Watching The
US Economy Crumble
By Paul Craig
Roberts
10 August, 2005
Counterpunch.org
The
US continues its descent into the Third World, but you would never know
it from news reports of the Bureau of Labor Statistics July payroll
jobs release.
The media gives
a bare bones jobs report that is misleading. The public heard that 207,000
jobs were created in July. If not a reassuring figure, at least it is
not a disturbing one. On the surface things look to be pretty much OK.
It is when you look into the composition of these jobs that the concern
arises.
Of the new jobs,
26,000 (about 13%) are tax-supported government jobs. That leaves 181,000
private sector jobs. Of these private sector jobs, 177,000, or 98%,
are in the domestic service sector.
Here is the breakdown
of the major categories:
30,000 food
servers and bar tenders;
28,000 health care and social assistance:
12,000 real estate;
6,000 credit intermediation;
8,000 transit and ground passenger transportation;
50,000 retail trade; and
8,000 wholesale trade.
(There were 7,000 construction jobs, most of which were filled by Mexicans
immigrants.)
Not a single one
of these jobs produces a tradable good or service that can be exported
or serve as an import substitute to help reduce the massive and growing
US trade deficit. The US economy is employing people to sell things,
to move people around, and to serve them fast food and alcoholic beverages.
The items may have an American brand name, but they are mainly made
off shore. For example, 70% of Wal-Marts goods are made in China.
Where are the jobs
for the 65,000 engineers the US graduates each year? Where are the jobs
for the physics, chemistry, and math majors? Who needs a university
degree to wait tables and serve drinks, to build houses, to work as
hospital orderlies, bus drivers, and sales clerks?
In the 21st century
job growth in the US economy has consistently reflected that of a Third
World country--low productivity domestic services jobs. This goes on
month after month and no one catches on--least of all the economists
and the policymakers.
Economists assume
that every high productivity, high paying job that is shipped out of
the country is a net gain for America. We are getting things cheaper,
they say. Perhaps, for a while, until the dollar goes. What the cheaper
goods argument overlooks are the reductions in the productivity and
pay of employed Americans and in the manufacturing, technical, and scientific
capability of the US economy.
What is the point
of higher education when the job opportunities in the economy do not
require it?
These questions
are too difficult for economists, politicians, and newscasters. Instead,
we hear that last month the US economy created 207,000 jobs.
Television has an
inexhaustible supply of optimistic economists.
Last weekend CNN
had John Rutledge (erroneously billed as the person who drafted President
Reagans economic program) explaining that the strength of the
US economy was mom and pop businesses. The college student
with whom I was watching the program broke out laughing.
What mom and pop
businesses? Everything that used to be mom and pop businesses has been
replaced with chains and discount retailers. Auto parts stores are chains,
pharmacies are chains, restaurants are chains. Wal-Mart, Home Depot,
and Lowes, have destroyed hardware stores, clothing stores, appliance
stores, building supply stores, gardening shops, whatever--you name
it.
Just try starting a small business today. Most gasoline station/convenience
stores seem to be the property of immigrant ethnic groups who acquired
them with the aid of a taxpayer-financed US government loan.
Today a mom and
pop business is a cleaning service that employs Mexicans, a pool service,
a lawn service, or a limo service.
In recent years
the US economy has been kept afloat by low interest rates. The low interest
rates have fueled a real estate boom. As housing prices rise, people
refinance their mortgages, take equity out of their homes and spend
the money, thus keeping the consumer economy going.
The massive American
trade and budget deficits are covered by the willingness of Asian countries,
principally Japan and China, to hold US government bonds and to continue
to acquire ownership of Americas real assets in exchange for their
penetration of US markets.
This game will not
go on forever. When it stops, what is left to drive the US economy?
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: [email protected]