Dollar Diplomacy, Outsourcing, And The Iraq War

The US might be a

, but it is not a country that controls
its own fate.


Much of the US public is deluded about the invasion
and occupation of Iraq and its consequences and about
the state of the US economy.

Just as Americans are deceived into believing that
Iraq was involved in the

September 11 terrorist attack
on the US and
threatened America with weapons of mass destruction,
Americans are deceived into believing that they benefit
economically from outsourcing, offshore production, and
an unprecedented trade deficit.

The deceivers emphasize the lower prices, not the
lost incomes and destroyed careers, that result when

American workers
are replaced by

cheaper foreign labor
. The deceivers allege that the
trade deficit means that we get to consume more of the
world`s goods than we produce, with the added benefit
that foreigners pay for our excess consumption by
investing in America.

The truth of the matter is that "foreign
in the US today consists of Asian
central banks, mainly Japan and China, using surplus
earnings from massive trade surpluses to prop up the US
dollar by purchasing US government bonds.

By propping up the dollar, Asians keep their goods
and services cheap, thus worsening the US trade deficit.
Washington goes along because Asian countries use their
export surpluses to finance the US budget deficit.

Propping up the dollar undermines investment in
factories or businesses that produce jobs for Americans.
Stephen Roach, chief economist for Morgan Stanley,
reports that in 2003 net investment in the US business
sector was 60% below the level in 2000.

The US has become the world`s largest debtor, in hock
to foreigners for one-fourth of our Gross Domestic
Product. The ratio of US external debt (what we owe to
foreigners) and US exports is approaching the crisis
ratios of banana republics.

It is inevitable: America`s mounting debts will
produce a crisis. The dollar`s value will plummet, and
US living standards will drop. Everything will become
more expensive for Americans.

The perilous condition of the

is one of the reasons Bush invaded Iraq. What
keeps the

overvalued dollar
up is the fact that it is the
currency in which the Middle East bills its oil. Every
country has to purchase dollars in order to pay for its
oil, and these purchases keep the dollar afloat.

Just prior to the US invasion,

on Iraqi oil had run their course and were
about to be removed. Saddam Hussein intended to bill
Iraqi oil in Euros, which could have started the
abandonment of the dollar by the oil producing
countries. Instead of fixing our economic problems, we
started a war.

In the meantime, America continues to lose
high-paying jobs and entire occupations to foreigners,
because US corporations outsource jobs and produce

University of California

Norm Matloff
warns that


H1-B visas
, which bring foreign workers into US
firms, are destroying the US
software engineering
profession. (Matloff`s writings

available online
and are worth more attention than
this column provides.)

The shrinking

computer science enrollments in American universities

have finally caught the attention of the academic
establishment. Computer science departments, which
should have been speaking out long ago, have been
muzzled, because they are heavily dependent on research
and faculty funds from the very firms whose outsourcing
practices are destroying the occupation in America.

Falling enrollments mean fewer faculty positions and

graduate students
. Despite their funding being
threatened by fewer enrollments, most computer science
professors are unwilling to contradict their corporate
benefactors` false claim that

"outsourcing is good for America."
Another year
of biting the tongue, another grant received.

Instead, the professors acknowledge that programming
is a lost occupation for Americans and claim that there
is still a future for American students in designing
computer systems—"computer systems architecture."
Nonsense, says Matloff, a computer science professor
himself. He notes that it is impossible to design
computer systems without having years of programming
experience. If you lose programming, you lose the base
for the occupation, and all the rest goes offshore as

Some economists claim that lost occupations will
return to the US once wages rise in India and China.
Matloff`s answer: "Did manufacturing work return to
the US over time as wages rose in developing countries?
Of course not."
Only America is stupid enough to
give away its manufacturing and high tech occupations.

Other economists allege that new high tech
professions will rise to take the place of the lost
computer engineering profession. Matloff punctures that

Venture capitalists
routinely demand that the new
companies they finance outsource to the hilt.

US universities have educated enough Indians and
Chinese to fill every high tech job American firms have
to offer. The false claim that only drudgery jobs are
outsourced is laughable.

If you believe that lie, you believe Saddam Hussein
was in cahoots with Osama bin Laden and had weapons of
mass destruction.


Paul Craig Roberts 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