Untitled Document
The US continues its descent into the Third World, but you would never know it
from news reports of the Bureau of Labor Statistics’ July payroll jobs release.
The media gives a bare bones jobs report that is misleading. The public heard
that 207,000 jobs were created in July. If not a reassuring figure, at least
it is not a disturbing one. On the surface things look to be pretty much OK.
It is when you look into the composition of these jobs that the concern arises.
Of the new jobs, 26,000 (about 13%) are tax-supported government jobs. That
leaves 181,000 private sector jobs. Of these private sector jobs, 177,000, or
98%, are in the domestic service sector.
Here is the breakdown of the major categories:
• 30,000 food servers and bar tenders;
• 28,000 health care and social assistance:
• 12,000 real estate;
• 6,000 credit intermediation;
• 8,000 transit and ground passenger transportation;
• 50,000 retail trade; and
• 8,000 wholesale trade.
(There were 7,000 construction jobs, most of which were filled by Mexicans
immigrants.)
Not a single one of these jobs produces a tradable good or service that can
be exported or serve as an import substitute to help reduce the massive and
growing US trade deficit. The US economy is employing people to sell
things, to move people around, and to serve them fast food and alcoholic beverages.
The items may have an American brand name, but they are mainly made off shore.
For example, 70% of Wal-Mart’s goods are made in China.
Where are the jobs for the 65,000 engineers the US graduates each year?
Where are the jobs for the physics, chemistry, and math majors? Who needs a
university degree to wait tables and serve drinks, to build houses, to work
as hospital orderlies, bus drivers, and sales clerks?
In the 21st century job growth in the US economy has consistently reflected
that of a Third World country--low productivity domestic services jobs. This
goes on month after month and no one catches on--least of all the economists
and the policymakers.
Economists assume that every high productivity, high paying job that is shipped
out of the country is a net gain for America. We are getting things cheaper,
they say. Perhaps, for a while, until the dollar goes. What the cheaper goods
argument overlooks are the reductions in the productivity and pay of employed
Americans and in the manufacturing, technical, and scientific capability of
the US economy.
What is the point of higher education when the job opportunities in the economy
do not require it?
These questions are too difficult for economists, politicians, and newscasters.
Instead, we hear that “last month the US economy created 207,000 jobs.”
Television has an inexhaustible supply of optimistic economists.
Last weekend CNN had John Rutledge (erroneously billed as the person who drafted
President Reagan’s economic program) explaining that the strength of the
US economy was “mom and pop businesses.” The college student with
whom I was watching the program broke out laughing.
What mom and pop businesses? Everything that used to be mom and pop businesses
has been replaced with chains and discount retailers. Auto parts stores are
chains, pharmacies are chains, restaurants are chains. Wal-Mart, Home Depot,
and Lowes, have destroyed hardware stores, clothing stores, appliance stores,
building supply stores, gardening shops, whatever--you name it.
Just try starting a small business today. Most gasoline station/convenience
stores seem to be the property of immigrant ethnic groups who acquired them
with the aid of a taxpayer-financed US government loan.
Today a mom and pop business is a cleaning service that employs Mexicans, a
pool service, a lawn service, or a limo service.
In recent years the US economy has been kept afloat by low interest rates.
The low interest rates have fueled a real estate boom. As housing prices rise,
people refinance their mortgages, take equity out of their homes and spend the
money, thus keeping the consumer economy going.
The massive American trade and budget deficits are covered by the willingness
of Asian countries, principally Japan and China, to hold US government bonds
and to continue to acquire ownership of America’s real assets in exchange
for their penetration of US markets.
This game will not go on forever. When it stops, what is left to drive the
US economy?