A Sinking Ship Full Steam Ahead

2ShipsPassingInTheNight

Growth in GDP is no longer an accurate test of our domestic health. Given the predominance now of foreign owned industry in this country, benefits in terms of GDP are largely accruing to parent companies overseas. Tax cuts put money into consumer’s hands that is largely spent on goods that are either imported or produced in this country by a foreign owned company. This is why the faster GDP appears to grow, the greater the burgeoning trade deficit swells.

Trillions of dollars of foreign goods clog the docks of our port cities battling to find a home on American consumer shelves. In an ultimate symbol of irony, consider the dollars spent on imported Chinese produced flags and symbols of patriotism following the attacks on September 11th, 2001.

Productivity should also be subject to review. Popular opinion holds that American technological gains have had the unfortunate consequence of making our own manual skills obsolete.

Another opinion is that outsourcing has led to tremendous gains in this category. In reality, productivity gains are most significantly due to the transition from a vertically-integrated economy to a thinly veiled economy consisting mainly of assembly and retail. By purchasing foreign semi-finished components and performing final assembly in this country, it appears as though we are able to produce finished goods in a fraction of the erstwhile production time.

Lastly and most directly deceptive are the so-called jobs creation figures. Net job growth over the past three years has been limited to construction, financial activities, education and health services, restaurants and bars, membership associations & organizations, and government. These sectors created over 3 million jobs; of which health care, government, and restaurants and bars account for over 70 percent.

Over the same period, over 4 million jobs were lost in manufacturing, wholesale trade, retail, transportation & warehousing, utilities, information, and professional & business services. In a Bureau of Labor Statistics report forecasting job creation over the next 10 years, 7 of the top 10 new job creating categories require no college education. Furthermore, there is only sparse discussion as to who is holding these new jobs and how many work permits will be issued to foreign registered workers to fill them.

If jobs are to be some test of economic health, it is only fair to incorporate the nature, quality, and worker profile in the discussion. To do otherwise is misleading, irresponsible, and deceitful.

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