U.S.A: The No-Think Nation.
By PAUL CRAIG ROBERTS
Thought is not an American forte. Consider the speed with which our
government got us trapped in two quagmires, Iraq and Afghanistan.
The CIA says that Bush's invasion of Iraq has created ideal
conditions for training insurgents and terrorists. The longer we are
there, the worse it gets.
Our military is being worn down by a gratuitous war of no benefit to
anyone except Osama bin Laden. Bush's war has provided substance for
bin Laden's propaganda and radicalized the Middle East.
Bush's war is being financed by debt, and the result is to give our
foreign bankers more control over our interest rates and our
currency's value, should they choose to use the power we have placed
in their hands.
Not only has our government demonstrated an inability to think before
rushing to war, it cannot think about the economy either.
Each month in the 21st century the government's own statistics tell
the tale of the US winding down as a superpower and devolving into a
third world country. Not a single net new high tech or manufacturing
job has been created for native-born Americans in the 21st century.
Month after month this devastating information is released and
Now comes a report from Richard Freeman, professor of economics at
Harvard University and associate of the National Bureau of Economic
Research. Freeman's conclusions suggest that the US is not only
losing its lead in science and engineering but also might be losing
the professions themselves.
A country that outsources its manufacturing and its R&D abroad
doesn't have jobs for its own engineers and scientists.
Corporations have moved many information technology, high-tech
manufacturing, engineering, and research and development jobs away
from America to lower cost countries principally in Asia. The result
is declining opportunities and salaries for American graduates in
science and engineering, which discourages students from these
As my free market friends are found of saying, "the market works." It
certainly does. The market is working to close down the great
American middle class and to dismantle the ladders of upward
The US economy in the 21st century has been able to create new jobs
only in nontradable domestic services. A labor market orientated
toward domestic services is the hallmark of a third world economy.
The jobs problem is more serious than the war problem and receives
even less attention. Economists misperceive the offshore outsourcing
of jobs as the beneficial workings of free trade, a subject they have
given scant thought for 200 years, being, as they are, content with
Ricardo's demonstration that comparative advantage ensures mutual
gains from trade.
America's no-think economists have yet to fathom that the offshore
outsourcing of jobs reflects the workings of absolute advantage, not
comparative advantage. When American capital, technology and business
know-how employ foreigners in place of Americans, foreigners benefit
and Americans lose.
In the short-run the corporations benefit. The lower labor costs
raise profits and executive bonuses. But the long-run effect is to
destroy the US consumer market for the goods and services that the
corporations supply from abroad.
American profits and American employment no longer move in tandem. A
recent report in the New York Times by John Markoff and Matt Richtel
says profits have rebounded in Silicon Valley but not employment.
They use the example of Wyse Technology, a maker of computer
At the beginning of this year, 90 percent of Wyse's work force was in
Silicon Valley. At the present time the figure is 48 percent, with
only 15 percent of its engineers remaining in Silicon Valley. The
Wyse has created technology development teams in India and China,
adding 100 employees in India and 35 in China so far this year.
America has a new development model, one unprecedented in history.
The growth and prosperity of American corporations is now keyed
directly to the employment of foreign workers in place of Americans.
It is impossible for a country to prosper when its capital,
technology, and business knowledge are used to enhance the
productivity of foreign workers in place of its own. American incomes
are stagnating and falling. By abandoning American employees,
corporations are eroding the great American consumer market and
America's position in the first world.
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: