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Trickle-Down
Outsourcing: A Brave New World
February
27, 2004
By Todd Smyth
Trickle-Down Economics just isn't what it used to be. That
$1 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 used 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 broadband
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-sized
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)
Hmmm.....?
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 well-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-sizde businesses,
public works and infrastructure to create well-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.
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