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Why is America suffering so much from a recession that Germany largely bypassed?

By   Follow Me on Twitter     Message Richard Clark       (Page 1 of 5 pages)     Permalink    (# of views)   27 comments

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As most everyone knows by now, ever more American jobs, recently even white-collar jobs, have been, and are now being, transferred to low-wage workers in other countries. Since 2000, the U.S. has lost 5.5 million manufacturing jobs, with 2.1 million of those jobs being lost in the last two years alone. Since 2001, over 42,400 factories have closed in the U.S., and another 90,000 are considered to be at severe risk of closing. The last time so few people were employed in manufacturing was in 1941, before World War II spending pulled that sector out of its Great Depression slump.


As a result of the loss of all these outsourced jobs, poverty in America is going to keep getting worse if they cannot be brought back, and ever more American children are as a result going to be raised in poverty and violence, with ever more hellish societal and personal consequences. Thankfully, President Obama has come up with a big, bold solution to deal with the problem: He's going to shut down the federal office that counts how many jobs are being shipped overseas! (Click here for source article)


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What permitted and even triggered all this job outsourcing? Something you will never hear about or read about in our oligarchic, corporate-owned mainstream media: It was a simple change in tax law that occurred during Ronald Reagan's first term in the White House -- a huge gift to the corporate bigwigs who helped get Reagan elected. As a result of this one new law, the importation of products made in American factories located in low-wage countries was no longer taxed the way it was before Reagan took the White House. As a result, virtually everything we buy these days is made by dirt-cheap workers making a buck or two an hour in some low-wage country.


Does it have to be this way? No. Proof: This is not the way it is in Germany -- the Germans still slap import taxes on stuff that their companies might be tempted to manufacture abroad, and by this means and others, the German government protects German jobs and incomes. As a result, last quarter saw more German GDP growth than at anytime since the reunification of the country. Plus, their unemployment rate during the recent recession was never anywhere near as high as ours in America. Why not? Because the German government subsidized worker salaries after it asked employers to cut their hours down to 30 or even 20 a week (rather than terminate any of them) if there wasn't enough work to keep all of them busy full time. This enabled all workers to keep on spending just as they had been, and so a German recession was for the most part, by this two means, avoided.

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In short, high-wage countries like Germany figured out a way to compete with China and Mexico. The proof of this: In 2008, Germany ran a $267-billion trade surplus, while the United States ran a $568-billion trade deficit. In a nutshell, Germany came up with a comprehensive plan to encourage manufacturing in Germany, while the U.S., under Obama's leadership, has simply stopped counting how many jobs we are losing, as US corporations continue to transfer our jobs to low-wage countries, so as to manufacture (at the lowest possible cost) the products we are supposed to buy once they are "imported" into the country.


But with what money are we supposed to buy them?! -- most Americans no longer have a house that can be refinanced, their credit cards are already maxed out, and their median wage, adjusted for inflation, has been reduced to the 1972 level.


If President Obama really wanted to deal with this problem, he would develop a national manufacturing strategy just like Germany did. Problem is, Obama and the Dems are totally cowed by big corporations and would never dream of passing a law that would impose stiff import taxes on stuff that US corporations manufacture in low-wage countries and ship back here for US consumption. Explanation: If the Dems did something like that, they would be kissing goodbye all future corporate campaign contributions, without which they could never get reelected.

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So what good is stimulus money given to Americans who are unemployed or underemployed? -- they just spend it on stuff that was manufactured in other countries. So the money they spend either goes to people in those countries (instead of to other Americans, thanks to the inherent multiplier effect) and/or it goes to corporate honchos and corporate stock holders, 95% of whom are in the top 2% of income receivers. In other words, the money is received by a very select and privileged group of Americans, i.e. the upper-income people who own the factories that manufacture stuff cheaply in low-wage countries, for duty-free import back into the US.


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Several years after receiving my M.A. in social science (interdisciplinary studies) I was an instructor at S.F. State University for a year, but then went back to designing automated machinery, and then tech writing, in Silicon Valley. I've (more...)
 

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