Paul Craig Roberts
Wednesday, May 19, 2004

According to Dr. Charles W. McMillion, president of MBG Information Services, the latest trade report from the Census Bureau shows that the United States consumed $51.2 billion more goods than it produced in March. The trade deficit is running $1.65 billion per day. The first quarter trade deficit worsened by another 8 percent, and the deficit in manufacturing goods worsened by 10 percent.

Looking for U.S. trade muscle in the 82 individual items is even more discouraging. The United States has surpluses in only 28 (34 percent) of the 82 trade categories.

Twelve (43 percent) of these surplus categories consist of agricultural products, scrap metal, and pulp and waste paper.

The total U.S. first quarter trade surplus from the 28 surplus categories is $23.4 billion - a figure smaller than the U.S. first quarter deficit in vehicles, smaller than the quarter's deficit in crude oil, and smaller than the quarter's deficit in clothing plus ADP equipment and office machines.

During the 1980s, the U.S. trade deficit in goods and services rose and fell with the dollar. Since 1991, however, the U.S. deficit has worsened continuously and is now three times the peak deficit of the 1980s.

There is no prospect of trade closing the gap. Once only energy-dependent, the United States is now dependent on foreign countries for its clothes, shoes, electrical machinery, general industrial machinery, metal manufacturing, iron and steel mill products, vehicles, office machines, TVs and VCRs, and so on and on.

Apologists for the destruction of American industrial power said not to worry, "knowledge jobs" in the "new economy" would provide employment in the future, and exports of high-tech services would pay for our imported consumption of "old economy" manufactures. They were wrong. The outsourcing of knowledge jobs is proceeding even more rapidly than the outsourcing of manufacturing.

The last two years have seen startling declines in American higher education enrollments in electrical and computer engineering, as American youth looks to nontradable domestic services for employment stability.

The more the payroll jobs numbers show U.S. employment growth to be restricted to nontradable domestic services, and the more the Bureau of Labor Statistics restricts its forecasts of future occupational growth to nontradable domestic services, the more ideologues and hirelings of global corporations preach that Americans are benefiting from outsourcing.

On May 13, a Federal Reserve economist, a graphic designer and an economics writer teamed up to produce a chart in The New York Times. Supposedly, the graphically designed chart shows that as the U.S. economy loses its goods-producing jobs and export capability, it is moving from an outmoded muscle-power, manual-dexterity, routine work economy into a new age economy characterized by analytic reasoning, imagination, creativity and emotional intelligence.

The authors of this propagandistic chart do not realize the joke they have played on themselves. Their chart shows that the greatest job growth in the last decade was in "financial services sales," followed by "legal assistants," and "actors and directors." Is the United States going to balance its enormous trade deficit by exporting Hollywood's sex and violence, tort lawyers' lawsuits and U.S. financial products?

The chart's authors tout the "rise of employment for hair stylists and cosmetologists" as the future for American "imagination and creativity."

The cumulative evidence of the past several years is unambiguous: U.S. job growth is concentrated in low-pay, hands-on domestic services. It is not concentrated in tradable goods and services.

If the outsourcing of knowledge jobs continues at its current pace, the United States will soon have a deficit in services. The U.S. surplus in services peaked in 1997. From 1997-2003, U.S. exports of services increased by 19 percent. Imports of services grew by 49 percent, and the U.S. surplus in tradable services declined by 35 percent. Service imports have increased from 64 percent of U.S. service exports in 1997 to 81 percent in 2003. As the U.S. deficit in traded goods grows, the U.S. surplus in traded services shrinks. Will the ideologues ever see the writing on the wall?

Free-market reassurances that the United States is winning from free trade will come back to haunt those who so cavalierly ignore the facts, no less than the neocon promise of an Iraqi "cakewalk" to freedom and democracy is haunting the Bush administration. In the end, as the powerful Communist Party of the Soviet Union learned, reality, not ideological commitment, carries the day.

COPYRIGHT 2004 CREATORS SYNDICATE, INC.