Free trade is destroying America. The statistics supporting my statement are many. It is painfully obvious that the flood of red ink is destroying our collective finances. There are many other aspects to this which are equally deadly. One was, the flood of funny money via the Japanese carry trade which inflated our real estate markets and loaded our corporations with unsustainable debts in the hedge fund ‘buyout’ business. But there are other, even more insidious dangers. Like, the destruction of the US ability to do science and technology.
First, I wish to discuss a delusional article in Forbes Magazine. Forbes is useful, like the Washington Post and the New York Times, it is a window onto the group mind-think of the ruling elites. And frankly, they are happy as pigs in a pigsty, with the results of free trade. It gives them increased wealth and power. At least, temporarily. Heh. Now, they are going bankrupt and losing power. But they cling to free trade because they think, they can regain the status quo again.
The 20th Century is often called the American Century, marking the U.S. rise to global pre-eminence. Manufacturing powered our ascendance, factories created our prosperity.
HAHAHA. So, how do we explain the 50 year plan to destroy both?
But the American Century is nearly a decade gone, manufacturing jobs are dwindling, and the future promises fierce competition from the new industrial giants of China and India (and the old giants of Europe). The recession drags painfully on, and dozens of other competitor countries target what they sense is a new U.S. vulnerability….
The Forbes writer should pause for one second and wonder, why are all the OLD GIANTS in Europe doing the same as the new giants in Asia? Oops. This raises an important question. Why is Europe still industrialized but the US is deindustrializing?
This paragraph even mentions ‘fierce competition’. HAHAHA. Duh. We are competitors. This is a struggle for power and dominance and we are losing it, not winning it.
First, the good news. The United States remains the world’s largest manufacturing nation, accounting for more than 19.5% of global manufacturing output. In 2007, the U.S. produced more volume of products than ever before, and manufacturing represented $1.6 trillion of our economy, or about 11.6% of gross domestic product.
OK: here is the severe problem with talking statistics. Note that this writer doesn’t mention what the US manufactures. The bulk of our manufacturing is more and more, for the military/industrial complex. The money spent on this manufacturing is US tax dollars. And there is a severe shortage of US tax dollars so this manufacturing is supported by borrowing money from China, one of our fiercest competitors! So, of that $1.6 trillion of all manufacturing volume in this country, about $400 billion is for the Pentagon and is paid for via debts we owe to China. And is being used to kill people in distant lands and terrorize the US public via say, tasering great grannies at traffic stops.
Manufacturing in the United States accounts for more than 12 million jobs and supports millions more in other sectors. And manufacturing jobs are among the most highly compensated in the nation, paying on average about 20% more than those in other sectors.
Now that the UAW is dead, this is no longer true. Yes, many people working in the military production lines still get paid better than the civilians being taxed to support these industries but everyone’s wages are going down, not up, so being 20% better off when wages are declining isn’t much to boast about.
Yes, we are shedding manufacturing jobs. Unlike China. In the U.S., manufacturing has lost some 1.5 million jobs since the current downturn started, continuing a long-term trend that dates back at least until the early 1980s. But to concentrate on aggregate job losses masks a more profound trend–vastly improved productivity. Americans are making a lot more stuff with a lot fewer people. This increased productivity is largely due to continuous innovation in the manufacturing sector and high investment levels in new technology….
The editorialist doesn’t wonder why this dynamic began in the 1980s. Usually, when countries have more robots or better tools, industry EXPANDS, not contracts. The US has been contracting and running in the red. And importing civilian manufactured goods while producing war goods. A very bad combination.
Down in Pittsboro, N.C., a former hosiery mill where 400 laborers once worked on looms is now home to a biotechnology company, Biolex Therapeutics, where 90 workers use advanced laboratory equipment to develop a drug for a serious liver ailment. Even the lowest paid of the lab technicians earns far more than the seamstresses in the old hosiery mill….
Whoopee. 400 people with normal jobs at normal pay are replaced by 20 scientists and a dozen secretaries, several supervisors, the head boss and the 30 assistants [I am assuming, the bosses want as few as possible] and the cleaning lady. The secretaries, the assistants and the cleaning lady have low wages. The 20 scientists [I am being generous here, probably, it is 3 or less] and the bosses get all the real pay.
A 2008 study by National Association of Manufacturers affiliate organization The Manufacturing Institute and the Manufacturer’s Alliance/MAPI compared the cost of manufacturing in the U.S. to a group of nine industrial nations including Germany, Japan, China and Mexico. Because of higher taxes, energy and regulatory costs, U.S. manufacturers face a 17.6% structural cost disadvantage when competing against firms from these nine countries. But progress is being made. The same group estimated that just two years earlier, in 2006, American firms faced a 31.7% structural cost disadvantage.
Germany has low regulatory costs? HAHAHA. Talk about mixing up things! Japan and Germany have the same or higher costs in this area than the US. They are not allowed to pollute the home base anymore because this is seen as suicidal. China and Mexico, on the other hand, do pollute the home base. Bundling up Germany and Japan with China and Mexico is quite dishonest.
In Germany, Canada, Japan and so on, they have national health care systems. True, the one in Japan is collapsing due to LDP corruption. But the US has a totally different system and we are now devolving into no system at all. Secondly, the author is very clever, like a little gnome, that he leaves out several important statistics. First, no one pays the real taxes and costs. He is using the theoretical figures, not the real statistics. Secondly, even with this differential, it is easy to fix by putting up tariffs and barriers to even out things. So a no-tax state can suck down all our financial systems, just for one glaring example.
His data, in other words, calls for an end to free trade. This, of course, is not the point of the article. It is merely one of zillions of identical articles using statistics to lie and misinform. Instead of trying to see the truth, they are trying to marshall data to deceive. I found this wonderful book in 1959 which I basically memorized: How to Lie with Statistics. You might say, it is my Bible.
How to Lie with Statistics is a book written by Darrell Huff in 1954 presenting an introduction to statistics for the general reader. It is a brief, breezy, illustrated volume outlining common errors, both intentional and unintentional, associated with the interpretation of statistics, and how these errors can lead to inaccurate conclusions. It has become one of the most widely read statistics books in history (even though Huff was not a statistician), with over one and a half million copies sold in the English-language edition. It has also been widely translated.
Themes of the book include “Correlation does not imply causation” and “Using Random Sampling“. It also shows how statistical graphs can be used to distort reality, for example by truncating the bottom of a line or bar chart, so that differences seem larger than they are, or by representing one-dimensional quantities on a pictogram by two- or three-dimensional objects to compare their sizes, so that the reader forgets that the images don’t scale the same way the quantities do.
The original edition contained humorous illustrations by artist Irving Geis.
Like my other Bible book, The Rise and Fall of the Great Powers by professor Kennedy, this book was very popular and a deserved best seller. Yet, it, like the Kennedy book, seems to not have informed the people at the top. Or rather, they viewed both books as an excuse or a helping hand in telling them how to lie, cheat and steal. Even if 10 million people read both books, comprehended both books and then pushed hard to change things, based on both books, this is a very small minority in the US population, not to mention, the world.
So those of us who read and comprehend these books sit here, today, gnashing our teeth as our rulers and the media merrily go about, violating every single rule of honesty. Instead of using statistics to understand, they use them to lie. Below is some interesting statistical material from the Federal government and the Federal Reserve. Both show that something is very, very wrong with free trade and on top of that, something is massively wrong and is literally destroying us.
You might not be able to spot foreign-owned firms in the district, but they add local jobs and some nuance to the globalization debate.
Colbey Sullivan – Contributing Writer
This is a disturbing graph from 2005. It clearly shows something went very, very wrong from 1996 to 2000. The US was absolutely flooded with amazing levels of foreign investment outlays. Secondly, we see clearly that before 1991, these foreign investment outlays, both established and acquired, were very, very small and the same volume, too. Half and half. Suddenly, beginning in 1992, the acquired foreign investment outlays begins to double each year. What happened?
Well, I look at foreign lands and I see something rather obvious: the Japanese bubble burst. But there was all this trade money flowing into Japan via the US. As it increased, the Japanese parked their profits here since Japan was in this depression. All the US media talked about this Japanese depression. But didn’t make the connection to this foreign investment outlay explosion in the US.
During the Asian currency crisis, this outflow leveled off briefly. Then, it shot to the moon. In just three years it went from slightly over $50 billion to over $300 billion.
So, I said to myself, time to look at the history of the Nikkei! What do we see? The same graph, actually. As it went into decline in Japan, the money the flooded the Japanese Nikkei simply shifted. The US suddenly saw an immense bubble forming here.
The DOW shot up to record highs, very fast. The Japanese carry trade took off during this decade, too. The US went hog-wild.
I still remember the stupid article in Atlantic Monthly, predicting the DOW would hit 36,000 and we were in a new world economy that would see everyone at the top, get very rich.
I would suggest, the money bubble in Japan simply shifted itself several time zones to a new locale. This is why the US markets suddenly and seemingly inexplicably, took off.
When the DOW fell, this bubble simply shifted from stocks to buying debt instruments like that huge flood of CDOs, OTC deals and interest rate swap contracts. Has this bubble vanished at last?
My theory is, no. It moved to governments which caused the money supply to balloon. Government debt is the new bubble and is about to pop, too. Normally, after a major bubble pops, the leveraged players all go bankrupt and that ends it all. But obviously, they didn’t go bankrupt. Japan saw a flood of bankruptcies but not a drop in export markets. This took off. All export markets took off because Japan unleashed an unprecedented flood of funny money via lending when its immense bubble burst. The banks in Japan made profits, selling these debts to non-Japanese!
This is because the government of Japan protected the bankrupt banks and enabled them to lend money despite all the bankruptcies of Japanese property owners and businesses owing money to the banks. And what capitalized this?
The trade surplus with the US! And when Japan lent to the US, the US bought more Japanese goods which then circulated back to the US in the form or easy lending. So, thanks to the magic of banking lending money on a very small capital basis, $10 billion of US trade dollars could trigger $1 trillion in lending. What is worse, Japan continues to do this and is most anxious to restart the carry trade business.
(Nikkei)–The Financial Services Agency on Friday disclosed that eased standards for evaluating outstanding loans kept 839.8 billion yen from being classified as nonperforming in the three months ended March 31.
The financial watchdog revised its oversight guidelines and inspection manual in November as part of efforts to facilitate lending to smaller businesses. Previously, a loan was generally deemed nonperforming if a bank extended the repayment period or waived interest payments. The new rules enabled banks to keep loans out of that category as long as the borrower was seen capable of following through with its business rehabilitation plan within 10 years.
The tally for the January-March quarter accounted for 45% of the outstanding lending balance that would have been nonperforming under the prior rules. For major banks, 187.2 billion yen of their loans benefited from the relaxed standards, representing 54% of the total using the previous standards.
See? They are doing it again! What is worse, the US is doing this too! This is a crime. It screws up the entire world’s finances. It is also dishonest. Pretending deadbeats might pay in 10 years is pure, barking insane. For example, Mr. Andrews married a deadbeat hausfrau. This woman always overspends. So, he is now bankrupt. But hopes, in 10 years, to earn lots of loot like Jon and Kate Who Hate and by selling off his family’s story to the highest bidders and making a spectacle of himself, he hopes to pay off loans he should have never taken on, in the first place.
So, we will see the bankers, wishing for lots of fees and other goodies, lending money they never had to a bunch of deadbeats. And worse, will pretend this army of deadbeats are solvent even as nothing is flowing back into the system, the money has vanished and become part of inflation. For prices of food and fuel have resumed climbing again.
More about Foreign Direct Investment Funds from an article by a gnome:
Foreign Direct Investment Trends
By Daniel Kah, Research Director
Foreign direct investment (FDI) is the underlying driver of many key U.S. economic issues including offshoring, the trade deficit, job creation, the current account deficit, and even interest rates. FDI is a domestic firm investing in a foreign market and vice versa. A GE call center in India and Toyota truck plant in San Antonio are both FDI. Firms seeking to invest in foreign markets have two options: build from scratch, often called a greenfield investment, or invest in an existing operation through a merger or acquisition.
Firms invest in foreign markets for three reasons – to serve the local market, increase efficiency, or natural resource access….
FDI flows moved back to historical norms in 2004 after a few volatile post-bubble years. Investment peaked in ’99 and ‘00 with over $1 trillion invested both years, and while the $650 billion invested in 2004 is below these peak years, foreign investment remains higher than any year previous to 1999. Historically low interest rates and strong equity markets provide the necessary means to raise capital for new investment and cross border mergers and acquisitions. The United States returned to a leadership position as the world’s leading source of FDI and destination for FDI. Investor confidence continues to increase, especially with respect to the world’s strongest economies, those of the U.S., U.K., and China….
This was written in 2006. The US and UK are now going down in flames after allowing this flood of foreign money to flow all over the place and then, down the sewer.
States that aggressively recruit foreign investment see the dividends in investment and employment. Foreign investment accounts for more than 20% of manufacturing employment in a handful of states including Kentucky and South Carolina.
This is a fancy way of saying, foreigners own our work force. In 1950, for example, they owned less than 1% of our workforce.
On the other side of the issue is investment abroad by U.S. multinationals. Not only is the U.S. the
world’s largest recipient of FDI, but it is also the largest supplier of foreign investment. American companies invested $229 billion abroad in 2004. Although offshoring receives the most attention, over 75% of this investment is directed at the local market. In 2002, only 11% of sales from U.S. corporate international operations were directed back to the U.S.
Most manufacturing was for outside the US. But a significant and GROWING amount was aimed for return to the US. Also, this guy doesn’t say if NAFTA outsourcing is part of his statistics.
Put another way, the large majority of U.S. investment abroad is not offshoring; rather, firms are pursuing revenue opportunities in other markets. HAHAHA. Storyline here is simple: did the US manufacturers go offshore to provide stuff they provide here? The answer is no. They went offshore and not only did they import these goods BACK to the US but everyone who was competing did the exact same thing! This is why we were flooded with goods we easily could have manufactured here, ourselves!
The 11% of sales focused on the America market is still a significant number and has begun to affect the trade deficit. According to a recent McKinsey study, 32% of the U.S. trade deficit is created by American firms trading within the corporation. But that’s a story for another article.…
Hooray, he mentioned a tiny truth and then, ran away. Why talk about that statistic that makes total mush of all his previous, arrogant statements?
So, our corporations make profits here and then…ship it overseas. Japan’s depression has meant, Japan’s people live in less and less comfort, have less and less job security and are now vanishing as a people as everyone is giving up, even reproducing. Oh, the birth rate actually went up from 1.32% to 1.37%. Isn’t that wonderful? Way below replacement levels, of course.
Talking about lying with statistics, here is a grotesque article from the US Chamber of commerce that lies about rail road facts via using statistics in a creative and childish way:
Transportation/Infrastructure: Of the top ten economies in the world by GDP, the United States has the largest roadway system, railway network, number of airports, and quantity of Internet hosts. Five of the top ten airports by air cargo volume are in the United States including the busiest cargo airport in the world. A number of the world’s busiest ports for international bulk cargo and container traffic are also in the United States.
HAHAHA. They compare MILES of rails of huge countries to physically small countries! Since this was published, China just increased milage hugely so the stats here are now wrong.
The US has miles and mile of tracks that are one of the crummiest on earth. We have more miles of rotting tracks than Africa? And this makes the Chamber of Commerce happy?
And in Paris? HAHAHA. I wonder how the Europeans greeted this article. Laughing to death? Maybe. Here is another stupid series of stats from the same webpage:
Foreign Direct Investment Creates New Jobs: U.S. affiliates of foreign companies (majority owned) employ over 5 million U.S. workers, or 4.4% of private industry employment. An additional 4.6 million U.S. jobs indirectly depend on foreign investment in the United States. Between 2002-2006, nearly 2,900 new projects were announced or opened by foreign companies, yielding $82 billion in investment and about 170,000 new jobs.
Foreign Direct Investment Boosts Wages: U.S. affiliates of foreign companies tend to pay higher wages than U.S. companies. Foreign companies support an annual U.S. payroll of $335.9 billion, with average annual compensation per employee of over $65,000. Average compensation per employee within these companies has risen every year since 1992. U.S. subsidiaries of foreign firms pay 32 percent higher compensation than the private-sector national average.
Foreign Direct Investment Helps U.S. Companies Penetrate International Markets and Increase U.S. Exports: U.S. companies can use multinationals’ distribution networks and knowledge about foreign tastes to export into new markets. Approximately 19 percent of all U.S. exports ($169.2 billion) are generated by U.S. subsidiaries of foreign companies.
Foreign Direct Investment Contributes to U.S. Tax Revenues: In 2003, foreign affiliates paid $19.1 billion in taxes, which represented 11 percent of U.S. corporate tax revenues.
We see from the pie chart here, that foreigners do pay taxes. This is, of course, a minor amount. Due to all the tax breaks US government and localities give these foreign powers so they can build factories here! On top of this, many of these were located here for political purposes. The only reason Toyota has factories here is so they can continue to import cars with impunity and never face any tariffs or barriers to this very uneven trade.
The flood of foreign funds which were created, over time, by the US allowing a trade deficit to grow, has some very bad side effects. I decided to poke around government sites to see how our own government is talking about these side effects. The National Science Foundation was set up in 1950, the same time I was born. Before WWII. a flood of refugee scientists fleeing the insane Nazis, poured into the country. After WWII, a flood of Nazi scientists also came in, courtesy of Operation Paperclip.
So, I visited this site to see if our own government is even dimly aware of the problems free trade is causing us in a very important sector. Remember: our scientific community had a sudden surge of European and Chinese scientists during and after WWII and they are now all dying of old age [most never retired, really].
After 2005, we lost immense hunks of our high-tech manufacturing. Or, we sold it to the Chinese. The graph, which shows it leveling off in the US, would, if we did one today, show that the US is collapsing.
These graphs show that the US, far from being some sort of technological giant, is actually losing not only the manufacturing race but also the mental race. Our educational systems are rotting away even as we frantically spend money on schools. Much of this money is on frills or being used as a means for enriching publishers, for example. All of Asia is very rapidly moving towards using computers for teaching while we are mired in the past. California may break this dam of inertia do to the collapse of funding for these wasteful and stupid teaching tools. We are in a deadly battle to see who will be the future power.
The US thinks, if we control the Middle East, we control the world. But the real battle is here in these charts and graphs. The people who control the technology coupled with understanding how trade and finance works, will rule the world. The US can’t do this if we are deluded and try to pretend, there is some other sort of system available which will allow us to be behind the times in technology, stupid in school, running a vast train system that is rotted to the core and filled with hubris and noses in the air, striding about like gods at home and then crawling on our bellies before the Dragon Throne, begging for hand outs…good grief.
This is not going to work, is it?
One last graph: In the 4th grade, our lovely children are outstanding in math and even more, in science. Then, in 8th grade, scores drop because the tests are harder, I am assuming. The US still is outstanding but on a lower level. Then, by high school, it collapses!
OUCH. This, of course, compares us to the world at large. Not to China or Korea. Korean and Chinese kids push very hard in high school. Their science and math abilities easily outstrip the general US school children. I went to school overseas. I saw this first hand. I went from feeling like a genius in the US to feeling like a dummy in Europe. It was most embarrassing.
The Asian system is extremely competitive. This is evolution at work. The Asians are beating the US because they have a fierce system at work. And this forcefulness infuses all other systems! These are our ‘competitors’ the first article above, mentions! And they are not playing this game so we can rest on our laurels and order them all around. It isn’t going to happen.
Time for us to prepare for the next battle. And putting ourselves deeper into debt is exactly the worst tactical move to make. But then, how can we have a strategy when we use statistics and graphs to lie to ourselves? Honesty is the first step on the road to recovery. Just like in the Alcohol Anonymous meetings. Maybe I could start a similar organization. Have everyone stand up and sob, ‘I thought we were winning the trade war but in reality, I was destroying America, not making us stronger.’
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