Reality Catching Up With Trade Ideologues

American delusion about the job
outlook and the future of the US economy is second only
to delusion about American success in Iraq.

According to Dr. Charles W.
McMillion, president of

MBG Information Services
, the latest trade report
from the Census Bureau shows that the US consumed $51.2
billion more goods than it produced in March. The trade
deficit is running $1.65 billion per day. The first
quarter trade deficit worsened by another 8%, and the
deficit in manufacturing goods worsened by 10%.

Looking for US trade muscle in the
82 individual items is even more discouraging. The US
has surpluses in only 28 (34%) of the 82 trade

Twelve (43%) of these surplus
categories consist of agricultural products, scrap
metal, and pulp and waste paper.

The total US first quarter
trade surplus from the 28 surplus categories is $23.4
billion–a figure smaller than the US first quarter
deficit in vehicles, smaller than the quarter`s deficit
in crude oil, and smaller than the quarter`s deficit in
clothing plus ADP equipment and office machines.

During the 1980s the US trade
deficit in goods and services rose and fell with the
dollar. Since 1991, however, the US deficit has worsened
continuously and is now three times the

peak deficit of the 1980s.

There is no prospect of trade
closing the gap. Once only energy-dependent, the US is
now dependent on foreign countries for its clothes,
shoes, electrical machinery, general industrial
machinery, metal manufacturing, iron & steel mill
products, vehicles, office machines, TVs & VCRs, and so
on and on.

Apologists for the destruction of
American industrial power said not to worry;

"knowledge jobs"
in the

"new economy"
would provide employment in the
future, and exports of high-tech services would pay for
our imported consumption of “old economy"
manufactures. They were wrong. The outsourcing of

knowledge jobs
is proceeding even more rapidly than
the outsourcing of manufacturing.

The last two years have seen
startling declines in American higher education
enrollments in electrical and computer engineering as
American youth looks to nontradable domestic services
for employment stability.

The more the payroll jobs numbers
show US employment growth to be restricted to
nontradable domestic services, and the more the Bureau
of Labor Statistics restricts its forecasts of future
occupational growth to nontradable domestic services,
the more ideologues and hirelings of global corporations
preach that Americans are benefiting from outsourcing.

On May 13 a Federal Reserve
economist, a graphic designer and an economics writer
teamed up to produce a chart in the New York Times.
Supposedly, the graphically designed chart shows that as
the US economy loses its goods-producing jobs and export
capability, it is moving from an outmoded muscle-power,
manual-dexterity, routine work economy into a new age
economy characterized by analytic reasoning,
imagination, creativity and emotional intelligence. [Where
the Jobs Are
By W. Michael Cox, Richard Alm And Nigel Holmes]

The authors of this propagandistic
chart do not realize the joke they have played on
themselves. Their chart shows that the greatest job
growth in the last decade was in "financial services
followed by "legal assistants," and
"actors and directors."

Is the US going to balance its
enormous trade deficit by exporting Hollywood`s


, tort lawyers` law suits, and US financial

The chart`s authors tout the
"rise of employment for hair stylists and
as the future for American
"imagination and creativity."

The cumulative evidence of the past
several years is unambiguous: US job growth is
concentrated in low-pay, hands-on domestic services.

It is not concentrated in tradable
goods and services.

If the outsourcing of knowledge
jobs continues at its current pace, the US will soon
have a deficit in services.

The US surplus in services peaked
in 1997. From 1997-2003 US exports of services increased
by 19%. Imports of services grew by 49%, and the US
surplus in tradable services declined by 35%. Service
imports have increased from 64% of US service exports in
1997 to 81% in 2003. As the US deficit in traded goods
grows, the US surplus in traded services shrinks.

Will the ideologues ever see the
writing on the wall?

Free-market reassurances that the
US is winning from free trade will come back to haunt
those who so cavalierly ignore the facts, no less than
the neocon promise of an Iraqi "cakewalk" to
freedom and democracy is haunting the Bush

In the end, as the powerful
Communist Party of the Soviet Union learned, reality,
not ideological commitment, carries the day.


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