Immigration, Outsourcing, Our Incipient Police State—Greater Threats Than Terrorism

Delusion has settled over America.
Washington cannot tell fact from fantasy. Neither can a

sycophantic media

nothink economists.

The Bush administration is the
first government in history to initiate a war based
entirely on fantasy—fantasy about nonexistent
"weapons of mass destruction,"
fantasy about
nonexistent "terrorist links," fantasy about
a people from their culture, fantasy
about a "cakewalk" invasion, fantasy about
America`s omnipotence.

Reality has yet to penetrate the
Oval Office or America`s "red state"
consciousness. The gratuitous invasion of Iraq, the
torture and the war crimes have made America despised
the world over. Our once formidable alliances are

The Muslim world, which perceives
America as Israel`s enabler of Palestine`s oppression,
has uniformly turned against us.

$300 billion—red ink to the last
cent—has been wasted in a pointless war and occupation
that has emboldened Islamic revolutionaries, who will be
more successful than the US in changing the face of the
Middle East.

Bush`s invasion of Iraq has proved
the limits of America`s "hegemonic" military
power: Eight heavily armored high tech US divisions are
tied down by a few thousand lightly armed insurgents who
control most of the roads and many towns and cities.

Any Iraqi collaborator with the US
occupation who is foolish enough to leave the heavily
fortified "Green Zone" is shot down or blown up
in the streets.

Such an outcome is proclaimed a
by the White House, Republican politicians
and a cheerleading media.

The reality is that an ignorant and
blundering Bush administration has created a

Shi`ite crescent
from Iran to Lebanon that is
revolutionizing the Middle East. The reality will not
penetrate the Bush administration. Reality contradicts
Bush fantasy and is "against us." Facts that
don`t support Bush fantasy are "liberal" and
Truth is dismissed as anti-Bush

It is America that has undergone
regime change. The Bush administration constitutes a

revolution. Its fanatics have declared world
war on political diversity. The first victim of Bush`s
"war on terror" is the Bill of Rights. In its
place we have an incipient

police state.

One might easily conclude that Bush
is first among the deluded, but the more one observes
economists` romance with outsourcing, the more one
wonders if economists are not the most deluded of all.

Outsourcing converts domestic
supplied goods and services into imports. It divorces
Americans from the incomes and careers associated with
the production of the goods and services that Americans

That divorce is highly detrimental
for Americans. As foreign labor is substituted for US
labor in the production of tradable goods and services,
the displaced US work force seeks employment in domestic
services that cannot be outsourced. This increases the
supply of labor, thus depressing wages, in those labor
markets already impacted by the entry of high rates of
legal and illegal immigration.

By turning domestic production into
imports, outsourcing increases the trade deficit.
America pays the import bill by turning over the
ownership of her wealth, and the income streams that
wealth produces, to foreigners. Thus, Americans not only
lose jobs and careers but also the ownership of their
companies, real estate, corporate and government bonds.
The incomes from these lost assets pass from Americans
to foreigners.

Today America`s consumption and the
government`s budget deficits are financed by foreigners,
principally Asians. There are now so many dollars in
foreign hands that the willingness of foreigners to hold
more is declining. For the past three years foreign
central banks have been diversifying their reserve
holdings away from dollars into other currencies.

The result has been to drive the
value of the dollar down sharply against many other
currencies. As prices adjust to the changed currency
values, Americans become poorer.

When economists preach that America
benefits from outsourcing, they deny all the hard facts,
just as do Republicans when they proclaim "success"
in Iraq. How does America benefit from a process that
destroys jobs, lowers incomes, and reduces the exchange
value of the dollar?

What outsourcing is doing for
America is destroying entire sectors of US
manufacturing, entire high tech occupations, the

value of a college education
,  the design and
innovative capabilities of the US economy, and the
dollar as reserve currency. This is a lot of
destruction. It goes far beyond what terrorists can

So far in the 21st century, the US
has experienced a net loss of jobs. Fewer Americans are
employed today than when President Bush was first
inaugurated. This has not happened since the Great
Depression in the 1930s.

When economists claim that the US
is made better off by outsourcing, they ignore the
evidence of job loss, stagnant incomes, and a collapsing

A perfect example is a recent

three economists
reported in the March 21 issue of
Barron`s. [Editorial
Commentary: The Wages of Virtue
Thomas G. Donlan, (subscriber link)]

The economists used economic models
to calculate the benefits to Americans of outsourcing.
An economic model is comprised of assumptions about
relationships. Many relationships are historical and
reflect America`s post-World War II economic dominance,
which is no longer the reality.

The economists concluded that the
benefits to Americans from outsourcing ranged from
$7,100 to $12,900 per household.
Payoff to America from Global Integration

By Scott C. Bradford, Paul L. E. Grieco, and Gary Clyde

According to the Bureau of Labor
Statistics, the average hourly wages of private, nonfarm,
nonsupervisory production workers produced an annual
income of $33,072 as of February 2005.

Only economists completely detached
from reality could believe that American households owe
such a large percentage of income to outsourcing, which
is threatening them with a depreciating currency and the
loss of their jobs and careers.

One of the dumbest defenses of
outsourcing is the claim that history shows that America
benefits from free trade.

First of all, there has been
precious little free trade. Economists mean that America
has benefited from trade during the decades following
World War II when the rest of the world was recovering
from war or smothered in socialism. It is easy to
benefit from trade when you are the only economy.

Second, outsourcing is not trade;
it is labor arbitrage. Outsourcing is a new phenomena
birthed by the collapse of world socialism and the rise
of the high speed internet. It reflects the operation
not of "comparative advantage" but of
"absolute advantage"
—the flow of capital and
technology across borders to the cheapest labor.
Outsourcing is the substitution of foreign labor for
domestic labor. It reduces the demand for domestic labor
and drives down incomes.

The Great Depression took a
terrible toll on the credibility of economists, who
failed to grasp that the Federal Reserve had shrunk the
supply of money by one-third.

Outsourcing the American economy
will take a larger toll on economists` reputations.

Once the economy is outsourced,
America is a third world country.

Craig Roberts, a former Reagan Administration official,
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 Brimelow`s

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