Outsourcing innovation…and everything else

America’s Has-Been Economy

This extraordinary article is not by a malcontent leftie but rather by Paul Craig Roberts, who “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 details precisely how outsourcing is destroying the American economy as of course, a tiny few at the top become wealthier.

A country cannot be a superpower without a high tech economy, and America’s high tech economy is eroding as I write.

The erosion began when US corporations outsourced manufacturing. Today many US companies are little more than a brand name selling goods made in Asia.

Corporate outsourcers and their apologists presented the loss of manufacturing capability as a positive development.

This assertion became an article of faith. Few considered how a country could maintain a technological lead when it did not manufacture.

So far in the 21st century there is scant sign of the American “new economy.” The promised knowledge-based jobs have not appeared.

A country that doesn’t manufacture doesn’t need as many engineers, and much of the work that remains is being outsourced or filled with cheaper foreigners brought into the country on H-lb and L-1 work visas.

Now it is design and innovation that are being outsourced. Business Week reports that the pledge of First World corporations to keep research and development in-house “is now passé.”

This is the key point. Outsourcing apologists claim that only the crummy jobs are outsourced, and that retraining will provide high-tech jobs here in the States. But that’s not happening. The high-tech design, innovation, and engineering jobs are now also being done in Asia.

The disappearing US economy can also be seen in the exploding trade deficit. As more employment is shifted offshore, goods and services formerly produced domestically become imports. Nothink economists and Bush administration officials claim that America’s increasing dependence on imported goods and services is evidence of the strength of the US economy and its role as engine of global growth.

This claim ignores that the US is paying for its outsourced goods and services by transferring its wealth and future income streams to foreigners.

However, those in the US who control the corporations, the ruling class, continue to become wealthier from the profits of outsourcing, as the rest of the population, of course, takes it in the shorts.

The US dollar will not be able to maintain its role as world reserve currency when it is being abandoned by that area of the world that is rapidly becoming the manufacturing, engineering and innovation powerhouse.

Misled by propagandistic “free trade” claims, Americans will be at a loss to understand the increasing career frustrations of the college educated. Falling pay and rising prices of foreign made goods will squeeze US living standards as the declining dollar heralds America’s descent into a has-been economy.

A large number of well-educated people with lousy job prospects is a sure recipe for social agitation and unrest.

Meanwhile the Grand Old Party has passed a bankruptcy “reform” that is certain to turn unemployed Americans living on debt and beset with unpayable medical bills into the indentured servants of credit card companies. The steely-faced Bush administration is making certain that Americans will experience to the full their counry’s fall.

Outsourcing is just another name for a predatory capitalism that seeks the absolute cheapest way to do anything, and screw the social or even the economic consequences. Like most rabid capitalists, they can’t or won’t see past this quarters balance sheet or understand how their shortsightedness and greed are destroying the economy for all of us.

But hey, as long as their credit card companies can gouge consumers with 20-30% interest rates with bankruptcy no longer a possibility, why should they care if others suffer, as they continue to amass wealth.

Until of course, the economy snaps and millions are in the streets organizing and protesting. It happened in the 30’s, it could happen again.