Outsourcing
Outsourcing of jobs has started out slowly, is rapidly advancing and soon will become a powerful force for precipitously reducing wages in the U.S. Pretty tough statement, isn't it? Paul Craig Roberts, a Senior Research Fellow at the conservative Hoover Institution puts the matter more bluntly:
"The United States is the first country in history to destroy the prospects and living standards of its labor force. It is amazing to watch freedom-loving libertarians and free-market economists serve as full time apologists for the dismantling of the ladders of upward mobility that made the America of old an opportunity society. America has begun a polarization into rich and poor. The resulting political instability and social strife will be terrible."
In his eyes, outsourcing is the main culprit. Not of unskilled jobs, but of highly skilled jobs. Here's what he finds in the Information Technology field:
"Information technology workers and computer software engineers have been especially heavily hit by offshore jobs outsourcing. During the past five years (Jan 01 - Jan 06), the information sector of the US economy lost 645,000 jobs or 17.4% of its work force. Computer systems design and related lost 116,000 jobs or 8.7% of its work force. Clearly, jobs outsourcing is not creating jobs in computer engineering and information technology. Indeed, jobs outsourcing is not even creating jobs in related fields."
According to his studies,
"All of the occupations with the largest projected employment growth (in terms of the number of jobs) over the next decade are in nontradable domestic services."
Offshoring
According to William Brittain-Catlin, who wrote the book Offshore, virtually all big multinational companies have set up companies in tax havens such as the Cayman Islands, Bermuda and other places. In the Caymans, companies need not have even an office there. Once registered for a fee, they can collect income from anywhere tax free.
One way of using tax havens to cheat the IRS is called transfer pricing, or the playing around with prices to achieve minimum total taxes. He offers a fictional example with an outfit like Apple Computer:
Apple Computer in Singapore manufactures a Macintosh. Apple Computer in the Caymans pays $200 for the machine and then sells it to Apple Computer in U.S. for $900. Apple Computer in U.S. sells the Macintosh to dealers in the states for $1000. The Macintosh itself is sent directly from Singapore to the eventual buyer in the U.S.
Here are the results:
Apple Computer (U.S.) makes $100 profit, which is taxed by U.S.
Apple Computer (Cayman) makes $700 profit, which is untaxed.
Pretty neat. No?
Racketeering
Both outsourcing and offshoring are forms of racketeering. In the first case, a businessman tells his workers, If you ask for a raise I'll outsource your job. In the second case, a huge corporation goes to the U.S. and says, If you tax me too much I'll go offshore. In both cases they are using a "gun" to enrich themselves.
Bush's response to business: I'm from the government and I'm here to help you. And he means it.
The rest of us who work for a living are in trouble. We must get rid of job outsourcing and capital offshoring if we hope to prosper.
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