying the price for this great failure of economic >thinking. > >The August payroll jobs report from the Bureau of Labor Statistics >repeats the consistent pattern of 21st century America--no net job >creation in high productivity sectors. The only jobs created are in >nontradable lower paid domestic services. > >Of the 154,000 private nonfarm jobs created in August, 25,000 are in >construction and are filled primarily by legal and illegal Mexican >immigrants; 20,000 are in wholesale and retail trade; 16,000 in >administrative and waste services; 43,000 in education and health >services; 34,000 in leisure and hospitality (primarily waitresses and >bartenders). Manufacturing lost another 14,000 jobs. > >Brand name companies that once were symbols of US manufacturing are >today assemblers of foreign made parts. An industry of assemblers has >no need for engineers or scientists. The dismantling of the US >economy cannot be corrected by education and job retraining. The US >is on its way to becoming a third world country. > >It is detrimental to the future of freedom that at this time, when >our civil liberties are under attack by the Bush administration and >diminishing economic opportunity is breathing new life into class >war, libertarians and market economists are demonstrating more >commitment to ideology than to the welfare of fellow citizens. By >associating freedom and market solutions with policies that are >eroding Americans' prospects, freedom's defenders are unwittingly >stabbing freedom in the back. > >Paul Craig Roberts has held a number of academic appointments and has >contributed to numerous scholarly publications. He served as >Assistant Secretary of the Treasury in the Reagan administration. His >graduate economics education was at the University of Virginia, the >University of California at Berkeley, and Oxford University. He is >coauthor of The Tyranny of Good Intentions. He can be reached at: >paulcraigroberts@yahoo.com >Attachment converted: general:untitled-2 12 (TEXT/ttxt) (00215F1B)
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