The Vicious Downward Cycle of the American Economy

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By Paul Craig Roberts, Posted by Rob Kall (about the submitter) Page 2 of 3 page(s)

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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.

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