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Title: Hegemony Lost: The American Economy is Destroying Itself
Source:
CounterPunch
URL Source: http://www.counterpunch.org/roberts08252005.html
Published: Aug 25, 2005
Author: Paul Craig Roberts
Post Date: 2005-08-31 16:39:56 by Kamala
Keywords: Destroying, Hegemony, American
Views: 51
Comments: 8
Hegemony Lost 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
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#1. To: Kamala, Red Jones, RickyJ, TommyMadArtist, Eoghan (#0)
Ooooops! 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. You mean it's not because we're special, "Yankee Ingenuity" and all that?
"There are only two things we should fight for. One is the defense of our homes and the other is the Bill of Rights. War for any other reason is simply a racket." – General Smedley Butler
Paul Craig Roberts is one of my fav authors. I rarely disagree with him. A related (excellent though lengthy) series is here as well The Coming Trade War by Henry C K Liu
(The Gospel of Jesus Christ is the only true good news)
Like hell it does. During my now-deceased career in telecom engineering, you could walk into any office, swing a dead cat over your head and hit a half dozen PM's upside their vacuous heads. These people brought new meaning to the word "clueless." Over seven years time, I was treated to scores of these idiots who would come to me with questions like "What's the difference between a T1 and a DS1?" and "Do we have to use seismic rated relay racks in the new Los Angeles site?"
"If you're not cynical, then you're not paying attention."
I can tell you why the American Economy is headed for trouble. Here is the list of the biggest problems we have. 1. Fiat Currency. Money that's backed by nothing, ala the Federal Reserve. 2. Government that is out of control in their spending, and even more out of control with their dispensing of foreign aid. 3. People like Alan Greenspan who can turn on and off the spigot of finance with a thought. 4. Out of control greed in the stock markets driving up the costs of everything, because shareholders demand more money, faster than ever before. 5. Outsourcing of American Jobs, and Technologies, turning third world nations, into first world competitors at third world prices. 6. Overall stupidity, and complacency on the part of the American Citizen who could give a shit less about anything so long as there are distractions such as TV, Booze, sex, drugs, music etc... 7. A lack of valuation of knowledge, and industrial skill. People just aren't being taught to be competent, as idiocy and mediocrity are rewarded. 8. A cradle to grave government who tells the citizenry not to worry, they'll take care of you from cradle to grave. Why bother trying to excel, or improve when you can skate by and have the government catch you when you fall? 9. A lack of monetary education. Nobody knows how to make money, save it, etc. People are lied to perpetually by the banking communities, as the rich take the money out of the system, out of the hands of the irresponsible few, and puts it into the hands of the so called responsible few. 10. Rampant taxation, and micromanagement by government agencies who do everything they can to thwart ideas, technologies, and the building of needed infrastructures, and refineries. That's the first 10 reasons I can think of why the American Economy is going straight to hell. Feel free to add to it.
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.
#2. To: Kamala, *unUsual Suspects* (#0)
#3. To: Kamala (#0)
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.
#4. To: Kamala, christine, OKCSubmariner, tom007, honway, all, *You Gotta Be Shitting Me* (#0)
 | So many morons, so few bullets. |
#5. To: TommyTheMadArtist (#4)
I'll add that when you have people as products of the conditions you list in 6-8 and something happens to cut off their distractions, you get New Orleans, post hurricane...
Snuggle Bear meets Mossberg... Balance is restored to the world...
#6. To: robin (#1)
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. This is about as "right on" as it gets, the unvarnished truth. PCR is also one of my favs and doubtless a thorn in the side of the PTB but "the people" are not listening ...
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.
#7. To: TommyTheMadArtist (#4)
When jobs are apportioned on the basis of skin tone, surname and gender, and not merit, decline is inevitable. It's been ongoing for a very long time.
... as idiocy and mediocrity are rewarded.
#8. To: Phaedrus (#6)
His articles appear less and less in the MSM and more and more on alternative websites. I have links of PCR from National Review, but they are old. Same for William R. Hawkins, another favorite of mine.
but "the people" are not listening ...
"There are only two things we should fight for. One is the defense of our homes and the other is the Bill of Rights. War for any other reason is simply a racket." – General Smedley Butler
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