The Bush/Obama bailout/stimulus plans are not going to work. Both are schemes hatched by a clique of financial insiders. The schemes will redistribute income and wealth from American taxpayers to the shyster banksters, who have destroyed American jobs, ruined the retirement plans of tens of millions of Americans, and worsened the situation of millions of people worldwide who naively trusted American financial institutions. The ongoing theft has simply been recast. Instead of using fraudulent financial instruments, the banksters are using government policy.
Michael Hudson captures the nature of the heist in CounterPunch (February 12):
"When it comes to cleaning up the Greenspan Bubble legacy by writing down homeowner mortgage debt, the Treasury proposal offers homeowners $50 billion – just [half of one percent] of the $10 trillion Wall Street bailout to date, and less than half the amount given to AIG to pay its hedge fund speculators on their derivative gambles. The Treasury has handed out $25 billion to each and every big bank, so just two of these banks alone got as much as the reported one-quarter of all homeowners in America suffering from Negative Equity on their homes and in need of mortgage renegotiation. Yet today's economic shrinkage cannot be reversed without a recovery in consumer demand. The economy has lost the 'virtual wealth' in higher-priced homes and the stock market, and must rely on after-tax earnings. But I see little concern for wage earners in the Treasury plan. Without debt relief, consumer spending and business investment will not recover."
The big money men cannot conceive of anyone's suffering except the mega-rich. If billions are not at stake, what is the problem? How can a family losing its house bring down the economy?
There was a time in America when the interests of elites were connected to those of ordinary Americans. Henry Ford said that he paid his workers good wages so they could buy his cars.
Today American corporations pay foreign workers low wages so CEOs can pay themselves multi-million dollar "performance" bonuses.
Congress has had a parade of CEOs, ranging from Bill Gates of Microsoft and IBM brass on down the line, to testify that they desperately need more H-1B work visas for foreign employees as they cannot find enough American software engineers and IT workers to grow their businesses. Yet, all the companies who sing this song have established records of replacing American employees with H-1B workers who are paid less.
Just the other day, Microsoft, IBM, Texas Instruments, Sprint Nextel, Intel, Motorola, and scores of other corporations announced thousands of layoffs of the qualified American engineers who "are in short supply."
IBM has offered to help to relocate its "redundant" but "scarce" American engineers to its operations in India, China, Brazil, Mexico, the Czech Republic, Russia, South Africa, Nigeria, and the United Arab Emirates at the salaries prevailing in those countries.. [IBM Offers To Move Laid Off Workers To India, By Paul McDougall, InformationWeek, February 2, 2009]
On January 28, USA Today reported: "In 2007, the last full year for which detailed employment numbers are available, 121,000 of IBM's 387,000 workers [31%] were in the U.S. Meanwhile, staffing in India has jumped from just 9,000 workers in 2003 to 74,000 workers in 2007."
In order to penetrate and to serve foreign markets, US corporations need overseas operations. There is nothing unusual or unpatriotic about this. However, many US companies use foreign labor to manufacture abroad the products that they sell in American markets. If Henry Ford had used Indian, Chinese, or Mexican workers to manufacture his cars, Indians, Chinese and Mexicans could possibly have purchased Fords, but not Americans.
Senators Charles Grassley and Bernie Sanders offered an amendment to the Troubled Asset Relief Program (TARP) bill that would prevent companies receiving bailout money from discharging American employees and replacing them with foreigners on H-1B visas.
The U.S. Chamber of Commerce, no longer an American institution, and immigration advocates, such as the American Immigration Lawyers Association, immediately went to work to defeat or to water down the amendments. Senator Grassley's attempt to prevent American corporations from replacing American workers with foreigners on H-1B work visas in the midst of the most serious economic crisis since the Great Depression was met with outrage from the U.S. Chamber of Commerce, an organization concerned solely with the multi-million dollar bonuses paid to American CEOs for reducing labor costs by offshoring American jobs or by replacing American employees with foreign guest workers.
On January 23 Senator Grassley wrote to Microsoft CEO Steve Ballmer:
"I am concerned that Microsoft will be retaining foreign guest workers rather than similarly qualified American employees when it implements its layoff plan. As you know, I want to make sure employers recruit qualified American workers first before hiring foreign guest workers. For example, I cosponsored legislation to overhaul the H-1B and L-1 visa programs to give priority to American workers and to crack down on unscrupulous employers who deprive qualified Americans of high-skilled jobs. Fraud and abuse is rampant in these programs, and we need more transparency to protect the integrity of our immigration system.
"Last year, Microsoft was here on Capitol Hill advocating for more H-1B visas. The purpose of the H-1B visa program is to assist companies in their employment needs where there is not a sufficient American workforce to meet their technology expertise requirements. However, H-1B and other work visa programs were never intended to replace qualified American workers. Certainly, these work visa programs were never intended to allow a company to retain foreign guest workers rather than similarly qualified American workers, when that company cuts jobs during an economic downturn.
"It is imperative that in implementing its layoff plan, Microsoft ensures that American workers have priority in keeping their jobs over foreign workers on visa programs.
"My point is that during a layoff, companies should not be retaining H-1B or other work visa program employees over qualified American workers. Our immigration policy is not intended to harm the American workforce. I encourage Microsoft to ensure that Americans are given priority in job retention. Microsoft has a moral obligation to protect these American workers by putting them first during these difficult economic times."
Senator Grassley is rightly concerned that recession layoffs will shield increased jobs offshoring and use of H-1B workers. On February 13, Pravda reported that "America has begun the initial steps to final outsourcing of its last dominant industry"—oil/gas and oil/gas services. Pravda reports that "as with other formerly dominant industries, such as light manufacturing, IT, textiles," recession is "used as the knife to finally do in the workers."
According to Pravda, "IT is a prime example. The companies used the bust to lay off hundreds of thousands of tech workers around the US and Britain, citing low profits or debt. The public as a whole accepted this, as part of the economic landscape and protests were few, especially with a prospect of the situation turning around. However, shortly after the turn around in the economy, it became very clear that there would be no turn around in the IT employment industry. Not only were companies outsourcing everything they could, under the cover of the recession, they had shipped in tens of thousands of H-1B work visa-ed workers who were paid on the cheap."
It is rare to find US Representatives and Senators, such as Grassley, who will take a stand against powerful special interests. Some do so inadvertently, forgetting that patriotism is no longer a characteristic of the American business elite. Hoping to stimulate American rather than foreign businesses, the House version of the economic stimulus bill, the American Recovery and Reinvestment Act of 2009, required that funds provided by the bill cannot be used to purchase foreign-made iron, steel, and textiles.
The Senate provision was more sweeping, mandating that all manufactured goods purchased with stimulus money be American-made.
The U.S. Chamber of Commerce, the National Association of Manufacturers, Caterpillar, General Electric, other transnational corporations, and editorial writers whose newspapers are dependent on corporate advertising set out to defeat the buy-American requirement. As far as these anti-American organizations are concerned, the stimulus bill has nothing to do with American jobs or the American economy. It only has to do with the special interest appetites that have the political power to rip off the American taxpayers. [See Manufacturing & Technology News, February 4, 2009]
Senator John McCain is their man. "Protectionism!" exclaimed the man the Republicans wanted as president. McCain said the buy-American provision would cause a second Great Depression. U.S. Chamber of Commerce President Thomas Donohue said that buying abroad was "economic patriotism."
The American economic elite are hiding their treason to the American people behind "free trade."
I want to say this as clearly as it can be said. The offshoring of American jobs is the antithesis of free trade. Free trade is based on comparative advantage. Jobs offshoring is an activity in pursuit of lowest factor cost—an activity that David Ricardo, the originator of the free trade theory, described as the betrayal of one's own country in pursuit of "absolute advantage."
The "free market" shills on the payroll of the U.S. Chamber, NAM, and in economics departments and think tanks that are recipients of grants from transnational corporations are whores aligned with elites who are destroying the American work force.
Obama has appointed to his National Economic Council blatant apologists for the offshoring of American jobs.
Possibly Obama loves the country that elevated him to its highest office. But his administration is populated with people whose loyalty does not extend beyond elites to the American people.
Paul Craig Roberts [email him] was Assistant Secretary of the Treasury during President Reagan's first term. He was Associate Editor of the Wall Street Journal. He has held numerous academic appointments, including the William E. Simon Chair, Center for Strategic and International Studies, Georgetown University, and Senior Research Fellow, Hoover Institution, Stanford University. He was awarded the Legion of Honor by French President Francois Mitterrand. He is the author of Supply-Side Revolution : An Insider's Account of Policymaking in Washington; Alienation and the Soviet Economy and Meltdown: Inside the Soviet Economy, and is the co-author with Lawrence M. Stratton of The Tyranny of Good Intentions : How Prosecutors and Bureaucrats Are Trampling the Constitution in the Name of Justice. Click here for Peter Brimelow's Forbes Magazine interview with Roberts about the recent epidemic of prosecutorial misconduct.