FacebookTwitterGoogle+RedditEmail

Delusion Rules

by PAUL CRAIG ROBERTS

 

The US might be a superpower, but it is not a country that controls its own fate. Delusion does.

Much of the US public is deluded about the invasion and occupation of Iraq and its consequences and about the state of the US economy.

Just as Americans are deceived into believing that Iraq was involved in the September 11 terrorist attack on the US and threatened America with weapons of mass destruction, Americans are deceived into believing that they benefit economically from outsourcing, offshore production, and an unprecedented trade deficit.

The deceivers emphasize the lower prices, not the lost incomes and destroyed careers, that result when American workers are replaced by cheaper foreign labor. The deceivers allege that the trade deficit means that we get to consume more of the world’s goods than we produce, with the added benefit that foreigners pay for our excess consumption by investing in America.

The truth of the matter is that “foreign investment” in the US today consists of Asian central banks, mainly Japan and China, using surplus earnings from massive trade surpluses to prop up the US dollar by purchasing US government bonds.

By propping up the dollar, Asians keep their goods and services cheap, thus worsening the US trade deficit. Washington goes along because Asian countries use their export surpluses to finance the US budget deficit.

Propping up the dollar undermines investment in factories or businesses that produce jobs for Americans. Stephen Roach, chief economist for Morgan Stanley, reports that in 2003 net investment in the US business sector was 60% below the level in 2000.

The US has become the world’s largest debtor, in hock to foreigners for one-fourth of our Gross Domestic Product. The ratio of US external debt (what we owe to foreigners) and US exports is approaching the crisis ratios of banana republics.

It is inevitable: America’s mounting debts will produce a crisis. The dollar’s value will plummet, and US living standards will drop. Everything will become more expensive for Americans.

The perilous condition of the dollar is one of the reasons Bush invaded Iraq. What keeps the overvalued dollar up is the fact that it is the currency in which the Middle East bills its oil. Every country has to purchase dollars in order to pay for its oil, and these purchases keep the dollar afloat.

Just prior to the US invasion, sanctions on Iraqi oil had run their course and were about to be removed. Saddam Hussein intended to bill Iraqi oil in Euros, which could have started the abandonment of the dollar by the oil producing countries. Instead of fixing our economic problems, we started a war.

In the meantime, America continues to lose high-paying jobs and entire occupations to foreigners, because US corporations outsource jobs and produce offshore. University of California professor Norm Matloff warns that outsourcing and H1-B visas, which bring foreign workers into US firms, are destroying the US software engineering profession. (Matloff’s writings are available online and are worth more attention than this column provides.)

The shrinking computer science enrollments in American universities have finally caught the attention of the academic establishment. Computer science departments, which should have been speaking out long ago, have been muzzled, because they are heavily dependent on research and faculty funds from the very firms whose outsourcing practices are destroying the occupation in America.

Falling enrollments mean fewer faculty positions and graduate students. Despite their funding being threatened by fewer enrollments, most computer science professors are unwilling to contradict their corporate benefactors’ false claim that “outsourcing is good for America.” Another year of biting the tongue, another grant received.

Instead, the professors acknowledge that programming is a lost occupation for Americans and claim that there is still a future for American students in designing computer systems–“computer software systems architecture.” Nonsense, says Matloff, a computer science professor himself. He notes that it is impossible to design computer systems without having years of programming experience. If you lose programming, you lose the base for the occupation, and all the rest goes offshore as well.

Some economists claim that lost occupations will return to the US once wages rise in India and China. Matloff’s answer: “Did manufacturing work return to the US over time as wages rose in developing countries? Of course not.” Only America is stupid enough to give away its manufacturing and high tech occupations.

Other economists allege that new high tech professions will rise to take the place of the lost computer engineering profession. Matloff punctures that delusion: Venture capitalists routinely demand that the new companies they finance outsource to the hilt.

US universities have educated enough Indians and Chinese to fill every high tech job American firms have to offer. The false claim that only drudgery jobs are outsourced is laughable.

If you believe that lie, you believe Saddam Hussein was in cahoots with Osama bin Laden and had weapons of mass destruction.

PAUL CRAIG ROBERTS is John M. Olin Fellow at the Institute for Political Economy and Research Fellow at the Independent Institute. He is a former associate editor of the Wall Street Journal and a former assistant secretary of the U.S. Treasury. He is the co-author of The Tyranny of Good Intentions.

 

Paul Craig Roberts is a former Assistant Secretary of the US Treasury and Associate Editor of the Wall Street Journal. Roberts’ How the Economy Was Lost is now available from CounterPunch in electronic format. His latest book is The Neoconservative Threat to World Order.

February 08, 2016
Paul Craig Roberts – Michael Hudson
Privatization: the Atlanticist Tactic to Attack Russia
Mumia Abu-Jamal
Water War Against the Poor: Flint and the Crimes of Capital
John V. Walsh
Did Hillary’s Machine Rig Iowa? The Highly Improbable Iowa Coin Tosses
Eliza A. Webb
Hillary Clinton’s Populist Charade
Uri Avnery
Optimism of the Will
Roy Eidelson Trudy Bond, Stephen Soldz, Steven Reisner, Jean Maria Arrigo, Brad Olson, and Bryant Welch
Preserve Do-No-Harm for Military Psychologists: Coalition Responds to Department of Defense Letter to the APA
Binoy Kampmark
Julian Assange, the UN and Meanings of Arbitrary Detention
Shamus Cooke
The Labor Movement’s Pearl Harbor Moment
W. T. Whitney
Cuba, War and Ana Belen Montes
Vincent Emanuele
The Curse and Failure of Identity Politics
Jim Goodman
Congress Must Kill the Trans Pacific Partnership
Peter White
Meeting John Ross
Colin Todhunter
Organic Agriculture, Capitalism and the Parallel World of the Pro-GMO Evangelist
Ralph Nader
They’re Just Not Answering!
Cesar Chelala
Beware of the Harm on Eyes Digital Devices Can Cause
Weekend Edition
February 5-7, 2016
Jeffrey St. Clair
When Chivalry Fails: St. Bernard and the Machine
Leonard Peltier
My 40 Years in Prison
John Pilger
Freeing Julian Assange: the Final Chapter
Garry Leech
Terrifying Ted and His Ultra-Conservative Vision for America
Andrew Levine
Smash Clintonism: Why Democrats, Not Republicans, are the Problem
William Blum
Is Bernie Sanders a “Socialist”?
Daniel Raventós - Julie Wark
We Can’t Afford These Billionaires
Enrique C. Ochoa
Super Bowl 50: American Inequality on Display
Jonathan Cook
The Liberal Hounding of Julian Assange: From Alex Gibney to The Guardian
George Wuerthner
How the Bundy Gang Won
Mike Whitney
Peace Talks “Paused” After Putin’s Triumph in Aleppo 
Ted Rall
Hillary Clinton: the Good, the Bad and the Ugly
Gary Leupp
Is a “Socialist” Really Unelectable? The Potential Significance of the Sanders Campaign
Vijay Prashad
The Fault Line of Race in America
Eoin Higgins
Please Clap: the Jeb Bush Campaign Pre-Mortem
Joseph Mangano – Janette D. Sherman
The Invisible Epidemic: Radiation and Rising Rates of Thyroid Cancer
Andre Vltchek
Europe is Built on Corpses and Plunder
Jack Smith
Obama Readies to Fight in Libya, Again
Robert Fantina
As Goes Iowa, So Goes the Nation?
John Grant
Israel Moves to Check Its Artists
Dean Baker
Market Turmoil, the Fed and the Presidential Election
John Wight
Who Was Cecil Rhodes?
David Macaray
Will There Ever Be Anyone Better Than Bernie Sanders?
Christopher Brauchli
Suffer Little Children: From Brazil to Flint
JP Sottile
Did Fox News Help the GOP Establishment Get Its Groove Back?
Binoy Kampmark
Legalizing Cruelties: the Australian High Court and Indefinite Offshore Detention
John Feffer
Wrestling With Iran
Rob Prince – Ibrahim Kazerooni
Syria Again
Louisa Willcox
Park Service Finally Stands Up for Grizzlies and Us
Farzana Versey
Of Beyoncé, Trudeau and Culture Predators
FacebookTwitterGoogle+RedditEmail