Tags: More | Jobs | Hype

More Jobs Hype

Thursday, 12 May 2005 12:00 AM

Americans regard themselves as "the world's only superpower," but the pattern of American job growth in the 21st century is that of a Third World economy. The U.S. economy has ceased to create jobs in high-tech sectors and in export and import-competitive sectors. Offshore outsourcing of manufacturing and of engineering and professional services is dismantling the ladders of upward mobility that made the American Dream possible. Not only is the U.S. economy creating Third World jobs, according to analysis by Edwin S. Rubenstein (vdare.com, April 2, 2005), it is creating the jobs for Hispanic immigrants. Rubinstein examined job growth by ethnicity and found that Hispanics (13 percent of the workforce) are gaining 60 percent of the new service jobs.

Rubinstein's findings are consistent with the racial composition one observes on construction sites, in fast food restaurants, in waste services and among hospital orderlies.

Until recent years, American jobs had nothing to fear from low-wage foreign labor. Americans' high pay reflected their high productivity from working with the most capital and best technology.

The collapse of world socialism and the rise of the high-speed Internet forced Americans to compete head-to-head in the same global labor market with low wage foreign labor working with identical capital and technology. When U.S. and European corporations move their manufacturing, research and development offshore or contract with offshore producers to supply the products and services that they market, the jobs and associated incomes are also transferred abroad.

Americans and Europeans cannot compete in labor markets with Chinese, Indians and Eastern Europeans, because the cost of living in North America and Europe is so much higher. In addition, there is a vast excess supply of labor in China and India that overhangs the labor markets there and keeps wages low.

The claim by outsourcing's proponents that outsourcing creates new and better jobs for Americans is pure fantasy. This claim can find no support in job and income data. Moreover, the same incentive to outsource that is sending so many jobs abroad applies equally to any new replacement jobs.

The only American jobs that are safe are in domestic nontradable services that cannot be outsourced, and even in these domestic services, such as schoolteachers and nurses, foreign workers are being imported via work visa programs.

Outsourcing's proponents claim that it benefits corporations and their shareholders. This is true only in the short run. The substitution of foreign labor for American labor allows executives to reduce costs and increase profits, thus producing large bonuses for themselves and capital gains for shareholders. The long run effect, however, is to destroy the U.S. consumer market and to reduce U.S. corporations to a brand name with a sales force selling foreign made products to Americans employed in Third World jobs.

Offshore outsourcing is a new phenomenon that has received little attention from economists, who mistakenly view offshore outsourcing as just another manifestation of the beneficial workings of free trade and comparative advantage. In fact, offshore outsourcing is the flow of resources to absolute advantage. Economists have known for two centuries that absolute advantage does not produce mutual gains. Unlike the operation of comparative advantage, absolute advantage produces winners and losers.

China and India are winning. America is losing. It is as simple as that.

COPYRIGHT 2005 CREATORS SYNDICATE INC.

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Americans regard themselves as "the world's only superpower," but the pattern of American job growth in the 21st century is that of a Third World economy. The U.S. economy has ceased to create jobs in high-tech sectors and in export and import-competitive sectors. Offshore...
More,Jobs,Hype
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2005-00-12
Thursday, 12 May 2005 12:00 AM
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