America`s Lost Hegemony

The historian who chronicles
America`s decline will lay the blame on

free market ideology.

I say this as a believer in the
market. My books and scholarly articles demonstrate the
superiority of

market systems

government allocative schemes.
The problem arises
when market economics ceases to be thoughtful and
becomes ideological or a dogma.

A good example of the latter is a

Heritage Foundation
study that argues that global
outsourcing is the best way to equip the US military
with the best technology at least expense. The study
brushes away concerns with the erosion of the American
manufacturing, science, and engineering knowledge base
by asserting that such concerns imply protectionism and
that protectionism means the death of innovation. [`Buy
America` Provisions Don`t Help Homeland Security or
National Defense
by Alane Kochems, June 21,

Protectionism can be problematical
for innovation, and the study is correct to point this
out. Where the study fails is in ignoring that
innovation does not take place in a vacuum. Innovation
requires a material base and depends on a strong
manufacturing, science and engineering foundation backed
by R&D programs.

In an interview with
Manufacturing & Technology News (
August 8), the
study`s project leader, Jack Spencer, sees protectionism
as the only threat to American innovation, which he
otherwise takes for granted:

belief is that subjected to the free market, the United
States is still going to produce most things because our
comparative advantages are innovation and new
technology. If liberated from protectionism, we can
compete and that is where we will always emerge as
winners.” [Heritage
Foundation Says Congress, DOD Should Learn To Live With
Globalization; Providing Troops With Best Equipment
Usurps Making It In America
by Richard

This belief is simply untrue. As
this belief is the basis for the study, the study has
done nothing but confirm a preordained belief.

The US has no God-given comparative
advantage in innovation and new technology. We were
leaders in these fields, because we were leaders in

We were leaders in manufacturing,
because Europe and Japan destroyed themselves in wars,
and the rest of the world destroyed themselves in
various forms of socialism and cronyism.

America`s hegemony in
manufacturing, science and engineering was the product
of historical circumstances. Moreover, it occurred
despite American protectionism.

The historical circumstances have
changed. The US gave away its scientific and engineering
education and its

. It did this partly for idealistic
reasons and partly as cold war strategy.

Once socialism collapsed in Asia,
US corporations began outsourcing abroad the manufacture
of products for US markets. Success with offshore
manufacturing has led to offshore outsourcing of
research and development and now innovation itself.

As a recent report from the
National Research Council recognizes,

“product development and technical support follow
 One consequence for America is
the loss of many manufacturing capabilities and “the
increasing availability abroad of unique technologies
not found in the United States.”

This development is taking a huge
toll on America`s human resources in manufacturing
skills, engineering and science. The first American
victims were

blue collar workers.
Millions of them lost their
jobs and experienced sharp declines in the quality of
their lives. But as research, engineering, design, and
innovation followed manufacturing abroad, now it is
white collar workers in

information technology
university graduates in engineering
and physics who
are being displaced.

American university enrollments in
science and engineering are declining because there are
no jobs for graduates. It is pointless to invest money,
sweat and toil in an education that has no payoff.
Markets do work. Markets are working to shrink the
demand for, and supply of, American engineers and

The next impact is going to be on
project manager jobs, practically the sole remaining
source of career related employment for many engineers
and technical people. Project management jobs require
people experienced with the technology of the job. The
loss of technical and engineering jobs empties the
pipeline of people who have the experience to assume
management positions. Far from being able to innovate,
the US will even lack the human resources to manage
technical and scientific projects.

Many uninformed people believe the
problem is that America doesn`t produce enough
scientists and engineers. Manufacturing & Technology
reports that “a group of 15 US business
organizations has launched a national campaign aimed at
doubling within 10 years the number of bachelor`s
degrees in science, technology, engineering and

What is the point of this when
there is a huge supply of unemployed engineers and
technical people who have been displaced by offshore
outsourcing and by H-1b and L-1 work visas for
foreigners? I know an American software engineer in his
thirties whose job was outsourced. After searching
fruitlessly for a job for four years, he took a job in
Thailand writing software programs for $850 per month.

The anecdotal stories are legion.
Yesterday, a friend reported to me that the service
technician who repaired his garage door opener said his
company was flooded with resumes from college graduates
and engineers who cannot find work and are willing to
take jobs installing garage doors.

US executives, with an eye to
quarterly earnings and their bonuses, continue to spend
considerable resources lobbying for increases in work
visas that enable them to replace their American
engineers, scientists, and technical people with lower
cost foreigners. These executives lie through their
teeth when they assert the lack of qualified Americans
for the jobs. The fact of the matter is, the executives
force their American employees to train their foreign
replacements and then fire their American workers.

In a word, American capitalism is
destroying itself by dismantling the ladders of upward
mobility that have made large income inequalities
acceptable. By rewarding themselves for destroying
American jobs and manufacturing, engineering and
scientific capabilities, US executives are sowing a
whirlwind. American political stability will not survive
the turning of an American university degree into a
worthless sheet of paper. Libertarians and free market
ideologues who rejoice in freedom should open their eyes
to freedom`s destruction.

Roberts, [
him] a former Associate Editor of the

Wall Street Journal and a
former Contributing Editor of
National Review
was Assistant Secretary of the Treasury during the
Reagan administration. He  is
the author of

The Supply-Side Revolution

and, with Lawrence M. Stratton, of

The Tyranny of Good Intentions : How Prosecutors and
Bureaucrats Are Trampling the Constitution in the Name
of Justice

for Peter
Magazine interview with Roberts about the recent
epidemic of prosecutorial misconduct.