Trickle Down Outsourcing - A Brave New World

Todd Smyth 

02/26/04: (ICH) Trickle-Down economics just isn't what it used to be. That $ trillion Bush pumped into the economy last year is trickling overseas. With cheap foreign labor, a new US tax code, trade policies and modern technology all encouraging US companies to expand overseas, why would US companies create jobs in the US? The trick to Trickle-Down economics is the jobs need to be created in the same country the tax cuts come from. Ooops! 

The premise of Trickle-Down or Supply-Side economics is to stimulate the economy with large tax cuts for the wealthy. That money hopefully is invested in a way that creates economic growth. That translates into increased productivity, profits and jobs. It sounds good and to some extent, it use to really work. However, something got terribly misunderestimated this time. 

The technology boom that occurred during the Clinton administration namely mobile computing, Internet, satellite and broad-band communications, laid the foundation that has made it possible to ship so many jobs overseas, where labor is cheap. Our declining public education system and lack of graduating engineers and scientists hasn’t helped. A new fifteen thousand page tax code with loopholes galore hasn’t helped. Weak trade policies that are casually enforced are no great help either. 

All this adds up to a great short term gain for the wealthiest US corporations. It drives down costs and drives up profits, while destroying labor unions and competing small and medium size businesses. It also permanently damages our middle class. With every job lost overseas a consumer is lost in this country. We are by far the largest market place in the world. We have every right and responsibility to protect that at some level. 

The wholesale give away of our middle-class job market is not a good thing and job retraining is not much of a solution. Dr. Catherine Mann, the architect and most quoted advocate of globalization has no more of a remedy than job retraining. Retrain us for what? It doesn’t take much training for the French fry cooking, car parking and butler serving jobs transforming our new “service industry growth.” 

Is it possible too many of us are confusing the word “serfdom” with “surfing” and think it sounds like fun? 

David Stockman, Ronald Reagan's budget director has said [Supply-Side tax cuts] "was always a Trojan horse to bring down the top [tax] rate" … "It's kind of hard to sell 'trickle down," … "So the supply-side formula was the only way to get a tax policy that was really 'trickle down.' Supply-side is 'trickle-down' theory." (Atlantic Monthly August 1981) 


While George Bush tells us to be patient, job growth is just around the corner, the trickle-down effect has already come and gone. We should still see some job creation by November, probably around a million new jobs. They will be mostly low paying service sector jobs that will bring down the median income while the rich get richer. Meanwhile, I’m sure we’ll hear plenty of empty rhetoric about how job growth will continue to accelerate as long as we re-elect Bush and make the tax cuts permanent. 

In addition to the 3 million jobs lost in the last three years, 2.6 million additional good paying, median income jobs have already been replaced by part time and minimum wage jobs. The typical American now works 184 hours longer than in 1970, an additional 4.5 weeks on the job for only nine percent more pay. 

I think it’s time for a change. I personally have never liked being trickled on and prefer investment in middle-class tax cuts to put the money directly into our own US marketplace. Investing in public education, small and medium size businesses, public works and infrastructure to create good paying jobs and stimulate our internal market upward. 

So how do we make such a change? You’re not going to like this. Register to vote; inform yourself on the issues and vote. Volunteer to help other people vote. Encourage everyone you know to do the same. It’s that simple. That’s the way it really works. There is no short cut and we can only hope it’s not too late. 

Copyright: Todd Smyth <>

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