The United States is the only nation in the history of the world to have intentionally destroyed itself via intentional economic and governmental policy.
"How the Economy was Lost" should be much more renown than it is, especially for its noting what is happening now and predicting what certainly will happen in the near future. The book is divided (actually, nuanced) into two parts. The first part focuses on the actual actions of business and government using ample amounts of BLS, government, and independent statistics both on the US and abroad.
From Comparative Advantage to Absolute Advantage:
The second part focuses more on basic economic principles. A common principle (and today it's a myth) regarding outsourcing and offshoring, is the outdated 200 year old Comparative Advantage model by David Ricardo. Ricardo's comparative advantage does not apply today.
Dr. Paul Craig Roberts uses consistent data to back up his claims, and he repeats his points throughout the book to reinforce his assertions - because repeating on this issue must be done - the reason is that most policy makes and citizens are not listening. The few that do listen and understand, do not care.
There are 3 reasons (among many more) for the current and future decline of the US economy and standard of living according to Roberts: 1) Outsourcing & Offshoring which began and continues in manufacturing. 2) Outsourcing & Offshoring profession service jobs such as engineering because of high-speed internet technology. 3) H1-B visas (and other visas) which allow foreign workers to work in the US. Illegal workers are another form in insourcing.
Roberts asserts that in about 20 years the United States will be a 3rd World Econony. The reason, is because a third world economy is characterized by having the majority of its jobs as "non-tradable domestic service industry" jobs: waitresses, bartenders, cashiers, hospital orderlies, hotel room cleaners, supermarket shelf stockers, cab drivers, etc. Regardless of one's skills or education, these are the jobs most of the population will have. It's already happening now. As we know, these jobs pay low wages with little or no benefits. In the last 11 years non-tradable domestic service jobs has increased more than any other industry in the United States. The BLS provides monthly public reports when jobs are "created." Do you even wonder why the industry or types of jobs "created" are *never* mentioned? Because most of these jobs created are domestic service jobs.
THE "NO THINK" ECONOMISTS:
The term 'no think' economists coined by Roberts reiterates the pressure put on American economists to conform to the falsehoods, propaganda and outright lies of "free trade," without even studying the data that refute its alleged benefits. Aspiring economists know that to oppose free trade can greatly damage their career in business, government, and academia.
*There is a common line spouted for years on the news and financial TV channels, that for every job outsourced, 3 or 4 jobs are created inside the US. This, is statistically and factually false. The American media is composed of free trader shills, that are on the payroll of these institutions and "think tanks." (Think tanks are actually Advocacy Organizations.)
We already know manufacturing has been outsourced and off-shoring and it still continues but *After manufacturing and other industries are outsourced and offshored abroad, R & D and innovation follow these industries overseas. They don't stay in the US to be apart of the "new economy" of "innovation."
Roberts notes Marx stating that "religions is the opiate for the masses" and Roberts states that today "the media is opiate of the masses" (p. 190).
*With the advent if high-speed internet, professional service jobs are now being outsourced and offshored overseas. Engineers in the US are now witnessing this phenomenon.
The first section of "How the Economy was Lost" is composed of articles written by Roberts and then benefit of this is that you can read this book from front-to-back or in any order. The oldest article is 6 years old, and shows Dr Roberts has been stunningly prophetic. Most of the articles are dated 2008 to 2010.
H1-B Visas and the H1-B Lobby:
Large corporations such as GE, and business figures such as Bill Gates publicly testify before Congressional Committee advocating *unlimited* H1-B visas that allow foreign workers to legally work in the United States to replace American workers. The H1-B visa is tied to the employer/company. This gives the corporation the advantage in the power-balance in the employer - employee relationship, hence more company control over the foreign worker. It's a statistical fact that these foreign workers in the US on H1-B visas work for lower wages.
The Shortage Myth:
Many pundits and economists - who are paid by these very corporations and "think tanks" claim that there are not enough American workers to fill these position - this again, is a lie. And if it was true, if there was a shortage in certain industries of workers, why are their wages *declining* instead of rising? Roberts refers to this as the "Shortage Myth," and uses ample evidence to back up his claim. How often do you hear about H1-B visa in the mainstream media? Although there is a cap on the H1-B now, will it be raised in the future? This is ample pressure to do so.
One of the questions a reader should be been asking before he/she reads this book, and definitely after reading it is: why is the issue of non-tradable service job growth in the US not mentioned in the mainstream media? I believe that one, many politicians and economists are ignorant of it and two, there are those that know, who do no publicly admit it to the public.
So, where is the USA headed? Again (it's worth repeating), Roberts accurately describes a Third World Economy (for lack of a better word) as an economy that is primarily composted of "non-tradable domestic service jobs." Low wages, little or no benefits, in addition to these jobs not being able to be outsourced abroad. In America, what sector has had the most growth over the last decade? Non-tradable domestic service jobs.
For additional information on this please see 'a prophetic interview by Sir James Goldsmith'
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Top reviews from other countries
- Luc REYNAERTReviewed in the United Kingdom on March 3, 2011
The bulk of the US population are headed for Third World status
