The No-Think Nation

Paul Craig Roberts
July 12, 2005, 9:00 am

A+ | a-

Thought is not an
American forte. Consider the speed with which our
government got us trapped in two quagmires, Iraq and
Afghanistan.

The

CIA says that Bush`s invasion of Iraq has created
ideal conditions for training insurgents and terrorists.
The longer we are there, the worse it gets.

Our military is being
worn down by a gratuitous war of no benefit to anyone
except Osama bin Laden. Bush`s war has provided
substance for bin Laden`s propaganda and

radicalized the Middle East.

Bush`s war is being
financed by debt, and the result is to give

our foreign bankers more control over our interest
rates and

our currency`s value, should they choose to use the
power we have placed in their hands.

Not only has our
government demonstrated an inability to think before
rushing to war, it cannot think about the economy
either. Each month in the 21st century the government`s
own statistics tell the tale of the US winding down as a

superpower and devolving into a

third world country. Not a single net new high tech
or manufacturing job has been created for native-born
Americans in the 21st century.

Month after month this
devastating information is released and ignored.

Now comes a report
from Richard Freeman, professor of economics at Harvard
University and associate of the

National Bureau of Economic Research. Freeman`s
conclusions suggest that the US is not only losing its
lead in science and engineering but also might be

losing the professions themselves.

A country that
outsources its manufacturing and its R&D abroad doesn`t
have jobs for its own

engineers and scientists.

Corporations have
moved many information technology, high-tech
manufacturing, engineering, and research and development
jobs away from America to lower cost countries
principally in Asia. The result is declining
opportunities and salaries for American graduates in
science and engineering, which discourages students from
these curriculums.

As my

free market friends are

fond of saying, "the market works." It
certainly does. The market is working to close down the
great American middle class and to dismantle the ladders
of upward mobility. The US economy in the 21st century
has been able to create new jobs only in

nontradable domestic services. A labor market
orientated toward domestic services is the hallmark of a
third world economy.

The jobs problem is
more serious than the war problem and receives even less
attention. Economists misperceive the offshore
outsourcing of jobs as the beneficial workings of free
trade, a subject they have given scant thought for 200
years, being, as they are,

content with Ricardo`s

demonstration that comparative advantage ensures
mutual gains from trade.

America`s no-think
economists have yet to fathom that the offshore
outsourcing of jobs reflects the workings of absolute
advantage, not comparative advantage. When American
capital, technology and business know-how employ
foreigners in place of Americans, foreigners benefit and
Americans lose.

In the short-run the
corporations benefit. The lower labor costs raise
profits and executive bonuses. But the long-run effect
is to destroy the US consumer market for the goods and
services that the corporations supply from abroad.

American profits and
American employment no longer move in tandem. A recent
report in the New York Times by John Markoff and
Matt Richtel says

profits have rebounded in Silicon Valley but not
employment. They use the example of Wyse
Technology, a maker of computer terminals.

At the beginning of
this year, 90 percent of Wyse`s work force was in
Silicon Valley. At the present time the figure is 48
percent, with only 15 percent of its engineers remaining
in Silicon Valley. The reason?

Wyse has created
technology development teams in India and China, adding
100 employees in India and 35 in China so far this year.

America has a new
development model, one unprecedented in history. The
growth and prosperity of American corporations is now
keyed directly to the employment of foreign workers in
place of Americans.

It is impossible for a
country to prosper when its capital, technology, and
business knowledge are used to enhance the productivity
of foreign workers in place of its own. American incomes
are stagnating and falling. By abandoning American
employees, corporations are eroding the great American
consumer market and America`s position in the first
world.

Dr.
Roberts, [email
him] a former Associate Editor of the
Wall Street Journal and a
former Contributing Editor of National Review,
was Assistant Secretary of the Treasury during the
Reagan administration. He is
the author of

The Supply-Side Revolution
and, with Lawrence M. Stratton, of