FacebookTwitterGoogle+RedditEmail

The American Economy is Destroying Itself

by PAUL CRAIG ROBERTS

 

The historian who chronicles America’s decline will lay the blame on free market ideology.

I say this as a believer in the market. My books and scholarly articles demonstrate the superiority of market systems over government allocative schemes. The problem arises when market economics ceases to be thoughtful and becomes ideological or a dogma.

A good example of the latter is a recent Heritage Foundation study that argues that global outsourcing is the best way to equip the US military with the best technology at least expense. The study brushes away concerns with the erosion of the American manufacturing, science, and engineering knowledge base by asserting that such concerns imply protectionism and that protectionism means the death of innovation.

Protectionism can be problematical for innovation, and the study is correct to point this out. Where the study fails is in ignoring that innovation does not take place in a vacuum. Innovation requires a material base and depends on a strong manufacturing, science and engineering foundation backed by R&D programs.

In an interview with Manufacturing & Technology News (August 8), the study’s project leader, Jack Spencer, sees protectionism as the only threat to American innovation, which he otherwise takes for granted:

“Our belief is that subjected to the free market, the United States is still going to produce most things because our comparative advantages are innovation and new technology. If liberated from protectionism, we can compete and that is where we will always emerge as winners.”

This belief is simply untrue. As this belief is the basis for the study, the study has done nothing but confirm a preordained belief.

The US has no God-given comparative advantage in innovation and new technology. We were leaders in these fields, because we were leaders in manufacturing.

We were leaders in manufacturing, because Europe and Japan destroyed themselves in wars, and the rest of the world destroyed themselves in various forms of socialism and cronyism.

America’s hegemony in manufacturing, science and engineering was the product of historical circumstances. Moreover, it occurred despite American protectionism.

The historical circumstances have changed. The US gave away its scientific and engineering education and its agriculture. It did this partly for idealistic reasons and partly as cold war strategy.

Once socialism collapsed in Asia, US corporations began outsourcing abroad the manufacture of products for US markets. Success with offshore manufacturing has led to offshore outsourcing of research and development and now innovation itself.

As a recent report from the National Research Council recognizes, “product development and technical support follow manufacturing.” One consequence for America is the loss of many manufacturing capabilities and “the increasing availability abroad of unique technologies not found in the United States.”

This development is taking a huge toll on America’s human resources in manufacturing skills, engineering and science. The first American victims were blue collar workers. Millions of them lost their jobs and experienced sharp declines in the quality of their lives. But as research, engineering, design, and innovation followed manufacturing abroad, now it is white collar workers in information technology and university graduates in engineering and physics who are being displaced.

American university enrollments in science and engineering are declining because there are no jobs for graduates. It is pointless to invest money, sweat and toil in an education that has no payoff. Markets do work. Markets are working to shrink the demand for, and supply of, American engineers and scientists.

The next impact is going to be on project manager jobs, practically the sole remaining source of career related employment for many engineers and technical people. Project management jobs require people experienced with the technology of the job. The loss of technical and engineering jobs empties the pipeline of people who have the experience to assume management positions. Far from being able to innovate, the US will even lack the human resources to manage technical and scientific projects.

Many uninformed people believe the problem is that America doesn’t produce enough scientists and engineers. Manufacturing & Technology News reports that “a group of 15 US business organizations has launched a national campaign aimed at doubling within 10 years the number of bachelor’s degrees in science, technology, engineering and mathematics.”

What is the point of this when there is a huge supply of unemployed engineers and technical people who have been displaced by offshore outsourcing and by H-1b and L-1 work visas for foreigners? I know an American software engineer in his thirties whose job was outsourced. After searching fruitlessly for a job for four years, he took a job in Thailand writing software programs for $850 per month.

The anecdotal stories are legion. Yesterday, a friend reported to me that the service technician who repaired his garage door opener said his company was flooded with resumes from college graduates and engineers who cannot find work and are willing to take jobs installing garage doors.

US executives, with an eye to quarterly earnings and their bonuses, continue to spend considerable resources lobbying for increases in work visas that enable them to replace their American engineers, scientists, and technical people with lower cost foreigners. These executives lie through their teeth when they assert the lack of qualified Americans for the jobs. The fact of the matter is, the executives force their American employees to train their foreign replacements and then fire their American workers.

In a word, American capitalism is destroying itself by dismantling the ladders of upward mobility that have made large income inequalities acceptable. By rewarding themselves for destroying American jobs and manufacturing, engineering and scientific capabilities, US executives are sowing a whirlwind. American political stability will not survive the turning of an American university degree into a worthless sheet of paper. Libertarians and free market ideologues who rejoice in freedom should open their eyes to freedom’s destruction.

PAUL CRAIG ROBERTS has held a number of academic appointments and has contributed to numerous scholarly publications. He served as Assistant Secretary of the Treasury in the Reagan administration. His graduate economics education was at the University of Virginia, the University of California at Berkeley, and Oxford University. He is coauthor of The Tyranny of Good Intentions. He can be reached at: paulcraigroberts@yahoo.com

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 09, 2016
Brian Foley
Interview With a Bernie Broad: We Need to Start Focusing on Positions and Stop Relying on Sexism
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
Vincent Emanuele
The Curse and Failure of Identity Politics
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
Patrick Cockburn
Oil Prices and ISIS Ruin Kurdish Dreams of Riches
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
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?
Dean Baker
Market Turmoil, the Fed and the Presidential Election
John Grant
Israel Moves to Check Its Artists
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
FacebookTwitterGoogle+RedditEmail