Moving Our Economy Offshore

The dollar keeps going down, and the trade deficit
keeps going up.

Economists and reporters explain this in terms of
American appetite for

foreign goods
outstripping overseas demand for U.S.

There is another explanation, one perhaps closer to
the truth. Americans are buying the same goods as in the
past made by the same U.S. multinational
corporations—only the goods are no longer made in the
United States. Their production has been outsourced or
offshored to Asia. The same goods now count as imports,
because they are produced offshore.

A country cannot close its trade deficit if its
economy is being moved offshore.

Offshore production hits the trade deficit from both
ends: goods once produced domestically become imports,
and as production moves offshore the ability to export
declines. When a U.S. business moves a factory to China,
that factory`s products cease to be potential exports
and become imports.

Stephen Roach at Morgan Stanley
estimates that more
than half of our whopping

trade deficit with China
results from offshore

Economists claim that outsourcing of U.S. production
helps our economy by creating incomes for the Chinese to
buy our products. However, increased Chinese incomes are
more likely to be spent in China buying products from
the U.S. multinationals that have moved their production
to China. Outsourcing and offshore production cause the
Chinese—not the U.S.—economy to grow.

Offshore production is a new development. It is not
your father`s traditional foreign trade. Goods are not
being traded. Offshore production is not a case of the
United States making good X and trading it to China for
good Y. It is a case of the United States ceasing to
make good X in the United States and making it in China

What is happening is that foreign labor is
substituted for

U.S. labor
in the production of the goods and
services that Americans consume. Americans lose the
incomes and employment associated with the production of
the goods that they consume.

The Bureau of Labor Statistics offers no evidence to
support economists` claims that outsourcing production
to Asia creates new and better jobs in the United
States. On Feb. 11, the BLS released its 10-year
projections of U.S. job growth by industry and
occupation. Missing in the BLS lineup are the high-tech
and knowledge jobs that economists have been falsely
promising us are our rewards for losing our
manufacturing jobs.

Are you ready for this? The BLS says that the bulk
of U.S. job growth over the next decade will be in
low-paid nontradable services that do not require a
college education

Here is America`s

job future
for the next 10 years:

  • waiters and waitresses;

  • food

  • nursing aides, orderlies and attendants;

  • cashiers

  • customer service representatives;

  • retail salespersons;

  • general and operational managers;

Of these 10 areas of greatest job growth, RNs require
an associate degree, managers a bachelor`s degree, and
postsecondary teachers a graduate degree. The BLS says
the qualifications for the other seven are met by

The BLS has another list: the 10 fastest growing
occupations. An occupation can be growing rapidly
without providing many jobs. For example, the BLS
estimates that employment for physician assistants will
grow by 31,000 over the decade or by 3,100 jobs per
year, enough to produce a 49 percent growth rate.

Seven of the 10 fastest growing occupations are in
medical services: medical assistants, physician
assistants, social and human service assistants, home
health aides, physical therapist aides, physical
therapist assistants, and medical records and health
information technicians.

The only knowledge jobs about which the BLS is
hopeful are network systems and data communications
analysts, and computer software engineers. Considering
the number of unemployed software engineers and the rate
at which these jobs are being outsourced, not many of
these jobs are likely to end up in American hands.

With employment growth concentrated in nontradable
services, how will the United States pay for its growing
dependence on imported manufactured goods? The BLS
projection of employment by major occupational group
shows production occupations with the lowest growth

If the BLS projections are correct, the United States
won`t long remain a high-tech, high-wage economy.

When the dollar collapses, Americans won`t be able to
afford those "cheap foreign imports" for which we
are giving up our good jobs.


Craig Roberts was Associate Editor of the WSJ editorial
page, 1978-80, and columnist for “Political Economy.”
During 1981-82 he was Assistant Secretary of the
Treasury for Economic Policy. He is the author of

Supply-Side Revolution: An Insider`s Account of
Policymaking in Washington