The wild volatility on both Wall Street and China’s Shanghai Composite Index is a timely reminder that Economics 101 is a cruel and impersonal master.
Its essentials can be fiddled with, circumvented, massaged, and mangled. But in the end – and there is always an end – you cannot escape the laws of economics; they don’t care what you think is right, fair, or equitable. They are what they are.
What’s happening in China is, of course, fairly obvious. You have a bunch of unrepentant communists who are reaping the whirlwind of contradictory polices that demand total control and fidelity to a political dogma, itself at war with human nature – which, without any moral substructure, rests solely on the lust for power compelled by brute force – of which they are particularly fond.
Here in the United States, we have another dilemma altogether. We have a nation founded on Judeo-Christian values and constitutionally arranged to diffuse and limit government power, while promoting free markets and free exchanges between willing individuals. Now we are tasting the bitter reward for multiple decades of stunningly stupid economic policies that reject that history, not to mention basic economics and common sense.
This is obvious and being proved out in a hundred different ways in the American economy, such as with a national debt now larger than the yearly gross domestic product of the whole nation and requiring enormous interest payments; crippling regulations that are driving down business formation for the first time in many decades; a massive meltdown in housing that didn’t have to happen, with shadow inventory still hiding in bank portfolios; or Obamacare that is already a financial train wreck with the worse yet to come in 2016.
But the matter that directly affects the lives of average Americans the most is the vortex of bad mojo involved in “globalization” largely, and our “free trade” agreements specifically, mixed with the toxic cocktail of unchecked legal and illegal immigration.
The former largely ends our capacity to build things – to be masters of our national destiny; while the latter decimates the human capital that makes the nation work, and are “the people,” whose protection is the primary Constitutional duty of every public official.
Of course, free trade – meaning that partners can buy and sell to each other on a more-or-less equal footing, each providing certain goods or services at a price that the other cannot, and vice versa – is a documentable benefit to participating economies and, of course, an article of faith to political conservatives.
Which is why it’s a crying shame we don’t have much, if any.
In only two decades, the U.S. has seen untold millions of American jobs exported – and tens of thousands of the factories in which those jobs existed unbolted and moved overseas. Much of our most critical manufacturing capacity has been lost under the rubric of “free trade,” when it was actually “managed trade” at best, with scant evidence of reciprocal transactions that benefit the nation as a whole.
Quite the contrary, these agreements have been demonstrably riddled with various industry subsidies, consumption taxes, VAT taxes, and currency manipulation that protect competing economies from U.S. goods, or which are used to suborn markets all together.
But while the various trade agreements put in place since NAFTA in 1993 were driving down employment opportunities, massive and unchecked increases in both illegal and legal immigration began eating up lower income jobs and forcing wages down. The nonpartisan Congressional Research Service reported to the Senate Judiciary Committee that the foreign-born population of the United States surged 324.5 percent, from 9,740,000 to 41,348,066, from 1970 to 2013, with most of that coming in the last two decades.
As that happened the incomes of the bottom 90 percent of working Americans dropped 7.9 percent in 2013 dollars in the past decade; from an average of $33,621 to $30,980, and projections for 2014 show the same trend. The damage is also seen in the net worth of the average American family that has dropped nearly 40% in inflation adjusted dollars between 2003 and 2013, and indications are that 2014 will show a further slide.
While the huge dismantling of American manufacturing has been going on, conjoined with falling incomes and falling net worth, we have witnessed very large increases in the rate of poverty, food stamps, and especially the growth of childhood poverty. With 93 million working age American’s out of the workforce and part time employment becoming the norm for all too many citizens, the U.S. Census reports this month that legal and illegal immigration will soar to 51 million in just the next eight years and will account for over 80% of all population growth.
Finally, this week, we learned that over 50% of all immigrants, legal and illegal, are on at least one source of public assistance.
This dooms, if left unchecked, younger, native born American citizens to a grim employment future. But, it gets worse. Almost every presidential candidate now on the Republican ballot for 2016 endorses and are enthusiastic supporters to this economic irresponsibility; massive trade agreements and unlimited immigration. They all (save two) want “immigration reform,” without much definition of what that means. But generally they are advocating more legal immigration and refugee immigrants, while pledging to “secure the border,” whatever that means.
In addition, these candidates, with two possible exceptions, want to massively increase H-1B visas, which are a special class of visa that allow American companies to bring in professionally skilled immigrants at vastly reduced wages, to replace their U.S. citizen employees. We have already learned with Disney and other U.S. corporations that this is fast becoming a new U.S. business model to drive out higher paid American professionals for a more compliant population who in effect become indentured to the employer who sponsors them for the H-1B work visa.
It is almost as though the peoples own government is at war with the citizens they are sworn to protect. The “ruling class” shows very little concern about the long term consequences of the irrational policies they have unleashed on the nation.
While free trade is a laudable goal and sound economics, we have been hoodwinked by economic charts that show the gains and losses resulting from “free trade” policies at the expense of paying attention to what is happening to average American citizens – for whom economic theory is not an academic paper or graph, but is the daily reality of making a living and raising a family – and doing the right thing.
If the politicians – left and right – want to know why 75 percent of Americans think the nation is on the “wrong track” according to recent polls, then they need look no further than the vortex of wrong-headedness that has been driven by internationalist business models and irresponsible immigration policies.
It ain’t rocket science.
This election season is the opportunity for Republicans, at least, to hold the candidates collective feet to the fire. There is no bigger issue than this. Primary voters need to ask really hard questions of the herd of presidential wannabes: What is the place of America in the world? Do we care more about the U.S., or China, India, Mexico? Are we more interested in American workers, or immigrants? Are we more concerned about cheap imports, or employed Americans that can afford imports? Can we survive as a non-manufacturing country? What if there is another major world war, and all of our critical manufacturing is in the hands of our enemies? Finally, and most importantly, what kind of America do we want to leave for our children and grandchildren?
1) I’m asking for a citation from this “Congressional Research Office”. Did you mean the Congressional Research Service? If so, that agency’s reports aren’t made public (which is a topic for another good discussion).
2) Correlation does not imply causation. You can make nice correlation graphs that prove absolutely nothing. The works of visual art copyrighted in the USA and the number of New York females who die by slipping or tripping has an inverse correlation factor of -0.940
No surprise here that an establishment troll would “pop out the box” and cry foul.
Trollolol, Lucy Lemonhead. I post under my real name and always represent my true opinion on matters. That’s quite unlike you.
Quiet, you. Adults are talking.
Yes, name calling under your real name is very important.
It’s one step above your name calling under your fake name.
What are you anyway? Are you a Democrat or one of Bearing Drift’s mindless drones… a lobbyist, GOP insider type? I can’t ever figure out your points. Usually some glib b.s. which makes little sense to anyone but yourself.
I’m a “who”, not a “what”. I’m Bruce Hedrick. I own & operate SouthsideCentral.com, a website that covers the Southside region of Virginia. I specialize in local, regional and state political coverage. I have a background in the broadcast TV business, having been the station manager of WMDV-TV. I’m a confirmed independent voter who loathes partisan politics. I support, vote and endorse based on the person and their take on the issues… and not the party letter after their name. I’m generally fiscally conservative in my beliefs and also believe that social issues are useless to try to legislate.
I don’t give a rat’s ass whether you can comprehend what I say and you don’t speak for anybody else. With that being said, who the hell are you?
Well good then Brucie, I don’t get your points as they usually are stupid.
Your declaration debuts on my “Things I’m concerned about” chart at #895. For reference, #894 is “Hugh Jackman”.
I love a good “Scrubs” reference.
But you can get copies from the Congressional Research Service through your Congressman or Senator. One need ask for the document. How do I know? I have asked and obtained copies.
Very true. I want to see the context and analysis that the CRS has attached to this. Giere’s “analysis” doesn’t work for the steadiness of the average income versus the foreign-born rate in the area that I’ve highlighted in the red oval.
Well simpleton, influxes of cheap labor drives down labor’s price, and it exploded 1995 to the present. It became very acute during W’s Presidency because his immigration policy was called “catch and release.” It was a bit more clever than Obama’s Not gonna enforce that law policy because it had the appearance of enforcement. Did you take economics? What happens when you have a greater supply of something? Does the price go up? I guess in your idiotic Bearing Drift world it does. Those morons think illegal immigration is the greatest thing since the invention of the wheel.
That doesn’t explain the red oval timeframe that I highlighted. I pay no attention to ad hominem attacks by someone who doesn’t use their real name for credibility.
Ugh… Your oval frame displays a time that immigration is not a major factor to push overall labor prices.. It doesn’t start becoming a major factor until after the amnesty in 1986. Amnesty then begat higher levels of immigration and then you get the crossing point in 2005 and now you get stark contrasts in US income levels and masses of new immigrants. It can’t help but drive down labor prices as you move more people into the lowest paying jobs.
Only an idiot would use their real name on the internet.
After pulling that much out of your butt, you may need to see a proctologist.
Yes, it is the Congressional Research Service. The post has been corrected to reflect that.
This is a superb article that effectively explains why we are on the wrong track and why Americans sense it. Bravissimo, Don Miguel!
Why not write an article on how SCOTUS has become what it has?
150,000,000 Protestants in this country according to what I can find out. SCOTUS is 6 Catholics, and 3 people of Jewish dissents.
Now, how is it that out of nine Justices, not one of them is of a Protestant faith?
Well, I will tell you how, the same way the things that you wrote about in this thread got to be the way they are.
People talk about the government is this and it is that. Republican this and Democrat that.
The problem with this country is the people.
Well as far as the disproportionate number of Jewish Supreme Court justices go, that is an easy one to explain. My experience, as an American ethnic Ashkenazi Jew (I do not practice Judaism), is that more than any other group, Jews heavily involve themselves in the political process. I guess members of “the tribe” have learned the painful lessons of history – which is to go tribal or get trampled. Rich American Jews fill the coffers of both parties disproportionately, and do so for a reason. It is therefore no coincidence to me that five of the seven most recent seven Supreme Court nominations made by Democratic presidents have been Jewish. Nothing is stopping rich Protestants, and Protestants in general, from doing likewise.
Another great essay, Michael. Thanks!
Good points all. Thank you.
“It is almost as though the peoples own government is at war with the citizens they are sworn to protect.”
If you think its bad for domestic business, go see what its like for U.S. citizens who are trying to start businesses overseas, compared to Europeans starting overseas businesses America has essentially criminalized the practice. See: FATCA, FBAR, etc. Where European politicians see overseas business as a way for their countries to expand their power and reach non-violently around the world, America sees overseas business as a way for evil entrepreneurs to avoid domestic progressive/moral responsibility.