Bush`s Untrue State of the Union

Gentle reader, if you prefer
comforting lies to harsh truths, don`t read this column.

The state of the union is
disastrous.  By its naked aggression, bullying, illegal
spying on Americans, and illegal torture and detentions,
the Bush administration has demonstrated American
contempt for the Geneva Convention, for human life and
dignity, and for the civil liberties of its own
citizens. Increasingly, the US is isolated in the world,
having to resort to bribery and threats to impose its
diktats.  No country any longer looks to America for
moral leadership. The US has become a rogue nation.

Least of all did President Bush
tell any truth about the economy. He talked about
economic growth rates without acknowledging that they
result from eating the seed corn and do not produce jobs
with a living wage for Americans.  He touted a low rate
of unemployment and did not admit that the figure is
false because it does not count millions of discouraged
workers who have dropped out of the work force. 

Americans did not hear from Bush
that a new

just opened on Chicago`s city boundary and
25,000 people applied for 325 jobs (
Jan. 26), or that 11,000 people
applied for a few Wal-Mart jobs in Oakland, California.
Obviously, employment is far from full.

Neither did Bush tell Americans any
of the dire facts reported by economist Charles
McMillion in the

January 19 issue
of Manufacturing & Technology

During Bush`s presidency the US has
experienced the slowest job creation on record (going
back to 1939).  During the past five years private
business has added only 958,000 net new jobs to the
economy, while the government sector has added 1.1
million jobs.  Moreover, as many of the jobs are not for
a full work week,
“the country ended 2005 with fewer private sector hours
worked than it had in January 2001.”

McMillion reports that the largest
sources of private sector jobs have been health care and
waitresses and bartenders.  Other areas of the private
sector lost so many jobs, including
supervisory/managerial jobs, that had health care not
added 1.4 million new jobs, the private sector would
have experienced a net loss of 467,000 jobs between
January 2001 and December 2005 despite an “economic
 Without the new jobs waiting tables and
serving drinks, the US economy in the past five years
would have eked out a measly 64,000 jobs.  In other
words, there is a job depression in the US.

McMillion reports that during the
past five years of Bush`s presidency the US has lost
16.5% of its manufacturing jobs.  The hardest hit are
clothes manufacturers, textile mills, communications
equipment, and semiconductors.  Workforces in these
industries shrunk by 37 to 46 percent.  These are
amazing job losses.  Major industries have shriveled to
insignificance in half a decade.

Free trade, offshore production for
US markets, and the outsourcing of US jobs are the
culprits. McMillion writes that “every industry that
faces foreign outsourcing or import competition is
losing jobs,”
including both Ford and General
Motors, both of which recently announced new job losses
of 30,000 each.  The parts supplier, Delphi, is on the
ropes and cutting thousands of jobs, wages, benefits,
and pensions. 

If the free trade/outsourcing
propaganda were true, would not at least some US export
industries be experiencing a growth in employment?  If
free trade and outsourcing benefit the US economy, how
did America run up $2.85 trillion in trade deficits over
the last five years?  This means Americans consumed
almost $3 trillion dollars more in goods and services
than they produced and turned over $3 trillion of their
existing assets to foreigners to pay for their
consumption. Consuming accumulated wealth makes a
country poorer, not richer.

Americans are constantly reassured
that America is the leader in advanced technology and
intellectual property and doesn`t need jobs making
clothes or even semiconductors. McMillion puts the lie
to this reassurance. During Bush`s presidency, the US
has lost its trade surplus in manufactured Advanced
Technology Products (ATP). The US trade deficit in ATP
now exceeds the US surplus in Intellectual Property
licenses and fees. The US no longer earns enough from
high tech to cover any part of its import bill for oil,
autos, or clothing.

This is an astonishing
development.  The US “superpower” is dependent on
China for advanced technology products and is dependent
on Asia to finance its massive deficits and foreign
wars. In view of the rapid collapse of US economic
potential, my prediction in January 2004 that the US
would be a Third World economy in 20 years was

Another five years like the last,
and little will be left.  America`s capacity to export
manufactured goods has been so reduced that some
economists say that there is no exchange rate at which
the US can balance its trade.

McMillion reports that median
household income has fallen for a record fifth year in
succession. Growth in consumer spending has resulted
from households spending their savings and equity in
their homes. In 2005 for the first time since the Great
Depression in the 1930s, American consumers spent more
than they earned, and the government budget deficit was
larger than all business savings combined. American
households are paying a record share of their disposable
income to service their debts.

With America hemorrhaging red ink
in every direction, how much longer can the dollar hold
on to its role as world reserve currency?

The World Economic Forum in Davos,
Switzerland, is the cradle of the propaganda that
globalization is win-win for all concerned.  Free trader
Stephen Roach of Morgan Stanley

that the mood at the recently concluded
Davos meeting was different, because the predicted
for the industrialized world have not made an

Roach writes that “job creation
and real wages in the mature, industrialized economies
have seriously lagged historical norms.  It is now
commonplace for recoveries in the developed world to be
either jobless or wageless–or both.”

Roach is the first free trade
economist to admit that the disruptive technology of the
Internet has dashed the globalization hopes.  It was
supposed to work like this: The First World would lose
market share in tradable manufactured goods and make up
the job and economic loss with highly-educated knowledge
workers.  The “win-win” was supposed to be
cheaper manufactured goods for the First World and more
and better jobs for the Third World.

It did not work out this way, Roach
writes, because the Internet allowed job outsourcing to
quickly migrate from call centers and data processing to
the upper end of the value chain, displacing First World
employees in “software programming, engineering,
design, and the medical profession, as well as a broad
array of professionals in the legal, accounting,
actuarial, consulting, and financial services

This is what I have been writing
for years, while the economics profession adopted a
position of total denial.  The First World gainers from
globalization are the corporate executives, who gain
millions of dollars in bonuses by arbitraging labor and
substituting cheaper foreign labor for First World
labor.  For the past decade free market economists have
served as apologists for corporate interests that are
dismantling the ladders of upward mobility in the US and
creating what McMillion writes is the worst income
inequality on record. 

Globalization is wiping out the
American middle class and terminating jobs for
university graduates, who now serve as temps, waitresses
and bartenders. But the whores among economists and the
evil men and women in the Bush administration still sing
globalization`s praises.

The state of the nation has never
been worse. The Great Depression was an accident caused
by the

incompetence of the Federal Reserve,
which was still
new at its job.  The new American job depression is the
result of free trade ideology. 

The new job depression is creating
a reserve army of the unemployed to serve as desperate
recruits for neoconservative military adventures. 
Perhaps that explains the Bush administration`s
enthusiasm for globalization.



Paul Craig Roberts [email
] is the author 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.