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Monday 24 September 2012

Paradoxically, the collapse of the Soviet Union is one of the two developments (the other being the rise of the high speed Internet) that wrecked the US economy. When the Soviet Union collapsed, the American neoconservatives spoke of “the end of history,” by which they meant that American capitalism was the only viable socio-economic system. The Soviet collapse caused the communists in China and socialists in India to rethink their approaches and to get on the winning side. These two Asian giants opened their vast under-utilized labor forces to western capital. The era of jobs offshoring began. US corporations, pressed by Wall Street for higher profits, by large retailers such as WalMart, and by the cap that Congress placed on executive pay that is not performance based, moved the production of goods for US markets offshore where labor costs were a small fraction of US wages. This development caused profits to rise, but separated American consumers from the incomes associated with the goods and services that they consume. The same happened to professional service jobs, such as software engineering, Information Technology, and research and design. The ladders for upward mobility for Americans were dismantled. Wages and employment fell, medical benefits were lost, and careers disappeared. Paul Craig Roberts

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