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Thursday 4 February 2010

The real American crisis is the offshoring of US manufacturing, industrial, and professional service jobs such as software engineering and information technology. Jobs offshoring was initiated by Wall Street pressures on corporations for higher earnings and by performance-related bonuses becoming the main form of managerial compensation. Corporate executives increased profits and obtained bonuses by substituting cheaper foreign labor for US labor in the production of goods and services marketed in the US Jobs offshoring is destroying the ladders of upward mobility that made the US an opportunity society and eroding the value of a university education. For the first decade of the 21st century, the US economy has been able to create net new jobs only in domestic nontradable services, such as waitresses, bartenders, sales, health and social assistance and, prior to the real estate collapse, construction. These jobs are lower paid than the jobs were that have been offshored, and these jobs do not produce goods and services for export. Jobs offshoring has increased the US trade deficit, putting more pressure on the dollar’s role as reserve currency. When offshored goods and services return to the US, they add to imports, thus worsening the trade imbalance. The policy of jobs offshoring is insane. It is shifting US GDP growth to the offshored locations, such as China, thus halting growth in US consumer incomes. Paul Craig Roberts

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