Behind the job loss: the U.S. government's trade, tax, monetary, regulatory, and immigration policies are destroying America's future. They must be changed before it is too late

New American, The, June 25, 2007 by William F. Jasper

The accelerating exodus of American businesses and American jobs to China, Mexico, and dozens of other countries over the past two decades is unprecedented in our history. The devastating impact of this development on America's middle class has been amplified by the simultaneous influx of millions of illegal aliens who have taken the jobs of U.S. citizens.

For years we were told that these waves of "undocumented workers" were essential to our economy, that they were simply "doing jobs Americans wouldn't do"--mostly seasonal, minimum-wage (or sub-minimum-wage) farm labor. But the fact is that several million Mexicans who have come as "temporary" farm laborers have moved on from the fields to take permanent jobs in the construction trades, manufacturing, meatpacking, food processing, textiles, hotel and restaurant services--good-paying blue-collar jobs that were, until very recently, held by U.S. citizens.

More recently, these unskilled workers have been joined by several million skilled white-collar workers, from a wide variety of fields: computers, engineering, information technology, medicine, and many sciences and professions.

This dual threat, the offshore "out-sourcing" of American jobs and the concomitant "insourcing" of foreign workers (both skilled and unskilled), presents a far greater danger to America's future than the usual experts have been willing to admit. One exception has been economist-author-columnist Paul Craig Roberts. In 2003, Roberts, an assistant secretary of the Treasury in the Reagan administration, predicted that if jobs outsourcing and occupational destruction continued apace, America would be a Third World country within 20 years.

Many, if not most, other economists responded to these alarming trends and Dr. Roberts' dire prediction with amusement and derision. In February 2004, Gregory Mankiw, President Bush's chief economic adviser, created a firestorm by stating that sending millions of U.S. service jobs abroad "is probably a plus for the economy in the long run," because foreign workers can do the jobs more cheaply. "Outsourcing is just a new way of doing international trade," he said. Voters and displaced workers were upset, but economists--even Democratic economists, including former Clinton economic advisers like Janet Yellen, Robert Reich, Laura Tyson, and Brad DeLong--came to Mankiw's defense.

Outsourcing is merely a reflection of "globalization," they sniffed, a contemporary illustration of Adam Smith's classical trade principle of "comparative advantage." While "temporarily" painful, it will benefit all players in the long run, they insisted. Economist Daniel W. Drezner presented one of the most important expositions of this argument in the May/June 2004 issue of Foreign Affairs, the influential journal of the Council on Foreign Relations. In his essay, entitled "The Outsourcing Bogeyman," Drezner defended Mankiw's remarks and said:

   Should Americans be concerned about the economic effects of
   out-sourcing? Not particularly. Most of the numbers thrown around
   are vague, overhyped estimates. What hard data exist suggest that
   gross job losses due to offshore outsourcing have been minimal when
   compared to the size of the entire U.S. economy.

However, within a couple of years, some very sobering studies were showing Paul Craig Roberts' warnings to be anything but bogeyman rantings. In 2006, Alan S. Blinder, former vice chairman of the Federal Reserve, shocked people on both sides of the debate with his "crude guestimate" that the number of potentially offshorable U.S. jobs was in the neighborhood of 42-56 million, roughly 30-40 percent of all U.S. jobs!

In March of this year, Dr. Blinder announced a more detailed study that was slightly less ominous but still alarming: "I estimate that somewhere between 22 percent and 29 percent of all U.S. jobs are or will be potentially offshorable within a decade or two." He didn't say that 22-29 percent of American jobs would be sent offshore, but that that percentage potentially could be outsourced. Nevertheless, that level of potential, combined with the devastating trends of the past decade--with no let up or reversal in sight--points toward a very bleak future for America.

Will the twin threats of outsourcing and insourcing continue? Can nothing be done to halt these devastating trends? Fortunately, they are not the result of unavoidable "market forces," as the globalization advocates so frequently proclaim. If America's middle class dissolves and our nation declines to Third World status, it will be because we have allowed the destructive policies that are killing our economy to continue. America can and must regain its competitiveness and leadership, but it will do so only if we move rapidly and aggressively to reverse the policies that are destroying middle-class America.

Regulation

The U.S. economy, once a flourishing free-enterprise colossus, is now a dying Gulliver, thanks to thousands of strangling Lilliputian regulatory cords.