Annual Fundraising Appeal

Here’s an important message to CounterPunch readers from Chris Hedges….

Hedges2

Chris Hedges calls CounterPunch “the most fearless, intellectually rigorous and important publication in the United States.” Who are we to argue? But the only way we can continue to “dissect the evils of empire” and the “psychosis of permanent war” is with your financial support. Please donate.

Day5

Yes, these are dire political times. Many who optimistically hoped for real change have spent nearly five years under the cold downpour of political reality. Here at CounterPunch we’ve always aimed to tell it like it is, without illusions or despair. That’s why so many of you have found a refuge at CounterPunch and made us your homepage. You tell us that you love CounterPunch because the quality of the writing you find here in the original articles we offer every day and because we never flinch under fire. We appreciate the support and are prepared for the fierce battles to come.

Unlike other outfits, we don’t hit you up for money every month … or even every quarter. We ask only once a year. But when we ask, we mean it.

CounterPunch’s website is supported almost entirely by subscribers to the print edition of our magazine. We aren’t on the receiving end of six-figure grants from big foundations. George Soros doesn’t have us on retainer. We don’t sell tickets on cruise liners. We don’t clog our site with deceptive corporate ads.

The continued existence of CounterPunch depends solely on the support and dedication of our readers. We know there are a lot of you. We get thousands of emails from you every day. Our website receives millions of hits and nearly 100,000 readers each day. And we don’t charge you a dime.

Please, use our brand new secure shopping cart to make a tax-deductible donation to CounterPunch today or purchase a subscription our monthly magazine and a gift sub for someone or one of our explosive  books, including the ground-breaking Killing Trayvons. Show a little affection for subversion: consider an automated monthly donation. (We accept checks, credit cards, PayPal and cold-hard cash….)

paypal-donate-21

To contribute by phone you can call Becky or Deva toll free at: 1-800-840-3683

Thank you for your support,

Jeffrey, Joshua, Becky, Deva, and Nathaniel

CounterPunch
 PO Box 228, Petrolia, CA 95558

Government is the Largest Employer The Fading American Economy

The Fading American Economy

by PAUL CRAIG ROBERTS


According to the Bureau of Labor Statistics, the US economy lost 98,000 private sector jobs in March, half of which were in manufacturing. Today 13,643,000 Americans are employed in manufacturing, of which 9,849,000 are production workers.

Government employs 22,387,000 Americans, 8,744,000 more than manufacturing. Even the category leisure and hospitality employs 13,682,000 Americans, slightly more than manufacturing. There are as many waitresses and bartenders as production workers.

Wholesale and retail trade employ 21,467,000 Americans. Professional and business services employ 18,036,000 Americans of which 8,368,000 are in administrative and waste services. Education and health services employ 18,699,000 Americans.

Financial activities employ 8,228,000 Americans. The information sector employs 3,010,000. Transportation and warehousing employ 4,532,000. Construction employs 7,338,000, and natural resources, mining and logging employ 751,000. Other services such as repair, laundry, and membership associations employ 5,516,000 Americans.

This is the portrait of the US economy according to the Bureau of Labor Statistics. It is an economy in which government is the largest employer. Manufacturing employment comprises just under 10% of total employment and about 12% of private sector employment. Everything else is services, and not particularly high level services.

Is this a portrait of a super economy?

To help answer the question, consider that US imports in 2007 were 17% of US GDP, according to the National Income and Product Account tables provided by the Bureau of Economic Affairs. In contrast, the BEA industry tables show that in 2006 (2007 data not yet available) US manufacturing comprised only 11.7% of US GDP.

If US imports actually exceed total US manufacturing output by 5% of GDP, it does not seem possible that the US can close its massive trade deficit. Even if every item manufactured in the US was exported, the US would still have a large trade deficit.

The NIPA and industry tables from which the percentages come are not calculated identically, and I do not know to what extent differences might exaggerate the differences between the percentages. However, it seems unlikely that mere calculation differences would account for US imports exceeding US manufacturing output.

If the US cannot close its trade deficit, it is unlikely that the US dollar can remain the world reserve currency. If the dollar were to lose the reserve currency role, the US government would not be able to finance its annual red ink budget by borrowing from foreigners, as the US saving rate is about zero, and the US would not be able to pay its import bill in its own currency. The rest of the world continues to hold depreciating US currency, because the dollar is the world reserve currency. The dollar is certainly not a good investment having declined dramatically against other traded currencies.

From March 2007 to March 2008 the US economy created 1.5 million new jobs (in services). Legal and illegal immigration and work visas for foreigners exceed US job creation.

During the current school year, 3.3 million high school students are expected to graduate. If we assume that half will go on to college, that leaves 1.6 million entering the work force. College enrollment in 2007 totaled 18 million. If we assume 20% graduate, that makes another 3.6 million job seekers for a total of 5.2 million. Clearly, immigration, work visas, and high school and college graduates exceed the 1.5 million jobs created by the economy. Unless retirements opened up enough jobs for graduates, the unemployment rate has to rise.

The US unemployment rate is creeping up, and according to John Williams, the official unemployment rate greatly understates the real rate of unemployment. Williams has followed the changes that government has made to the official indices over the years in order to spin a more politically palatable picture. Williams uses the original methodology prior to the decades of spin. The original way of measuring unemployment indicates the current rate of unemployment in the US to be 13%, much higher than the 5.1% official number.

Williams also calculates the CPI according to the same way it was officially calculated prior to the recent decades of spin. Williams estimates the current CPI at 12%, three times higher than the official 4% figure.

Williams reports that upward growth biases built into GDP modeling since the early 1980s "have rendered this important series nearly worthless as an indicator of economic activity." Williams estimates that US GDP growth has been in negative territory during almost all of the 21st century. The notion that the US is just now entering a recession is nonsense if we have in fact been in recession for most of the 21st century.

America’s post-World War II economic dominance was based on the destruction of other economies by war and socialism. It is a different world now, and Americans have given little thought to the economic challenges of the 21st century.

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: PaulCraigRoberts@yahoo.com