[ close ]


Bg1

Spread this message with Digg, Del.icio.us, Reddit, or Stumbleupon, and subscribe to the RSS Feed to track articles

Excerpts from Paul Craig Roberts “Losing the Economy to Mythology”

Published 07/16/07 Paul Craig Roberts - Print Article
E-mail - editor@economyincisis.org

Jobs offshoring is dismantling the ladders of upward mobility in the US, polarizing the population into rich and poor, and, thereby, worsening the income distribution.

Americans need to understand that it is jobs offshoring, not lower tax rates, that is worsening the income distribution. Because of the million dollar cap on tax-deductible executive pay, executive incomes depend primarily on performance-related bonuses. The multi-million dollar CEO pay checks are not salaries. They are bonuses for making or exceeding profit expectations by such practices as offshoring jobs and lowering production costs. We have created an incentive system in which a few corporate executives are amazingly well paid for destroying jobs and career opportunities for Americans. The more they can worsen income inequality by offshoring American jobs, the higher they are paid.

A real solution as opposed to a theoretical one will have to address the powerful incentive to offshore jobs. A solution will have to address the American preoccupation with short-term results. Quarterly reporting was a "reform," the purpose of which was to provide shareholders with up-to-date information that approximates the information of corporate insiders. In practice, quarterly reporting drives share prices and executive pay. Management and short-term shareholders can get rich from practices that shorten a corporation's life span, such as selling productive assets and reporting the proceeds as profit and replacing the domestic work force with foreigners.

Another remedy would be a return to tariff protection. However, many economists believe that the decimation of unprotected American industry and professional occupations is a small price to pay for lower consumer prices. These economists ignore that the US prospered under tariffs, as did the tax bases of cities and states.

Since imports include the offshored production of US corporations for US markets, the ability to sell in America the goods and services produced offshore would decline. Corporations would be forced to move the production of goods and services for US markets back to the US.

Economists cannot understand this straightforward analysis, because economists, like neoconservatives, are not reality-based. Economists are governed by the illusion that America's post World War II prosperity is based on free trade. It is not. America's post-war prosperity was based on the destruction of the economic capability of the rest of the world by World War II and communism/socialism.

America was prosperous in its trade, because no one else could produce anything.

COPYRIGHT 2007 CREATORS SYNDICATE INC.

Click here to contact your Representative in Congress.

Unless the above article is already copyrighted, this article is licensed under a Creative Commons Attribution-No Derivative Works 3.0 United States License, EIC grants permission to use this article in whole or in part provided attribution is given, preferably in the form of a link back to EconomyInCrisis.org.

MORE OF TODAY'S NEWS | Comment on this Article | Read Comments


Spread this message with Digg, Del.icio.us, Reddit, or Stumbleupon, and subscribe to the RSS Feed to track articles

Register for newsletter

Additional Recommended Articles


Comment on this article

Subject

Comment


Article Comments From Readers

guest says "Losing the dollar!" on 07/18/07
We desparately need to save our industries if possible, but first we must secure the dollar from its spiraling descent into worthlessness. It has sunk to a new all-time low of $1.38= 1 Euro and is at a 30+ year low against the British pound.
This website:

http://www.xe.com/ucc/
has currency converters updated to the second for those interested in following currencies.
Since the value of our dollar is based on the trust and faith of the U.S. government to repay loans, we must make our government accountable, fiscally responsible and balance the budget each year.
Currently the Iraq War witht he surge is now costing $12 billion per month of borrowed money.
How much more will be lent to the USA before investors bail? It would be nice to say "plenty" but I think that many are getting nervous and may cash in their chips early because they fear getting burned.
Remember how George Soros became a billionaire? hont: it had to do with currency trading at the expense of the Bank of England.
There's an important lesson the USA should take away from that incident. Especially since many multi- billionaires would not mind breaking the US economy if they could make several more billion in the process.
We should be wary of the merciless millionaires and robber baron billionaires who are much more market savvy and ruthless then the U.S. Treasury dept.

guest says "an excellent article!" on 07/17/07
Finally someone who makes sense. You need to take the next steps though.

To protect America, we should boycott China and block all Mexican goods. These countries have extremely damaging trade agreements with the USA. I'm sure they must laugh behind our backs and call us "trade fools" as we welcome their illegal workers, poison food and they block access to their markets for our goods.

We have no genuine need to trade with these alien nations.

We also need to return to the gold standard for the basis of our currency.

Thanks to the idiot president Richard Nixon the value of the dollar is now about 5-10% of what it was in 1970. $35 per ounce for Gold then. $600 per an ounce of gold now.
The dollar continues to spin out in an orbit further away from any real value. Soon it will be out by Peso Pluto and detached of any meaningful value.

Dollar devaluation is a form of inflation.
Folks, a strong dollar=a strong economy. A weak dollar=a weak economy. The continued devaluation of the dollar (37% loss against the Euro since Bush took office)means that any savings you have must grow faster than the devaluation rate in order to preserve any safty cushion.Otherwise, you're losing out.

In terms of taxes, the wealthy don't pay their fair share. They never have and never will. But other classes shouldn't have to pay anything either. The IRS should be abolished and people should be allowed to keep their earnings.
The story of our government, is that it wastes and squanders our current and future money every chance it gets. Instead of beneficial social programs, like the EU creates, our government wages needless wars in Korea, Vietnam, Grenada, Nicaragua, and now Iraq.Soon we'll throw away more money and lives in Iran only to inflame more terrorists, but boost Bush's ego.
Defunding is the last but necessary step that must be taken if the government contines to act in a financially irrresponsible manner.

guest says "Partial Misanalysis" on 07/16/07
Mr. Roberts,
Some of your points are well taken and certainly true....but with regard to taxes, you've fundamentally misunderstood the biggest part of the problem.
The million dollar tax cap is a nice delusion!
The wealthiest Americans actually pay the LEAST in taxes even though they owe the MOST.
They park their wealth overseas in the Cayman Islands and The Isle of Man. They use legal tax shelters such as trust funds and shell businesses to hide wealth and avoid paying their fair share for living in society. They employ armies of tax-savvy accountants to scrutinize the law and find loopholes (designed by tax lobbyists)to stash their cash.
They do not care about America or Americans. They are too wealthy in their $3000 sports box seats to be concerned with the little guy or the national welfare of the country. They can enjoy the luxury of believing they pulled themselves up by their own bootstraps while other Americans were stupid, lazy, or wasteful.
They forget that it is the infrastructure and hard work of working Americans and the laws of our nation that allowed them to succeed and profit so much.
Look at Bill Gates. Americans helped him grow his business into a billion dollar corporation and propelled him to billionaire status. Does he feel any obligation to the country that nurtured him? Obviously not. That's we he's moved Microsoft headquarters to Ireland where he can avoid paying American taxes. His reward to Americans not paying his fair share and to lobbying for cheap laborers (HB1 Visas) to further undercut Americans citizens.
The Bill and Melinda gates fund is an relatively inexpensive tool to defuse public fury while he continues to grow richer.
Look at Ken Lay. He took all the hard work and diligence of his Enron employees stole them blind and had no guilt or regrets. Folks let's remeber in court that he claimed no knowledge and no wrong doing of fiscal improprity even though he had been short selling stock!Now dead and his sentence repealed, his family will reap the stolen wealth as thousands of employees lost everything as their reward for hard work.
let's not forget that Bush appeared at his funeral and praised him as a good and godly man now at peace in heaven!
No. I'm sorry, but allowing the rich a free ride while everyone in the middle class picks up the tax burden for them and the illegal aliens is completely immoral. Its scarcely any different from the 18th c. aristocracy hogging 98% of the wealth for .001% of the population.
We need a 25 year retroactive tax to reclaim the stolen wealth from Americans.
There are now trillions owed to the public that were improperly seized through Bush tax cuts, off shoring of businesses, tax shelters and tax cheats at the top.
Thoseevaders who cannot or will not pay back what is owed to the public must serve life imprisonment or suffer the guillotine for destroying America.