[jeffkrol]

America R.I.P. | Foreign Policy Journal

The cause of all of the problems is the offshoring of Americans’ jobs. When jobs are moved offshore, consumers’ careers and incomes, and the GDP and payroll and income tax base associated with those jobs, go with them. When the goods and services produced for American markets by offshored labor are brought into the US to be sold, the trade deficit rises, and downward pressure is put on the dollar, pushing up domestic inflation. (On October 12, statistician John Williams (shadowstats.com) reported that “third-quarter wholesale inflation jumped to an annualized 6.2%.”)

Jobs offshoring is driven by Wall Street, “shareholder advocates,” the threat of takeovers, and by large retailers, such as Walmart. By cutting labor costs, profits go up.

It is that simple. However, as a result of sending American jobs to cheap labor countries, US consumer incomes go down. The end result is to destroy the domestic consumer market. What would have been US consumer income growth becomes instead profit growth for US corporations.

Keynesian economists use in their textbooks the example of how the aggregate effect of individual saving could be the opposite of the effect intended by the individuals. Whereas each saver seeks to improve his position by building wealth, in the aggregate saving could exceed investment, resulting in a decline in aggregate demand and a fall in income for all. Offshoring has the same logic. Each corporation can expect to gain more profits from moving US jobs offshore, but the aggregate effect is a fall in American consumer incomes and a reduction in the American consumer market.

I have told this story many times. But policymakers, the media, and economists seem unable to connect the dots.

Jobs offshoring has substantial implications for Social Security and Medicare. The US has the least adequate social safety net of any developed country. The two major components of the US social safety net are Social Security and Medicare for the elderly. Social Security and Medicare are financed by a payroll tax. The combined tax is 15.3% of payrolls. For the past quarter of a century the Social Security portion of the payroll tax has built up a surplus of over $2 trillion. Recently, the Medicare portion began running in the red.

Right-wing Republicans, free market ideologues, and the left-wing have all indoctrinated themselves with incorrect beliefs about Social Security and Medicare. The right-wing claims that a safety net financed with 15.3% of payrolls is a “Ponzi scheme” and an “unfunded liability.” If that is the case, then so are veterans benefits, military pensions, and federal pensions, all of which are financed by the income tax, the basis for the payroll tax.

So again.. you have bad (due to misunderstanding which can be corrected) vs Romney/Ryan extremely worse (ideology which is un budge-able)

The right-wing ideologues who try to scare old age security out of existence go on and on about rising medical costs, about an aging population living longer, declining birthrates and a worsening ratio of workers to retirees, about people learning to rely on handouts rather than their own means, and about Washington’s rising unfunded liabilities.

None of these promises or predictions were true. Nowhere in the government’s jobs statistics are there any of these promised replacement jobs. The economists who provided cover for the destruction of the US economy were rewarded by the corporations with speaking fees, grants for their university departments, and newspaper columns paid for by corporate advertisers. Those few who told the truth were expelled from the corporate media that Bill and Hillary Clinton allowed to be monopolized (for campaign contributions, of course).

The future of old age security in the United States has been lost, because the job base has been given away to foreigners in order to maximize incomes in the short-run for the few decision-makers.

The misrepresentation of jobs offshoring as free trade has destroyed the prospects of cities, counties, and states along with those of unions and millions of Americans who once had a secure future. It has destroyed the prospects of class after class of university graduates burdened with student loans who expected to step into the jobs that have been offshored or filled by H-1B visa holders from abroad.

The American work force has been forsaken by the corporations and by Washington, and this means that Social Security and Medicare have also been forsaken.

As I predicted in the early years of this new century, “the United States will be a third world country in 20 years.” We might get there even sooner as Washington exhausts what little is left of American wealth in gratuitous wars in service to Israel and the US Military/Security Complex, in unaffordable military buildups in futile hopes of establishing hegemony over China and Russia, and in negative interest rates from the Federal Reserve’s effort to drive up the book value of debt instruments on the balance sheets of financial institutions.

[bmor]

The is a clear statement of the problems we face here in the US, don't know how we can find soloutions.