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….and you can bet your ass that that is not going to change in our lifetimes!
All those jobs going overseas.
by Steve Love Wed Dec 29, 2010
("Companies are hiring – overseas" Dallas Morning News 12/29/2010)
Item #1: Caterpillar hires as many people overseas as it does in the U.S. Why? Because there is a massive building boom overseas that has a demand for the earthmoving machines Caterpillar makes. There is nothing in the U.S. comparable to the apartment, highway and railway construction going on in China.
Item #2: "There is a huge difference between what is good for American companies vs. what is good for the American economy," says Robert Scott, spokesman for the Economic Policy Institute. Why? The down-side of the dollar being the dominant international currency is that a dollar earned anywhere in the world is as valuable as one earned in the United States. So U.S. companies take their business to where they can make the most dollars and that is no longer in the United States.
Item #3: "Companies will go where there are fast-growing markets and big profits," says Jeffery Sachs, economist, Columbia University. Where are those fast-growing markets? Where the middle class is growing. Why there? Because that is where there is disposable income and high demand for consumer goods. And where is the middle class growing? "By 2015, the middle class in Asia will be as large as that in Europe and North America," the article goes on to say. This is the hand-writing on the wall that we need to be reading!
And about those "big profits?" Where are they? Certainly not where "Everyday low prices" is the gospel of business. Big profits do not take place where the margin between the fixed cost of an item and the selling price is constantly shrinking. Wal-Mart is profitable, not because it makes a reasonable profit on every item it sells but because it makes a minimal profit on massive numbers of items sold...a great model for a few mass-marketers but a formula for "little or no profits" for everyone else. Small businesses cannot operate on a Wal-Mart business model...as is clear across this country as hundreds of thousands of small business have tried to compete with Wal-Mart and failed.
Small businesses thrived in the post-WWII era precisely because there was a reasonable margin between fixed costs and price and, most importantly, there was a middle class being formed receiving wages high enough that a couple of dollar cheaper was not sufficient motivation to change buying habits...something we have not seen in the United States since wages began stagnating three decades ago.
Item #4: "China just became the world’s second-largest economy," says David Wyss, chief economist at Standard & Poor’s, who goes on to report that half of the S&P’s revenue now comes from overseas. Which is just another way to say that Wall Street does not just share Manhattan Island with the United Nations - it shares its place in the world as an international institution.
So, what do we know? Beginning in the late 20th Century, there appears to have been set in motion a process by which the U.S. economy has been made further and further irrelevant. The dollar is still the currency of the world however, when it comes to being the producers of goods the world wants to buy or being the creative center for innovations, no one is looking to the United States anymore. The days of an American-centric world economy are gone.
What passes for a domestic economy is one gigantic system designed to transfer what wealth the middle class still has, after three decades of stagnate wages and a lowering standard of living, to the moneyed elite: the 0.01% of the population who control the lion share of the nation’s wealth. And when that transfer is complete we will join the other banana republics of the world.
Or then, we shall become, as England became after all its colonies went their separate ways, a nation of shop-keepers, unless....unless we have the political leadership to challenge almost every element of what is accepted as economic common wisdom, and focuses like a laser on rebuilding the middle class by setting the nation on a course of nothing less than a complete reshaping of the American economy and modernization of its infrastructure.
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