The June jobs report from the Bureau of Labor Statistics should be the last straw for Barack Obama. Even Reuters had to admit the jobs situation is grim.
The number of jobs only increased by 18,000, a truly pathetic number. And the April and May figures were revised downward by 44,000. The BLS noted that since March, the number of unemployed persons has increased by 545,000. And these are the official figures. Anyone who understands unemployment statistics knows that Reagan changed the definition of unemployment to exclude a large number of people who have been unemployed for a long time.
Obama is either completely clueless with respect to unemployment or he is exactly the same as Republicans. I vote for both.
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Republicans and Democrats both want outsourcing regardless of their statements to the contrary. Republicans favor pure capitalism and outsourcing is merely one more facet of that philosophy. Democrats believe in unfettered immigration, whether from Mexico, Islamic countries, or via H-1B / L-1 visas; outsourcing is just one more way for liberals to give jobs to non-Americans.
Der Spiegel noted that as recently as the 1990s, Portugal was an important textile center. The USA also used to be a major producer of textiles. We allowed China to join the WTO in 2001, rapidly accelerating the world's manufacturing decline. Now Portugal's debt has been classified as junk. The jobs outsourced to China and India have had a very real effect on Europe and the USA.
The Council on Foreign Relations graphed unemployment since 1940, paying attention to the shape of the recovery. Until the recession in 1990-91, the shape of the recovery was V-shaped, i.e. job growth was sharp and strong. However, after 1991, all recoveries have had a U-shape, i.e. job growth was sluggish. Not coincidentally, imports from China first started exceeding our exports to China in 1985, in the middle of Reagan's reign of terror. The current recovery is projected to be the longest since 1940, but recent dismal job growth makes one question if we even have a recovery.
Capitalists and their sycophantic politicians continue to claim that we have always recovered from past recessions, so therefore we will recover from this one. I'm sure Roman politicians said pretty much the same thing after the various sacks of Rome -- e.g. in 410, 455, and 546 -- but the barbarians were still able to keep Europe in the Dark Ages for the next thousand years.
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In the process of moving to a dumpy apartment -- my house is being foreclosed because I cannot find a real job -- I used professional movers to move the really heavy stuff. They commented that my dressers were much heavier than the usual things they carry. That's because my American-made furniture is all more than 20 years old, before we outsourced our entire furniture industry to China and other foreign countries. Quality matters.
My house is listed for sale, even though it is almost certain to end in foreclosure. The carpetbaggers are out in force throughout the real estate business once again, even after we realized that we should hammer stakes into their hearts. My house was visited by one agent accompanied by some potential buyers, or so he said. He claimed that the buyers were very interested in making an offer. We were expecting an offer far below market value, par for the course, one which the bank would have to approve as a short sale. Instead he asked, in writing, to give him access to my personal information with my mortgage lender.
Now why in the world would he require this information? He could not possibly understand my financial situation as well as me, or my real estate predicament as well as my real estate agent, so he would not be able to assist me in the process. And, of course, we never heard from him after I refused to participate in his grift even though he told us that the buyers were absolutely, positively going to make an offer. The answer is clear: he is seeking new business in identity theft and fraud. This is the brave new world of the Tea Party: snake oil 2.0.
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Since the beginning of the USA to 1985, most goods were manufactured and consumed locally. General Motors used to control over 50% of the world market for automobiles. Then the auto industry was struck by two bolts of lightning, both based on expectations that the party would last forever. Today GM has less than 20% of the market.
The first bolt was the UAW's suicidal demands for control of the factory floor. Their demand that a specific class of employee only be required to perform a narrow range of tasks naturally led to that employee being unproductive when his skill was not needed.
The second bolt was Detroit management's arrogant view that it knew best what consumers needed and/or wanted. Management was absolutely clueless when gas prices rose and Japanese automakers made in-roads into the largest auto market in the world at that time.
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As Chrystia Freeland noted in Winners and losers in the Apple economy, most jobs in Apple are located overseas. In 2006, jobs directly related to the iPod involved nearly twice as many people outside the USA -- 13,920 in the USA and 27,250 abroad. And more than half of the jobs in the USA -- 7,789 -- went to retail and other low-paying job descriptions, e.g. office support staff and freight and distribution workers.
And that does not take into account Apple's propensity to treat its foreign workers like slaves (read here and here).
As Freeland correctly concluded, the high-tech industry will not create sufficient jobs in the USA to end America's job crisis.
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BBC News noted some depressing medical statistics. It noted that substandard surgical tools are quite common in the UK, with the London NHS board rejecting almost 20% of tools as unsafe for use. And it noted that two-thirds of the world's surgical instruments are made in the city of Sialkot in northern Pakistan.
Given the rapid increasing trend towards outsourcing in every aspect of our lives, look for substandard Pakistani surgical tools to be used in your next operation.
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Free trade treaties sound like a good idea the first time you hear them. What could be wrong with expanding trade between two friends? As usual, reality rears its ugly head into the discussion.
For 2010, the trade imbalance with Canada was 28,542.5 (in millions of dollars) for a ratio of 1.115. In 1985 those figures were 21,755.4 and 1.46.
For 2010, the trade imbalance with Mexico was 21,781.5 (in millions of dollars) for a ratio of 1.353. In 1985 those figures were 5,497.0 and 1.4.
In 2007, the year before the crash, for Canada the figures were 68,168.6 and 1.274, and for Mexico the figures were 74,795.8 and 1.55; normal trade was skewed by the crash. I will graph the data soon to show the complete trend, especially since the passage of NAFTA.
The Economic Policy Institute (EPI) noted that free trade treaties increase the trade imbalance between the USA and the other country. The Census data shows this to be often true. An increase in our trade imbalance is always accompanied by a loss of American jobs, or perhaps more correctly, they are outsourced to the other country.
Also, the other country's workers are often taken advantage of by unscrupulous capitalists, with the other country having an advantage because it does not pay attention to environmental concerns or workers' rights.
Jane Hamsher wrote in the Naked Capitalism blog that there is a loophole in the free trade treaty with South Korea which allows it to send us goods with up to 65% non-South-Korean content, as long as final assembly is done in South Korea. So 2/3 of South Korean products can actually be from China, Vietnam, Burma, or North Korea, all countries which have no respect for civilization in general. If you have trouble getting to sleep at night, you can read the text of the actual treaty. Compare the 65% figure with the 50% allowed by NAFTA and you see that each free trade treaty is worse than the one before it.
If free trade treaties gave favorable treatment to cooperatives formed by workers, then perhaps those treaties would be helping those workers. But no.
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As I wrote before, Libertarians and the Tea Party want to eliminate the Food and Drug Administration. Given the ever-increasing outsourcing of drugs and drug components, this would be a public health disaster.
The Times UK noted back in 2007 that AstraZeneca is planning to outsource all its drug manufacturing activities within ten years.
In 2007-8 Baxter found that its heparin was contaminated, causing deaths in some patients. Baxter, like most drug companies, uses chemical components manufactured in other countries; often the entire drug is manufactured overseas. Investigations revealed that the Changzhou SPL plant in China was never inspected by the FDA.
Most people have no idea how large of a percentage of drug components are manufactured in other countries like China and India. The world's largest drugmaker, Pfizer, outsources 17% of its active pharmaceutical ingredient production.
The FDA wants to outsource even more inspections of foreign plants, probably to the manufacturers themselves. Self-regulation worked really well for Wall Street, right?
Reading the FDA and GAO websites is educational.
The GAO noted that "Drugs manufactured in more than 100 countries were offered for entry into the United States in fiscal year 2009."
One of our local grocery stores, King Soopers, sells generic painkillers manufactured in India. Luckily, I can still shop at Walgreens where more of their goods are made in the USA, especially their generic painkillers.
The GAO also noted that the "FDA increased the number of foreign drug inspections it conducted from fiscal year 2007 to 2009, but still conducts relatively fewer foreign drug inspections each year than it conducts domestically."
And the Tea Party wants to make that even worse. Let's not throw the baby out with the bathwater.
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As I first alluded to in UPDATE: Chrystia Freeland and the Chinese Tea Party, we need to revise the corporate tax structure. We need to do this not to satisfy corporate America's insatiable greed, but to change the motivation of American corporations with respect to hiring locally.
The current corporate tax code must be eliminated, especially all of the custom tax breaks given to friends of Congress, aka earmarks. It must be replaced by a calculation based on the percentage of American workers employed in the states and territories and American content.
Each company's American percentage must be calculated, based on the percentage of employees in the USA and percentage of USA content (parts and raw materials). This will be the most difficult part: how do we compare employees and parts / components, given that outsourcing the latter results in fewer American jobs? Since we will take into account the sources for 100% of components and part, the actual assembly locations are irrelevant.
This way we can tax Walmart appropriately, with its largely Chinese-made goods being sold in stores manned by Americans.
There are a number of important loopholes which must be addressed. We want companies to sell American-made products, so we will give an exemption for foreign salespeople. This must be strictly controlled, as companies will try to cheat. However, it would be very easy for a company to manufacture components overseas and classify it as service, so service must not be included in the sales category exemption.
It would be best to repeal all free trade treaties and start over, but this is probably not realistic given the long and arduous process required to do so. Perhaps we could consider the workers of those other countries as being American workers, but assemblies and components would need to be counted separately to prevent Chinese and other foreign parts tainting the result.
All food and drug products must be labeled with content: assembly location, percentage of foreign components, and the names of the contributing foreign countries.
Two things should be obvious. First, the above scheme will favor small business, as their work force tends to be mostly American. Second, there would be no need to differentiate between foreign and domestic companies because the tax code would treat a foreign company importing its wares the same as an American company importing its goods manufactured in foreign lands.
To paraphrase Pogo: We have imported the enemy and he is now us.
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