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MARIN COUNTY'S NEWS MONTHLY - FREE PRESS
(415)868-1600 - (415)868-0502(fax) - P.O. Box 31, Bolinas, CA, 94924

 

The  Great American Job Sell Out
By Paul Craig Roberts

   Americans are being sold out on the  jobs front. Americans' employment opportunities are declining  as a result of corporate outsourcing of US jobs, H-1B visas that  import foreigners to displace Americans in their own country,  and federal guest worker programs
   President Bush and his Republican majority intend to legalize the aliens who hold down wages for  construction companies and cleaning services. In order to stretch  budgets, state and local governments bring in lower paid foreign nurses and school teachers. To reduce costs, US corporations  outsource jobs abroad and use work visa programs to import foreign  engineers and programmers. The American job give away is explained  by a "shortage" of Americans to take the jobs.
   There are not too many Americans  willing to accept the pay and working conditions of migrant farm  workers. However, the
US is bursting at the seams with unemployed  computer engineers and well-educated professionals who are displaced  by outsourcing and H-1B visas. During Bush's entire first term,  there was a net loss of American private sector jobs. Today there  are 760,000 fewer private sector jobs in the US economy than  when Bush was first inaugurated in January 2001.
   For years the hallmark of the  European economy was its inability to create any jobs other than  government jobs.
America has caught up with Europe. During  Bush's first term, state and local government created 879,000  new government jobs. Offsetting these government jobs against  the net loss in private sector jobs gives Bush a four-year jobs  growth of 119,000 government jobs. Comparing this pathetic result  to normal performance produces a shortage of 8 million US jobs.  What happened to these jobs?
   Over these same four years  the composition of US jobs has changed from higher-paid manufacturing  and information technology jobs to lower-paid domestic services.  Why?
   During this extraordinary breakdown  in the American employment machine, politicians, government officials,  corporate spokespersons, and "free trade" economists gave assurances that
America was benefitting greatly from the work visa programs and outsourcing.
   The mindless chatter continues.  Just the other day Ambassador David Gross, US Coordinator for  International Communications and Information Policy in the State  Department, declared outsourcing to be an economic efficiency  that works to
America's benefit. There is no sign of this alleged benefit in US jobs statistics or the US balance of trade.
   Repeatedly and incorrectly,  US corporations state that outsourcing creates more
US jobs. They even convinced a New York Times columnist that this was  the case.
   The problem is, no one can  identify where the
US jobs are that outsourcing allegedly creates.  They are certainly not to be found in the BLS jobs statistics.  However, the Indian and Chinese jobs created by US outsourcing are highly visible.
   On February 13, the
Dayton  (Ohio) Daily News reported that jobs outsourcing is transforming  Indian "cities like Bangalore from sleepy little backwaters  into the New York Cities of Asia." In a very short period outsourcing has helped to raise India from one of the world's  poorest countries to its seventh largest economy.
   Outsourcing proponents claim  that
US job loss is being exaggerated, that outsourcing is really  just a small thing involving a few call centers. If that is the case, how is it transforming sleepy Indian cities into "the  New York Cities of Asia"? If outsourcing is no big deal,  why are Bangalore hotel rooms "packed with foreigners paying  rates higher than in Tokyo or London," as the Dayton Daily  News reports?
   If outsourcing is of no real  consequence, why are American lawyers or their clients paying  $2,900 in fees plus hotel and travel expenses and two days' billings  to attend the Fourth National Conference on Outsourcing in Financial Services in Washington DC (April 20-21)?
   On the jobs front, as on the  war front, the social security front and every other front, Americans  are not being given the truth. Americans' news comes from people  allied with the Bush administration or dependent on revenues  from corporate advertisers. Displease the government or advertisers  and your media empire is in trouble. The news most Americans get is filtered. It is the permitted news. Many "free  trade" advocates also are dependent on the corporate money  that funds their salaries, research and think tanks.
   Another clear indication that  outsourcing of US jobs is no small thing comes from the reported  earnings of the leading Indian corporations that provide American  firms with outsourced IT employees and engineers. During the recent quarter, Ifosys' revenues increased by 53%, TCS grew by  38%, and Wipro was up 34%.
   On
January 1, 2001, Cincinnati-based  Convergys Corp had one Indian employee. Today it has 10,000.  Why? Because it can hire Indian university graduates for $240  a month, a sum that is a small fraction of the US poverty level  income.
   Many Americans think that an  outsourced job is an existing job that is moved offshore. But  many outsourced jobs are created offshore in the first place.  On February 11, USA Today told the story of OfficeTiger, "the  sort of young technology company that once created thousands  of high-paying jobs in the
USA, fueling sizzling economic growth."  The five-year old startup business employs 200 Americans and  ten times that number of Indians. The company has plans for hiring  many more Indians to perform "tech-heavy financial services."
   Under pressure from venture  capitalists who fund new companies, American startup firms are  starting up abroad. Thus, the new ventures, which "free trade" economists assured us would create new jobs to take  the place of the ones moved offshore by mature firms, are in  fact creating jobs for foreigners.
   As a consequence, tech jobs  in the
US are falling as a percentage of the total. Clearly,  tax breaks for venture capitalists are self-defeating when the result is to create jobs for foreigners, not for Americans. Why  should the American taxpayer subsidize employment in India and  China?
   These developments have obvious  adverse implications for engineering and professional education  in
America. The BLS jobs forecast for the next ten years says  the vast majority of US jobs will not require a college education. University enrollments will decline and so will the production  of PhDs as fewer professors are needed.
   As
India and China rise to  first world status, the US falls to third world status where  the only jobs are in domestic services.
   This has enormous implications  for the
US balance of payments. Americans' consumption of manufactured  goods is heavily dependent on foreign manufacture, whether that  of foreign firms or that of US multinational firms that supply  their American customers from offshore. How does an economy in  which employment growth is concentrated in nontradable domestic  services pay for its imports with exports?
   Since 1990 the
US has been  paying for its imports by giving foreigners ownership of its  assets. In the last 15 years foreigners have accumulated $3.6  trillion of America's wealth.
  
America has been able to pay  for its consumption by giving up its wealth because the dollar  is the world's reserve currency. As America's high-tech and  manufacturing capabilities decline and its red ink rises, the  dollar's role as reserve currency must end.
   When the dollar loses its reserve  currency role,
America will not be able to pay for the imports  on which it has become dependent. Shopping in Wal-Mart will  be like shopping at Neiman Marcus.
   Until recent years, US companies  employed Americans to produce the goods that Americans consumed.  Employment supported sales, and sales supported employment.  No more. By their shortsighted policy of moving US jobs abroad,  our corporations are destroying their American markets.
   Economists give assurances  that the dollar's decline and fall will bring jobs and industry  back to the
US. Once Americans are as poor as Indians and Chinese  are today, the process will reverse. Multinational corporations  will locate in America to take advantage of cheap labor and unserved  markets. By becoming poor, the US can become rich again.
   You might want to ask the economists  and our "leaders" in
Washington why we should put ourselves  and our descendants through such a wrenching process.
    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: [email protected]
 

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