In the West
Junk Information And Junk Judgment Prevail
- The Western world and that part of the world that
partakes of Western explanations live in a fictional
world. We see this everywhere we look—in the alleged
machinations of Russia to elect Donald Trump president
of the US, in claims that Saddam Hussein and his
(nonexistent) weapons of mass destruction were a threat
to the United States (a mushroom cloud over American
cities), that Assad of Syria used chemical weapons
against his own people, that Iran has a nuclear weapons
program, that a few Saudi Arabians outwitted the
entirety of the US, EU, and Israeli intelligence
services and delivered the greatest humiliation to the
“world’s only superpower” in the history of mankind,
that Russia invaded Ukraine and could at any moment
invade the Baltics and Poland, that the US rate of
unemployment is 4.6%, that China’s trade surplus with
the US is due to Chinese currency manipulation, and so
on and on.
live in a scientific era of information, but what good
can come from faulty orchestrated information? As long
as fake news delivered by presstitutes serves powerful
private and governmental interests, how can we know the
truth about anything?
consider the claim found everywhere in US government and
US media statements that the massive US trade deficit
with China is the result of Chinese currency
manipulation, keeping the yuan underpriced relative to
the US dollar.
claim, which is widely accepted as truth even by
Russian writers on
is nonsense. China’s currency is pegged to the US
dollar. It moves with the dollar. China pegged its
currency to the US dollar in order to create confidence
in the Chinese currency. Over the past decade China has
adjusted the peg of its currency to the dollar and
permitted a rise in the value of the Chinese currency
from 8.1 yuan to 6.9 yuan to the US dollar. (The yuan
reached a strength of 6 to the dollar, but a rising
dollar was pulling up the yuan, causing China to widen
the float in order to avoid undue appreciation because
of the US dollar’s rise to other Asian and European
currencies.) How is a rising yuan “currency
manipulation”? Don’t expect an answer from the
presstitute financial media or the junk economists who
comprise the neoliberal economics profession.
The function of
the myth of Chinese currency manipulation is to hide
from view the fact that the massive US trade deficit
with China is due to US corporations offshoring their
production for US markets to China. When US corporations
bring goods and services produced offshore back to the
US for sale, they enter as imports, thus swelling the
trade deficit. The myth about currency manipulation
shifts the blame from US corporations to China, while in
fact it is the return of offshored production, such as
Apple computers, for sale to Americans that swells the
US trade deficit.
produce offshore because the much lower labor costs
result in higher profits, higher stock prices for
shareholders, and in performance bonuses for executives.
One of the main causes for the high Dow Jones averages
and the worsened income and wealth distribution in the
US is the offshoring of jobs. In 2016 the richest people
added $237 billion to their wealth, while the rise in
student loan, auto loan, and credit card debt combined
with stagnant or declining income left ordinary
Americans poorer. During the 21st century, household
indebtedness has risen from about 70% of GDP to about
80%. Personal income has not risen in keeping with
of jobs benefits only a small number of shareholders and
executives, and it imposes massive external costs on
American society. Former prosperous manufacturing states
are in long term depression. Median real family incomes
have fallen. Real estate values in abandoned
manufacturing areas have fallen. The tax base has
eroded. State and local government pension systems
cannot meet their obligations. The social safety net is
To get an
idea of the external costs that offshoring imposes on
the American population, go online and look at the
pictures of decrepit Detroit, formerly an industrial
powerhouse. Schools and libraries are abandoned. Public
buildings are abandoned. Factories are abandoned. Homes
are abandoned. Churches are abandoned.
Here is one 4
And it is not
only Detroit. In my book,
The Failure of
Laissez Faire Capitalism
(Clarity Press, 2013), I report the 2010 US Census data.
The population of Detroit, formerly America’s fourth
largest city, declined by 25 percent in the first decade
of the 21st century. Gary, Indiana, lost 22 percent of
its population. Flint, Michigan, lost 18 percent.
Cleveland, Ohio lost 17 percent. Pittsburg, Pennsylvania
lost 7 percent. South Bend lost 6 percent. Rochester,
New York, lost 4 percent. St. Louis, Missouri, lost 20
percent. these cities were once the home of American
manufacturing and industrial might.
telling the truth, the presstitute financial media and
the corrupt US economics profession have hidden the
massive social and external costs of jobs offshoring
under the totally false claim that offshoring is good
for the economy. In my book, I take to task corporate
shills such as Dartmouth’s Matthew Slaughter and
Harvard’s Michael Porter, who produced through
incompetence or complicity erroneous reports of the
great benefits to Americans of having their jobs given
to Chinese and American cities left in ruins.
history the US has suffered from public lies, but not
until the Clinton, George W. Bush, and Obama regimes did
lies become so ubiquitous that truth disappeared.
November jobs report. We were told that the unemployment
rate has fallen to 4.6% and that 178,000 new US jobs
were created in November. The recovery is on course,
etc. But what are the real facts?
unemployment rate does not include discouraged workers
who have been unable to find employment and have ceased
job hunting, which is expensive, exhausting and
demoralizing. In other words, unemployed people are
being pushed into the discouraged category faster than
they can find jobs. That is the explanation for the low
official unemployment rate. Moreover, this reported low
rate of unemployment is inconsistent with the declining
labor force participation rate. When jobs are available,
people enter the work force in order to take advantage
of the employment opportunities, and the labor force
participation rate rises.
by the financial presstitutes adds to the deception. We
are given the number of 178,000 new jobs in November.
And that is it. However, the data released by the Bureau
of Labor Statistics shows many problematic aspects of
the data. For example, only 9,000 of the claimed 178,000
jobs are full time jobs (defined as 35 hours or more per
week). October saw a loss of 103,000 full time jobs from
September, and September had 5,000 fewer full time jobs
than August. No one explains how an economy losing full
time jobs is in recovery.
distribution of the November new jobs is disturbing.
77,000 of the jobs went to those 55 and over. Only 4,000
jobs went to the household forming ages of 25-34.
status distribution of the jobs is also troubling. In
November there were 95,000 fewer employed married men
with spouse present and 74,000 fewer employed married
women with spouse present than in October. In October
there were 331,000 fewer married men and 87,000 fewer
married women employed than in September.
conclude from these large differences month to month
that the official statistics are not good, which might
well be the case. For example, as I have stressed in my
reports on the monthly payroll employment releases,
there is always a large number of new jobs for
waitresses and bartenders. Yet restaurant traffic has
declined for 9 consecutive months. Why do restaurants
hire more employees as traffic declines?
Williams (shadowstats.com) has informed us, the monthly
payroll jobs claims might consist entirely of add-ons
from estimates from a flawed birth/death model and
manipulations of seasonal adjustments. In other words,
the reported new jobs might only be statistical
also emphasizes that the claimed real GDP growth numbers
might be entirely the products of the under-measurement
of inflation. Some years ago the inflation measures were
“reformed” in order to cheat those on Social Security
out of cost-of-living adjustments. In place of a
weighted index that calculated the cost of a constant
standard of living, substitution was introduced. In the
reformed index, if the price of an item in the index
rises, a lower-priced item is substituted in its place,
thus negating the inflationary impact of the price rise.
Also, price rises are defined away as “quality
improvements.” Clearly, this is an index designed to
under report rising prices.
The bottom line
is that the recovery allegedly underway since June 2009
might be a statistical illusion produced by a flawed
measure of inflation.
Americans expect from the economy in 2017? First, some
perspective. The defeat of stagflation by President
Reagans supply-side policy gave the Clinton regime a
good economy. The improved US economy was not entirely a
good thing, because it masked the adverse consequences
of jobs offshoring that began in earnest after the
Soviet collapse in 1991.
collapse encouraged the change in attitude of the Indian
and Chinese governments toward foreign capital. Wall
Street and big box retailers such as Walmart forced the
relocation of much of US manufacturing to China, to be
followed after the rise of the high speed Internet by
offshoring professional skill jobs such as software
engineering to India. These relocations of US economic
activity to foreign locations hollowed out the US
economy and reduced the job opportunities for Americans.
The growth of
real median family income ceased. Without increases in
consumer spending to drive the economy, the Federal
Reserve substituted a growth in consumer debt for the
missing growth in real median family income. But the
growth of consumer debt is limited by the lack of growth
in consumer income. Thus, an economy dependent on debt
expansion is limited in its ability to expand. Unlike
the federal government, the American people cannot print
money with which to pay their bills.
those contending for political office, president-elect
Trump has fingered jobs offshoring as a blow to the
American people and the US economy. It remains to be
seen what he can do about it, as jobs offshoring serves
the interests of the global corporations and their
For many years
now the monthly payroll jobs reports show the US
descending into Third World status, with the vast bulk
of the claimed new jobs in lowly paid, non-tradeable
domestic services. The BLS 10-year job projections show
few new jobs that require a university degree. If high
value-added, high productivity middle class jobs cannot
be brought back to the US, the American economic future
is one of continuing decline into Third World status.
constraints on the consumer, a large share of corporate
profits has come from labor cost savings from jobs
offshoring. For corporations such as Apple, whose
products are almost entirely produced in Chinese
factories, there are no more profits to be secured from
jobs offshoring. To keep the profits flowing, Apple
plans to replace the inexpensive Chinese labor with
robots, which do not have to be paid any wage. What
better shows the disconnect between capital and labor
than to robotize Chinese factories in the face of an
excess supply of labor?
Samuelson’s economic textbook taught the fallacy of
composition, what is good for the individual might not
be good for the group. The Keynesian economists applied
this to savings. Saving is good for the individual, but
if aggregate saving exceeds investment, aggregate demand
falls, pulling down income, employment, and saving.
This is the
case with jobs offshoring. It can increase profits for
the firm, but in the aggregate it decreases aggregate
income of the population and limits sales growth. What
jobs offshoring does in this respect will be done in
spades by robotics.
When I read
economists and financial presstitutes glorifying the
cost savings of robotics, I wonder where their mind is
or if they have one. Robots don’t purchase housing, home
furnishings and appliances, cars, food, clothing,
vacations, entertainment. When robots have the jobs,
where do humans get the incomes with which to purchase
the products produced by robots?
question has extraordinary implications for property
rights and the social organization of society. Robotic
patents are not widely held. Therefore, in a robotized
world, income and wealth would be concentrated in the
hands of a relatively few people. As robotics increases
profits and reduces wages, economic inequality will
sharply increase. Indeed, would there be any income or
wealth at all? The only way humans could survive their
displacement by robots would be to again become
self-sufficient farmers with no monetary income to
purchase products made by robots. As few would be able
to purchase products made by robots, what would be the
source for income and wealth for the owners of robotics?
It is nonsense
that macroeconomic monetary and fiscal policies (such as
low interest rates and tax cuts) can maintain full
employment in the face of jobs offshoring and robotics.
I am convinced that if robotics is going to supplant
human labor, the patents will have to be socialized, and
income distributed on a relatively equal basis
So, can Trump
fix the economy in 2017?
There can be no
fix unless the ladders of upward mobility that made the
US an opportunity society can be put back in place. This
will require bringing home the offshored middle class
jobs or, assuming that new high value-added jobs could
somehow be created, preventing the new jobs from being
There is a way
to do this: Base the corporate tax rate on the
geographical location where corporations add value to
their product. If corporations add value domestically
with US labor, the tax rate would be low. If the value
is added abroad, the tax rate would be high. The tax
rate can be adjusted to offset the benefits of lower
progaganda about globalism and free trade, the US
economy was built on protection, and its strength was
the domestic market. US prosperity was never dependent
on exports. And as the US dollar is the world reserve
currency, the US doesn’t need exports in order to pay
for its imports. This is why the US can tolerate the
trade deficits caused by jobs offshoring.
Globalism is a
concoction by the neoliberal junk economists in
complicity with the big banks, Wall Street, and
multinational corporations. Globalism is a disguise for
the exploitation of the many in behalf of the few. The
alleged benefits of globalism were used to justify the
offshoring of jobs and to enrich corporate executives
It is the
domestic economy that is important, not the global
economy. The suffering population in flyover America
finally learned this lesson and elected Trump.
script “The Escape From Globalism?” He could lose the
fight. Globalism has been institutionalized. The large
corporations that have offshored their production for US
markets would oppose moves against jobs offshoring. So
would all their shills in the economics profession and
financial media. I don’t know the extent to which
globalism has taken root in people’s minds in Asia,
Africa, and South America, but in Europe—even some in
Putin’s Russia—people are brainwashed in the belief that
they can’t exit globalism without paying a large
example, the Greeks. For the sake of the balance sheets
of a handful of northern European (and perhaps US)
banks, the Greek and Portuguese peoples have been forced
into extreme austerity, resulting in such high
unemployment and plummeting living standards that women
have been forced into prostitution in order to survive.
This totally unnecessary outcome has occurred because
the Greek and Portuguese peoples and governments are so
brainwashed that they believe they cannot survive as
independent countries without globalism and the entry to
globalism provided by EU membership. In the UK 45% of
the population suffers from the same misconception.
the latest technique by which capitalism loots and
destroys. In the Western world it is the working and
middle classes that are looted of their jobs and
careers. In Asia, Africa, and Latin America
self-sufficient farming communities are looted of their
land and forced into monoculture as laborers who produce
an export crop. Countries formerly self-sufficient in
food become dependent on food imports, and their
currency, which carries that burden, is subject to
endless speculation and manipulation.
universal ignorance or bribes that compelled governments
everywhere to ransome their populations to globalism?
journalists, such as Chris Hedges, who have seen and
reported a lot, have concluded that the fate of the
world is in such few hands that act only in their narrow
self-interests that only revolution can correct the
imbalance between the interest of a handful of oligarchs
and the mass of humanity. Hedges’ position is not an
easy one with which to argue.
descending into the snakepit that is Washington, D.C.,
needs to remember what happened to President Jimmy
Carter. In fact, the best thing Trump can do for his
presidency is to go spend some time with Carter prior to
Carter was an
outsider, a principled person, and the Washington
establishment did not want him. They reduced his
effectiveness by framing up his budget director and
chief of staff. The same thing can happen to Trump,
assuming he is able to get his appointees confirmed by
the Senate, members of which are allied with the CIA
a similar experience in the Reagan adminisration. Reagan
had political experience as governor of California, the
largest state, but he was an outsider to the Republican
establishment, whose candidate for the presidential
nomination was George H.W. Bush.
Bush for the nomination, but was advised by Republicans,
who remembered the Goldwater wipeout when the
Rockefeller forces turned on Goldwater for not choosing
the defeated Rockefeller as his VP running mate, costing
Goldwater the election, to select Bush as VP. Otherwise,
Reagan would find himself, like Goldwater, running
against both the Democratic and Republican
term took place with George H.W. Bush’s main operative
as chief of staff of the White House. This confronted me
with problems as Assistant Secretary of the Treasury for
Economic Policy where I was the point man for Reagan’s
supply-side economic policy.
party establishments are more interested in controlling
the party than in doing well for the country. During
President Carter’s four years, the main concern of the
Democratic establishment was in regaining control of the
party from the forces that had sent an outsider to the
White House. During Reagan’s eight years, the main
concern of the Republican establishment was in regaining
control of the Republican party from Reaganites.
It is likely
that Trump will now experience in spades what presidents
Carter and Reagan experienced. The effort will be made
to force him into compromises and to neuter his agenda.
Ironically, this determined attack on Trump is being
aided by the leftwing, progressive forces that stand to
gain by Trump’s standing up for the working and middle
classes and for peace with Russia. Many of the liberal,
progressive, leftwing websites are already soliciting
donations in order to fight against Trump.
So, even when
we get a president who might try to represent the
interests of the American people, those who claim to
speak in behalf of the people join in the oligarchs’
attack on Trump. The left side of the spectrum seems
always, like the extreme rightwing side, to defer to
their hatreds: Trump is a billionaire = hatred. Trump
appointed an energy magnate = hatred. Trump appointed
two 3-star generals = warmonger and more hatred.
progressive, leftwing cannot get beyond their bogeymen.
Of course, they might be correct. However, as I have
emphasized, Trump has chosen mavericks who have gone
against the establishment. Moreover, these are strong
men, like Trump, which is what it takes to bring change
from above. The Exxon CEO wants energy deals, not war,
with Russia. Gen. Flynn is the one who exposed on TV
Obama’s use of ISIS to overthrow Syria against the
recommendation of the Defense Intelligence Agency. Gen.
Mattis is the one who challenged the effectiveness of
appointments are people who have challenged the
Establishment. The usual assortment of
establishment-approved appointees cannot bring change to
progressive, left-wing should be happy at the prospect
of a government on the outs with the Establishment.
Instead, the liberal, progressive, left has aligned with
the Establishment in opposition to Trump.
Every day I
receive a half dozen requests for donations to “help us
fight Donald Trump.” What are these people thinking? Why
do they want to fight someone that the entire US
political establishment opposes? What they should first
try is to gain Trump’s confidence and win him to their
agenda, as General Mattis did.
I cannot assure
you that Trump is not another fake like Obama. But it is
a mistake to begin with this assumption. Why write off
in advance the only person with the courage to put his
life on the line and take on the corrupt and evil
Why help the
Establshment defeat Trump? If Trump sells out Americans,
we can turn on him then, or we can decide whether Chris
Hedges is correct that only revolution can rectify the
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