Wednesday, April 19, 2006

Harris Miller doesn't want you to read this...

OUTSOURCING is not beneficial to the long term interests of the United States, the U.S. economy or American workers.

Why has Harris Miller supported outsourcing as a well paid business lobbyist for more than 10 years?

Shouldn't we hold Harris Miller to account for his support of outsourcing and worker replacement programs? (Harris Miller is far more than "anti-union".)



This has been the profile of US employment growth for a number of years, along with some construction jobs filled by legal and illegal immigrants. It is the job profile of a third world economy.

From January 2001 to January 2006 the US economy lost 2.9 million manufacturing jobs. The promised replacement jobs--“new economy” high-tech knowledge jobs--have failed to materialize.

High-tech knowledge jobs are also being outsourced abroad. According to the Bureau of Labor Statistics, US employment of engineers and architects declined by 189,940 between November 2000 and November 2004 (latest data available).

Economist Alan Blinder estimates that as many as 56 million American jobs are susceptible to offshore outsourcing. That would be about half of the US work force.

Offshoring has contributed to the explosion of the US trade/current account deficit over the past decade to $800 billion annually and rising. The US has a trade deficit in manufactured products, including advanced technology products, of more than a half trillion dollars annually, a sum far larger than the oil import bill.

To cover the trade deficit, the US has to turn over to foreigners ownership of its accumulated wealth. This worsens the current account deficit as the income streams on the US based assets now accrue to foreigners.

Many economists pretend that the whopping US trade/current account deficit is evidence that the rest of the world has great confidence in America. They pretend that it is foreign investment in the US that causes the trade deficit, whereas the simple fact is that it is the US trade deficit that gives foreigners the dollars with which to purchase our existing assets.

Traditionally, a trade deficit might indicate that a country’s industries were not competitive against imports from abroad, resulting in a decline in the exchange value of the country’s currency. This would make foreign goods more expensive for that country and its goods cheaper for foreigners, thus restoring a balance.

This does not work for the US for three reasons:

(1) The US dollar is the world’s reserve currency. The dollar can be used to settle all international accounts. Therefore, there is a world demand for dollars. This demand absorbs what would be an excess supply for any other country running such large deficits.

(2) China pegs its currency to the dollar, thus preventing an adjustment in the price of the two countries goods and services. Other countries, such as Japan, intervene in currency markets by purchasing dollars in order to support the dollar and prevent its currency from rising in dollar value.

(3) Offshoring turns US production into imports. Much of the US trade deficit results from offshoring, not from traditional trade competition. The collapse of world socialism and the advent of the high speed Internet made cheap foreign labor available to US companies. US firms use foreign labor to produce offshore the goods and services that they market to Americans. For example, more than half of the large US trade deficit with China is comprised of goods and services produced by US companies in China for American markets.

How can the US reduce its trade deficit when it deprives itself of exports and fills itself with imports by offshoring its production of goods and services, and when the devaluation of the dollar is limited by the dollar’s reserve role and by other countries pegging their currency to the dollar or by intervening to support the dollar? Obviously, when balance returns to US trade, it will not come through traditional means.

One way balance can return is by the US oversupplying the world with dollars to the point at which the dollar is abandoned as the reserve currency.

Another way is through the limit placed on Americans’ ability to consume that results from replacing manufacturing and engineering jobs with waitress, bartender and hospital orderly jobs. A country that loses high value-added jobs and gains low value-added jobs is in danger of losing its prosperity. Offshoring raises corporate profits in the short-run at the expense of destroying the domestic consumer market in the long-run.

Most economists are confused about offshoring. They mistakenly think offshoring is an example of free trade bringing mutual benefit through the principle of comparative advantage. It is not. Offshoring is an example of companies obtaining absolute advantage by combining high-tech capital with low-cost labor. The gains from absolute advantage are asymmetrical or one-sided. The cheap labor country gains, and the expensive labor country loses.

As Morgan Stanley economist Stephen Roach pointed out on April 7, “average hourly compensation of Chinese manufacturing workers is only 3-4 per cent of levels in the US, 10% of the pay rate of Asia’s newly industrialized economies, and 25 per cent of levels in Mexico and Brazil.” Roach also notes that with a rural population of 745 million (about two and one-half times the total US population) and headcount reductions of more than 60 million workers from state-owned enterprises, China will not experience a labor shortage any time soon.

This means that it will be a long time before Chinese wages rise enough to offset the benefits of offshoring. The same can be said about India. Consequently, a large percentage of US jobs is vulnerable to being moved abroad.

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

3 Comments:

Blogger Stomp Allen said...

I think Miller thinks that he's smarter than most people, and that if just SAYS that offshoring and outsourcing is "global economy" that CREATES jobs in the US that people will believe him.
What a crock.
Your analysis is right on.

Wed Apr 19, 09:22:00 AM GMT-5  
Blogger Jonathan Mark said...

Hi info guy:

I have an attack 8th District Rep. Jim Moran website called GoodbyeJim.com . I link to your superb stuff often. As you may

know, Moran and Harris Miller are joined at the hip. Miller and his college-age dependent daughter has have given Moran

$11,500.

Moran was a major supporter of increasing the H-1B cap to 60,000 a few years ago, and Moran also attacked a Dem compromise

on the grounds that the compromiser was not a supporter of what Moran called "immigration for purposes of employment."

Moran whipped CAFTA for the Republicans even though Moran is nominally a Dem. Singapore L-1 visas, whatever, Jim Moran is

there to send our jobs abroad or bring people from abroad over to do our jobs.

Miller and Moran are a hydra. But Miller is more vulnerable now. So focus on him and then bash Moran for doing what the

defeated failure candidate Miller did on jobs. Go after stooge jobs-quisling Moran/Miller supporter Del. Mark Sickles as

well.

I am a computer programmer and work in a cube. Have for 15 years almost. Am not a member of the Communications Workers of

America but could join. I don't want to organize my workplace though. No one here would be interested.

Rather I want to bash Miller and Moran. They are sellouts.

Let's join forces. Could we do a joint demo sometime? We should have an informational flyer that compares Miller to Webb.

It should mention the 60,000/year H-1B legislation a few years ago and quote Moran's complaint that someone was not a

supporter of "immigration for purposes of employment." I will get you the exact quote.

Maybe we could hit a place that has a lot of tech workers in the 8th. Parts of Reston? Ballston? I would prefer to hit the

8th in order to maximize collateral damage to Moran, even though our target would be Miller.

First destroy Miller. Make employment the issue. Then use that issue against Miller's sellout friends Jim Moran, Del. Mark

Sickles and others.

If you are interested please email me at jonathansamuel@yahoo.com .

Jonathan Mark
Webmaster
GoodbyeJim.com (which, incidentally, I code myself using Zope. I am moving on from Zope/Python, however. Boo/Mono is the

wave of the future.)

Wed Apr 19, 12:35:00 PM GMT-5  
Blogger Info_Tech_Guy said...

In my parts, Miller is what some would call a "slicky-boy" -- basically, what you said, stomp allen.

I think that Miller has done his best to misrepresent himself and his past. He keeps grabbing onto the same old tired phrases that he and his outsourcing allies have used for years.

The difference is now he's trying to hide from the American public. It isn't going to work. We know from our own financial condition and that of our friends and neighbors that outsourcing has hurt our communities. The lies that Miller told to alot of Washington insiders aren't going to pass muster in front of the electorate. That's why he wants to shift the focus to other things like "job creation" (haha).

Miller suggests spending (how much?) to put in a broadband network that will supposedly attract jobs to Virginia. What the heck does this have to do with the massive job loss of industrial and "knowledge" jobs that he helped facilitate? Nothing.

Yet, Miller has actually claimed that American IT jobs were offshored b/c some countries such as India have broadband networks! As an engineer who has witnessed outsourcing in IT, I can tell you our IT job losses have NOTHING to do with any superior broadband networks in India except that this modern communication system made it easier to dump American workers and move jobs and work offshore.
The reason why the jobs left is because American companies can hire engineers in places like India and China for about $7-10,000 a year!!

Miller does not want to talk about how American wages will fall to match the Third World making us more "competitive" for MNC business. He does not want his past as an outsourcing lobbyist to become the subject for discussion. And, most of all, he is not interested in discussing the politically created "free trade" and outsourcing paradigm in the context of what is WRONG with our economy -- what is unfair in our economy.

Wed Apr 19, 12:52:00 PM GMT-5  

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