Sunday, September 30, 2007

Offshoring US Jobs: IBM Seeks Patents on the Processes

Not content with slashing it's American and European (i.e., middle class) workforce with a noticeable age-biased twist and moving all possible work to low wage Third World nations like India where IBM now has an immense and growing workforce doing work formerly performed by middle class Americans, IBM is seeking to patent the methodologies and processes for offshoring jobs -- planning to sell the use of these patented processes as services to other companies which will then eliminate even more American jobs and put more middle class Americans into the large pool of uncounted under-employed and unemployed.

While "IBM" is supposed to be shorthand for "International Business Machines", the job-killing "offshore outsourcing" employment practices of this one-time American company leads one to ask if IBM hasn't become "India Business Machines" with an implicit message of "no middle class Americans need apply"?

Here then is the informative item from slashdot (hat tip to kdawson and theodp along with" /." for the excellent story):


Posted by kdawson on Saturday September 29, @02:38PM

theodp writes

"IBM and other corporations are seeking patents for inventions covering the offshoring of US jobs. The USPTO is considering IBM's patent application for Outsourcing of Services, a 'method for identifying human-resource work content to outsource offshore of an organization' to 'countries where cheaper labor prices and/or cheaper materials are available.' Then there's Big Blue's Electronic Marketplace for Identifying, Assessing, Reserving and Engaging Knowledge-Workers for an Assignment Using Trade-Off Analysis, which provides a handy-dandy IBM calculator that drives home the point that you'll pay less for IGS India workers, whether onshore or offshore. And with its System and Method of Using Speech Recognition at Call Centers to Improve Their Efficiency and Customer Satisfaction, IBM describes how to operate in 'low cost foreign countries' with 'support people not having good English language skills, or having an accent that makes it difficult to understand them' by exploiting technology developed for students who are deaf or hard of hearing, as well as other accent reduction techniques."

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Wednesday, September 26, 2007

UAW Strike and the Jobs Issue

Sometimes, (quite often) I want to yell, "It's about jobs, stupid!"

Many politicians and journalists seem to live in a bubble where life is good for them and they have difficulty relating to the concerns of middle class Americans who live in fear of job loss to low wage workers outside the U.S. or imported into the U.S. on "guest worker" programs.

Confrontations like the UAW strike are actually a "reality check" for those of us who know something is wrong with the current economy but don't get alot of useful information from the mainstream media. The reality which with which most of us must contend breaks into the "pretend" world of the managed media.

Here's a terrific quote from the New York Sun describing what's really bubbling under the surface:

The GM dispute highlights the conflicting arguments about free trade that have until now rarely surfaced between presidential hopefuls. The strike will ensure that the Democratic candidates will face tough questions at tonight's debate in New Hampshire, televised on MSNBC, about what they would do to keep jobs in America.

Note: The article mentions how Hillary is supposedly taking positions in opposition to "free trade". I believe that this is fraudulent and meant to "cover over" her profitable, long-term support of corporations and the offshore outsourcing programs they demand.

Saturday, September 22, 2007

Buffalo News: Critics charge Sen. Clinton tied to Offshore Outsourcing U.S. Jobs

The "Buffalo News" in Buffalo, NY has a story today about Hillary Clinton's ties to Indian Job Outsoucing giant TATA/TCS. The headline of the story is "Critics tie Clinton to offshoring" ( subtitled, "Touted company’s promised local jobs never materialized") This follows on earlier stories in the LA Times and the Washinton Post.

Eye-catching quotes:

"She touted how she brought Tata to Buffalo – and in the meantime Tata is one of the biggest body shops in America,” bringing cheap foreign labor to this country while exporting other jobs to India, said John Bauman, founder of the Connecticut- based Organization for the Rights of American Workers."

"In its last fiscal year, nevertheless, Tata — which reported revenues of $4.1 billion — ranked as the top Indian exporter of software and services this year, according to the National Association of Software and Service Companies."

“What she did was really pretty dumb from an economic development point of view,” said Ron Hira, an assistant professor of public policy at Rochester Institute of Technology and the author of “Outsourcing America.” “Tata destroys a lot more American jobs than it created [in] Buffalo.”

The article fails to mention that Ron Hira, quoted above, is also with the Economic Policy Institute (EPI). Links to his writings and a video of him discussing the use of guest worker visas to replace American middle class workers appears on this blog site. See the links to the side noting that TATA/TCS uses imported Indian "guest workers" (rather than Americans) for its managerial, engineering and technical positions (what have historically been good, well paying middle class jobs) in the U.S. -- nearly 8,000 imported workers in 2006. TATA was #1 user of L-1 "guest workers" and #4 in H-1b in 2006.

Friday, September 21, 2007

US on a Path to Economic Armageddon

Reviewing Greenspan's book, economist Paul Craig Roberts writing at Counterpunch eviscerates Greenspan for his failure to grasp the realities of what offshore outsourcing has done and is doing to the U.S. economy. Roberts say that the "U.S. is on path to economic Armageddon" because of these practices. It's a meaty article but well worth a read. If you can't or won't read the entire piece, look at the last 9 paragraphs.

Here's a sampling -- just the last 3 paragraphs:

A country that offshores its own production is unable to balance its trade. Americans are able to consume more than they produce only because the dollar is the world reserve currency. However, the dollar's reserve currency status is eroded by the debts associated with continual trade and budget deficits.

The US is on a path to economic Armageddon. Shorn of industry, dependent on offshored manufactured goods and services, and deprived of the dollar as reserve currency, the US will become a third world country. Gomery notes that it would be very difficult-perhaps impossible-for the US to re-acquire the manufacturing capability that it gave away to other countries.

It is a mystery how a people, whose economic policy is turning them into a third world country with its university graduates working as waitresses, bartenders, and driving cabs, can regard themselves as a hegemonic power even as they build up war debts that are further undermining their ability to pay their import bills.

Blogging re. Hillary and Offshore Outsourcing Yesterday

Crossposts of "The Rich Get Richer, We Get Poorer" led to some good blogging yesterday over at The Daily Kos and Raising Kaine

I appreciated the commentary from Hugo here on TMP...

Also, I'm joining Technorati... Capisci?
Technorati Profile

Thursday, September 20, 2007

The Rich Get Richer, We Get Poorer

In my last post, I commented on EDS permanently whacking another 12,000 middle class American jobs (Offshoring jobs to low labor cost nations). Afterward, I wondered how much money the current CEO, Ronald Rittenmeyer is paid given that EDS is allegedly so concerned with cost cutting.

Well, in 2006, Rittenmeyer received a salary of $770,000 plus a bonus of $310,000. Salary and bonus for CEO Rittenmeyer in '06 was $1,080,000 -- over a MILLION dollars. But that's not all: there's this "Latest FY other long-term comp." item totaling over FOUR MILLION DOLLARS: $4,318,694. The real total 2006 compensation for the cost-cutting CEO of EDS is $5,399,527. Look at that number real hard. That reads FIVE MILLION, THREE HUNDRED, NINETY-NINE THOUSAND DOLLARS.

Of course in 2006, Rittenmeyer was just a peon at EDS, merely the "President/COO/Director" -- not the "CEO". The CEO of EDS in '06 was Michael H. Jordan who received total cash compensation from EDS of $13,639,711 and stock options of $11,007,630. (Total: $24,647,341)

So, look what Rittenmeyer has to look forward to: there's some real room for income growth between $5,399,527 and $13,639,711. Hmm... if Rittenmeyer replaces enough American workers with cheaper workers in India, he can make a good case for pushing close to that THIRTEEN MILLION DOLLAR figure. And don't forget the ELEVEN "MIL" in stock...

EDS plans to hire lower cost workers in, among other places, India to replace the expensive middle class American workers. This is a well known situation: American middle class jobs being destroyed and American middle class workers without comparable job opportunities. This is how "free trade" really works. Corporations eliminate jobs and job opportunities for Americans until Americans are willing to accept the same Third World wages that Indians and others in low labor cost nations are willing to accept. Supporters of "free trade" and unrestricted offshore outsourcing (like Sen. Hillary Clinton) have publicly dismissed this as merely the workings of "global competition".

I note the peculiar injustice and hypocrisy of CEOs like Ronald Rittenmeyer and politicians like Hillary Clinton acquiring tremendous wealth while millions of middle class Americans face an endless "Race to the Bottom" in wages and living standards. While most business leaders and many political leaders claim that free trade is good for America, I think the truth is that offshore outsourcing American jobs is good for them and bad for us.

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Wednesday, September 19, 2007

Remember, "Free Trade is Good for Americans"

EDS is whacking its U.S. workforce again...

Though, I wonder if EDS management ever stops axing its American workforce? (Answer: "Don't think so")

Look at the numbers below. Another 12,000 American middle class jobs are set to be permanently eliminated by EDS alone this year. This is on top of 5,000 American jobs cut in '03 and 20,000 cut in '04! Working with just these figures alone, that's 37,000 middle and upper middle income jobs permanently GONE in America

I wonder if all the people who thought free trade would be a "win-win" feel "punked"?
(Of course, I mean those people not in upper corporate management, working on Wall Street, insulated in political jobs or enjoying the fat rewards of high corporate dividends 'cuz the the company ditched it's "expensive" American workers and moved ops offshore...)

Remember, how our "leaders" told us back in the '90s that it's ok if the "dirty" factory jobs go to places like China and Mexico?? Americans, said the assorted business and political "leaders, will have cool "information age" jobs? That's what Bill Clinton and Newt Gingrich said around the time they rammed NAFTA through the Congress back in the early '90s...

Well, it sure worked out "different" didn't it? (Isn't it ironic that Hillary Clinton and ex-prez Bill are still claiming that free trade is "good" and we just need to better "compete" to keep jobs?? Well, that is called the "Race to the Bottom".

If we're gonna go that route -- cutting our incomes to keep the jobs from going to places like India -- I want Hillary Clinton to take a 25% per year cut in salary -- you know, so she is like competing with Indian politicians to keep her job. Seems fair to me. After all, Hillary wouldn't ask American workers to make any sacrifices she herself isn't willing to make, right
Maybe it's time for all of us to start thinking "different" and voting "different" -- you know vote for people "different" from the ones who support "free trade" and letting corporations "offshore outsource" all the middle class American jobs they want.

EDS Offers 11% of Work Force Early Retirement
[Note: That 11% figure refers only to the EDS American workers]

The outsourcing giant has been cutting jobs in the U.S. while hiring workers in lower-cost countries.

At an estimated cost of between $70 million to $130 million, outsourcing giant EDS said in a Sept. 12 Securities and Exchange Commission filing that it will offer early retirement packages to about 12,000 U.S. employees in the fourth quarter, or more than 11 percent of its 136,000 worldwide work force.

After receiving board authorization Sept. 6, the company announced the offer to its staff on Sept. 11. Employees have until Oct. 30 to accept or reject the offer.

Workers who opt for the early retirement will receive an additional $10,000 from the retirement plan, as well as extra credits to their retirement account, according to the filing.

This benefit is equal to five times the allotted annual funds made to their company retirement plan.

Officials were unable to nail down the exact price it would run them until they knew how many employees would accept the offer.

Second in revenue to only IBM among United States technology services companies, EDS, based in Plano, Texas, has cut costs over the last several years. The cuts have included the elimination of 5,000 jobs in 2003 and 20,000 in 2004.

Its current CEO, Ronald Rittenmeyer, took over on Sept. 1 and is said to be hiring workers in India to revive profit by replacing more-expensive U.S. employees. Rittenmeyer said he would be bringing its work force in low-cost countries, including India, Brazil and the Czech Republic, from 38,000 to 45,000 by the end of 2008.

EDS also offered 9,200 workers early retirement in 2004, an offer accepted by 1,500.

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Clinton Hypocrisy: Bill "Giving" Himself Undeserved Praise...

I'm reading this...

The Hypocrisy of Bill Clinton's New Book 'Giving'

Bill Clinton has written a new book about charity, a "fitting subject" for a president who betrayed the poor and led his party into the arms of corporate America.

Noteable Quote:
The misery sweeping across the American landscape may have begun with Ronald Reagan, but it was accelerated and codified by Bill Clinton. He sold out the poor and the working class. And Clinton did it deliberately to feed the pathological hunger he and his wife have for political power. It was the Clintons who led the Democratic Party to the corporate watering trough.

The Clintons argued that the party had to ditch labor unions, no longer a source of votes or power, as a political ally. Workers would vote Democratic anyway. They had no choice. It was better, the Clintons argued, to take corporate money and use government to service the needs of the corporations. By the 1990s, the Democratic Party, under Clinton’s leadership, had virtual fund-raising parity with the Republicans. In political terms, it was a success. In moral terms, it was a betrayal.

I'll add that while Bill Clinton is rightfully slammed for NAFTA, he also initiated the H-1b non-immigrant visa "guest worker" program with no "labor test" safeguards for American workers. This omission has permitted corporations to claim phantom labor shortages and import lower wage, more compliant foreign workers as replacements for middle class American workers. (There are obvious indicators of age discrimination here too; the imported replacement workers are mostly 20-somethings...)

H-1b has proven a highly effective tool for offshore outsourcing the very "information age" jobs which Clinton claimed Americans would fill in the wake of the loss of manufacturing and industrial job movement out of the U.S. due to NAFTA and future "free trade" agreements.

The fact that Bill Clinton makes regular free trade pilgrimages (junkets) to Davos where he continues to sing the praises of the corporate managed trade system (WTO) he helped ram through Congress is a source of endless disgust.

Bill Clinton's profitable relationship with corporations such Cisco which wholeheartedly embrace the offshore outsourcing paradigm is an indication of how little he cares about Americans who must work for a living.

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Tuesday, September 18, 2007

In Opposition to Hillary Clinton...

Hillary Clinton supports laws, regulations and trade agreements which subordinate the broad general good of all Americans and the long term interests of the United States to the whims of corporations controlled by monied elites. Hillary Clinton believes in the same radical corporate-managed trade and labor policies supported by the Bush Administration. These radical pro-corporate policies, established in law and government regulation, enable corporations to destroy good paying jobs for Americans undercutting the very idea of a broad middle class society.

Indeed, Hillary Clinton has displayed a pattern of studied indifference to the plight of working Americans while eagerly accepting corporate gifts, favors, and financial reward. From support for UN-FAIR trade agreements to promoting corporate "guest worker" programs used to replace American white-collar workers with imported lower-cost non-Americans, Senator Clinton well represents the corporate interests of the Offshore Outsourcing lobby in the U.S. Senate.

However, effective advocacy and unwavering support for the interests of corporations and slavish devotion to business lobbies are not popularly-accepted qualifications for election to the office of President of the United States. While it is convenient for some to confuse the short-term objective of winning elections with the principles necessary to govern for the broad general welfare of all Americans, self-serving political opportunism must be recognized for what it is.

Therefore, "The Modern Patriot" opposes the candidacy of Hillary Clinton for the office of President of the United States and urges others to closely examine the beliefs and conduct of Senator Clinton. True democrats do not support policies which destroy the livelihoods of American families and lead to deteriorating living standards for all except the wealthy and well-connected.

Cross-posted to Raising Kaine on 09/18 and the Daily Kos on 09/19.

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Friday, September 14, 2007

Hillary Clinton Supports Destruction of American Jobs, Takes Pay-Offs For Helping Outsourcers

Continuing on the theme of my previous posting re. Hillary Clinton's support for corporate programs to eliminate jobs for American workers, I read a comment by an angry Clinton constituent on Progressive Geek

The one-time Clinton supporter discussed Hillary's promise to work to improve the jobs situation in Upstate New York when she first ran for the U.S. Senate. Clinton has done just the opposite and cynically used the jobs issue for election but has no interest in helping American workers once in office.

Here's a brief part of the comment:

"Her entire career in upstate New York has been of a piece in a series of token gestures, creating 10 token window-dressing American jobs for Tata Consulting in Buffalo (what a great trade -- there are more than 10 Indian consultants right now just in my cubicle cluster in Albany!!). It's endemic up here, cheap token gestures like renaming empty streets leading to dead malls and empty office campuses "Computer Avenue" and "Silicon Way"; pointless PR campaigns "re-branding" upstate New York as "Tech Valley"; setting up a local non-union "Charter School" in technology with enrollments of 40 kids who probably spend more time being photographed with politicians than learning."

The comment came in response to a very important story of how the Clinton campaign was actively seeking the support of key U.S. and foreign "big money" in the Offshore Outsourcing business. The article referenced appeared in the LA Times, "Clinton woos the outsourcers feared by U.S. workers". This article is also well worth a read, essentially underscoring the tremendous reality lost in the much misunderstood Obama campaign claim that Hillary Clinton was essentially representing the interests of the Indian offshore outsourcing business elites.

Here's one fine quote from the article which gives some indication of how offshore outsourcing money is helping to power the Hillary Clinton campaign:

"Clinton is successfully wooing wealthy Indian Americans, many of them business leaders with close ties to their native country and an interest in protecting outsourcing laws and expanding access to worker visas. Her campaign has held three fundraisers in the Indian American community recently, one of which raised close to $3 million, its sponsor told an Indian news organization.

But in Buffalo, the fruits of the Tata deal have been hard to find. The company, which called the arrangement Clinton's "brainchild," says "about 10" employees work here. Tata says most of the new employees were hired from around Buffalo. It declines to say whether any of the new jobs are held by foreigners, who make up 90% of Tata's 10,000-employee workforce in the United States."

The quote from John Miano at the Programmer's Guild reminds me very much of the criticisms faced by Harris Miller in last year's Virginia Dem. primary:

"It's just two-faced," said John Miano, founder of the Programmers Guild, one of several high-tech worker organizations that have sprung up as outsourcing has expanded. "We see her undermining U.S. workers and helping the offshoring business, and then she comes back to the U.S. and says, 'I'm concerned about your pain.' "

TATA or TCS, the Indian Offshore Outsourcing and H-1b bodyshop mentioned in the article imports thousands of Indian guest workers into the US to facilitate offshore outsourcing of jobs to India or replace American workers in the U.S. with imported Indian workers also in the U.S. The key in both cases is the so-called "guest worker" programs (e.g., H-1b, L-1) supposedly created because of "shortages of American workers" (a widespread myth concocted at great effort and cost by outsourcing and anti-worker lobbies).

Hillary Clinton is all about LIES -- lies propping up bigger lies to help make the rich and powerful more rich and more powerful leading to the sort of sharply reduced living standards for the majority of Americans now increasingly in evidence all over the U.S.

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Thursday, September 13, 2007

Hillary CLinton's Offshoring Ties Face Scrutiny

It seems that contrary to Hillary Clinton's claim that there's nothing new to talk about re. her past, the Sept. 8 Washington Post has an interesting article, "Unions Press Clinton on Outsourcing Of U.S. Jobs", filled with information about Senator Clinton's ties to monied elites who profit from the elimination of American middle class jobs.

The Obama campaign's fumbled criticism of Hillary Clinton's ties to Indian outsourcing corporations (e.g., "Sen. Clinton, D-Punjab") and mainstream press failure to explore the facts, notwithstanding there's plenty of grist for the mill here.

Millions of middle and working class Americans want to know what the he!! an alleged "democrat" is doing allied with the people responsible for declining standards of living and rising inequities in America.

Assuredly, this is the conversation that Hillary Clinton does NOT want to have with American journalists and voters.

The reality is that Hillary likes the cash that comes from being the friend of business lobbies who wish to continue their middle class job-killing policies without government interference.

My suggestion to those interested in seeing whose interests Hillary is concerned with: follow the money. The money trail to Hillary leads back to corporate boardrooms and CEO mansions in the U.S. and offshore -- to people who have grown immensely rich while the lives of middle and working class Americans have deteriorated.

Isn't it interesting that Hillary Clinton is trying to downplay her offshore outsourcing lobbyist ties now? Voters in last November's elections put two outspoken critics of offshore outsourcing into the U.S. Senate: Jim Webb (Virginia) and Sherrod Brown (Ohio)

Perhaps Hillary realises that she has to get past democratic voters in states where her outsourcing lobby money may count less than it does in New York -- states like Virginia and Ohio. Democrats in these states have elected leaders diametrically opposed to the economic/jobs/labor policies that Hillary has joined Republicans in supporting during her time in the Senate.

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Monday, September 10, 2007

The Dying U.S. Economy...

Over the past four years, I've found economist/writer Paul Craig Roberts a sharp and insightful commentator and analyst on the topic of our economy generally and offshore outsourcing in particular. Here's PCR's latest. It would be nice if more elected politicians took note of economic reality instead of living in the fantasy world of "free trade"... We need more patriots like Sen. Jim Webb who understand that middle class Americans are under siege.

American Economy: R.I.P.

By Paul Craig Roberts

09/10/07 -- -- The US economy continues its slow death before our eyes, but economists, policymakers, and most of the public are blind to the tottering fabled land of opportunity.

In August jobs in goods-producing industries declined by 64,000. The US economy lost 4,000 jobs overall. The private sector created a mere 24,000 jobs, all of which could be attributed to the 24,100 new jobs for waitresses and bartenders, and the government sector lost 28,000 jobs.

In the 21st century the US economy has ceased to create jobs in export industries and in industries that compete with imports. US job growth has been confined to domestic services, principally to food services and drinking places (waitresses and bartenders), private education and health services (ambulatory health care and hospital orderlies), and construction (which now has tanked). The lack of job growth in higher productivity, higher paid occupations associated with the American middle and upper middle classes will eventually kill the US consumer market.

The unemployment rate held steady, but that is because 340,000 Americans unable to find jobs dropped out of the labor force in August. The US measures unemployment only among the active work force, which includes those seeking jobs. Those who are discouraged and have given up are not counted as unemployed.

With goods producing industries in long term decline as more and more production of US firms is moved offshore, the engineering professions are in decline. Managerial jobs are primarily confined to retail trade and financial services.

Franchises and chains have curtailed opportunities for independent family businesses, and the US government?s open borders policy denies unskilled jobs to the displaced members of the middle class.

When US companies offshore their production for US markets, the consequences for the US economy are highly detrimental. One consequence is that foreign labor is substituted for US labor, resulting in a shriveling of career opportunities and income growth in the US. Another is that US Gross Domestic Product is turned into imports. By turning US brand names into imports, offshoring has a double whammy on the US trade deficit. Simultaneously, imports rise by the amount of offshored production, and the supply of exportable manufactured goods declines by the same amount.

The US now has a trade deficit with every part of the world. In 2006 (the latest annual data), the US had a trade deficit totaling $838,271,000,000.

The US trade deficit with Europe was $142,538,000,000. With Canada the deficit was $75,085,000,000. With Latin America it was $112,579,000,000 (of which $67,303,000,000 was with Mexico). The deficit with Asia and Pacific was $409,765,000,000 (of which $233,087,000,000 was with China and $90,966,000,000 was with Japan). With the Middle East the deficit was $36,112,000,000, and with Africa the US trade deficit was $62,192,000,000.

Public worry for three decades about the US oil deficit has created a false impression among Americans that a self-sufficient America is impaired only by dependence on Middle East oil. The fact of the matter is that the total US deficit with OPEC, an organization that includes as many countries outside the Middle East as within it, is $106,260,000,000, or about one-eighth of the annual US trade deficit.

Moreover, the US gets most of its oil from outside the Middle East, and the US trade deficit reflects this fact. The US deficit with Nigeria, Mexico, and Venezuela is 3.3 times larger than the US trade deficit with the Middle East despite the fact that the US sells more to Venezuela and 18 times more to Mexico than it does to Saudi Arabia.

What is striking about US dependency on imports is that it is practically across the board. Americans are dependent on imports of foreign foods, feeds, and beverages in the amount of $8,975,000,000.

Americans are dependent on imports of foreign Industrial supplies and materials in the amount of $326,459,000,000--more than three times US dependency on OPEC.

Americans can no longer provide their own transportation. They are dependent on imports of automotive vehicles, parts, and engines in the amount of $149,499,000,000, or 1.5 times greater than the US dependency on OPEC.

In addition to the automobile dependency, Americans are 3.4 times more dependent on imports of manufactured consumer durable and nondurable goods than they are on OPEC. Americans no longer can produce their own clothes, shoes, or household appliances and have a trade deficit in consumer manufactured goods in the amount of $336,118,000,000.

The US "superpower" even has a deficit in capital goods, including machinery, electric generating machinery, machine tools, computers, and telecommunications equipment.

What does it mean that the US has a $800 billion trade deficit?

It means that Americans are consuming $800 billion more than they are producing.

How do Americans pay for it?

They pay for it by giving up ownership of existing assets--stocks, bonds, companies, real estate, commodities. America used to be a creditor nation. Now America is a debtor nation. Foreigners own $2.5 trillion more of American assets than Americans own of foreign assets. When foreigners acquire ownership of US assets, they also acquire ownership of the future income streams that the assets produce. More income shifts away from Americans.

How long can Americans consume more than they can produce?

American over-consumption can continue for as long as Americans can find ways to go deeper in personal debt in order to finance their consumption and for as long as the US dollar can remain the world reserve currency.

The 21st century has brought Americans (with the exception of CEOs, hedge fund managers and investment bankers) no growth in real median household income. Americans have increased their consumption by dropping their saving rate to the depression level of 1933 when there was massive unemployment and by spending their home equity and running up credit card bills. The ability of a population, severely impacted by the loss of good jobs to foreigners as a result of offshoring and H-1B work visas and by the bursting of the housing bubble, to continue to accumulate more personal debt is limited to say the least.

Foreigners accept US dollars in exchange for their real goods and services, because dollars can be used to settle every country?s international accounts. By running a trade deficit, the US insures the financing of its government budget deficit as the surplus dollars in foreign hands are invested in US Treasuries and other dollar-denominated assets.

The ability of the US dollar to retain its reserve currency status is eroding due to the continuous increases in US budget and trade deficits. Today the world is literally flooded with dollars. In attempts to reduce the rate at which they are accumulating dollars, foreign governments and investors are diversifying into other traded currencies. As a result, the dollar prices of the Euro, UK pound, Canadian dollar, Thai baht, and other currencies have been bid up. In the 21st century, the US dollar has declined about 33 percent against other currencies. The US dollar remains the reserve currency primarily due to habit and the lack of a clear alternative.

The data used in this article is freely available. It can be found at two official US government sites: and

The jobs data and the absence of growth in real income for most of the population are inconsistent with reports of US GDP and productivity growth. Economists take for granted that the work force is paid in keeping with its productivity. A rise in productivity thus translates into a rise in real incomes of workers. Yet, we have had years of reported strong productivity growth but stagnant or declining household incomes. And somehow the GDP is rising, but not the incomes of the work force.

Something is wrong here. Either the data indicating productivity and GDP growth are wrong or Karl Marx was right that capitalism works to concentrate income in the hands of the few capitalists. A case can be made for both explanations.

Recently an economist, Susan Houseman, discovered that the reliability of some US economics statistics has been impaired by offshoring. Houseman found that cost reductions achieved by US firms shifting production offshore are being miscounted as GDP growth in the US and that productivity gains achieved by US firms when they move design, research, and development offshore are showing up as increases in US productivity. Obviously, production and productivity that occur abroad are not part of the US domestic economy.

Houseman's discovery rated a Business Week cover story last June 18, but her important discovery seems already to have gone down the memory hole. The economics profession has over-committed itself to the "benefits" of offshoring, globalism, and the non-existent "New Economy." Houseman's discovery is too much of a threat to economists, human capital, corporate research grants, and free market ideology.

The media has likewise let the story go, because in the 1990s the Clinton administration and Congress overturned US policy in favor of a diverse and independent media and permitted a few mega-corporations to concentrate in their hands the ownership of the US media, which reports in keeping with corporate and government interests.

The case for Marx is that offshoring has boosted corporate earnings by lowering labor costs, thereby concentrating income growth in the hands of the owners and managers of capital. According to Forbes magazine, the top 20 earners among private equity and hedge fund managers are earning average yearly compensation of $657,500,000, with four actually earning more than $1 billion annually. The otherwise excessive $36,400,000 average annual pay of the 20 top earners among CEOs of publicly-held companies looks paltry by comparison. The careers and financial prospects of many Americans were destroyed to achieve these lofty earnings for the few.

Hubris prevents realization that Americans are losing their economic future along with their civil liberties and are on the verge of enserfment.

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