Offshoring and decapitalization are the real causes of the economic recession that the US has been going through for a long time.
The main problem for the US economy is that globalization has long dissipated it. The relocation of U.S. jobs abroad has boosted U.S. manufacturing, industrial capability, and related innovation, research, development, supply chain, consumer purchasing power, and the tax base of the state and federal government. local government. At the expense of these long-term expenses, companies have increased short-term profits. The US economy is practically being shifted from the First World to the Third World.
Tariffs are not a solution. The Trump administration claims that the tariffs are paid by China, but as long as Apple, Nike, Levi, and all the other companies that have moved abroad are not exempted from the tariffs, they will burden the outsourced production of U.S. companies for products that are U.S. consumers. The tariffs will either reduce the profits of US companies or be paid for by price increases by US buyers. And they will only hurt China by losing jobs for Chinese in the production of US goods for US markets.
There is no trade war
The financial media is full of predictions about the consequences of a “trade war” between the US and China. There is no trade war. It is a trade war when countries try to protect their industries by erecting tariff barriers against importing cheaper products from abroad. But at least half of the goods imported from China are imports from US companies. Trump’s tariffs are for U.S. companies or U.S. consumers.
One has to be surprised that there is not a single economist in the entire Trump administration, in the US central bank, or anywhere else in Washington who is able to understand the facts and pass this knowledge on to President Trump. is able to.
Global recession because of Trump’s tariffs?
One effect of Washington’s all-encompassing economic ignorance is the brewing of the financial media’s tale that “Trump’s tariffs” are driving not only Americans into recession, but the whole world. Somehow, tariffs on Apple’s computers and iPhones, Nike and Levi Jeans shoes are sending the world into recession or worse. This is an extraordinary economic conclusion, but the mind has all but disappeared in the US.
The question for the financial media is: Will Trump’s tariffs in the US or around the world cause a recession that will cost him his re-election? This is a very stupid question. The US has been in recession for two or more decades because its production, industrial, and engineering potential has been shifted abroad. The US recession is still very good for the Asian part of the world. Indeed, China owes its surprisingly rapid rise to global power to the transfer of US jobs, capital, technology, and business know-how to China — and only so that shareholders can receive capital gains and US managers receive bonuses for it. that they made these gains possible by reducing labour costs.
Clearly, neoliberal economists cannot understand — a contradiction in themselves — that it is the outsourced production facilities that benefit from this economic activity when US companies use the products and services they provide to Americans. market, manufacture abroad.
Offshore production as the real cause of the recession Offshore production really began with the collapse of the Soviet Union, when India and China opened their economies to the West. Globalization means that U.S. companies can make more profits by letting down their U.S. workers. However, what is true for the individual company is not true for the whole. why? When many companies move their manufacturing facilities abroad for the U.S. market, the unemployed or low-income workers lose purchasing power to buy goods manufactured abroad.
Decapitalisation of enterprises
For years, I’ve been reporting that U.S. jobs are no longer middle-class jobs. In terms of added value and pay, these jobs are deteriorating to this day — and with this deterioration, aggregate demand is also declining. This is demonstrated by the fact that for years US companies have not put their profits into new factories and machine equipment, but have thus repurchased their own shares. Any economist who deserves this designation should immediately realize that companies that would rather buy back their shares than invest see no demand for more production. As a result, they plunder their businesses — for bonuses — and thus decapitalise them. We are well aware of what is going on and that this is incompatible with a growing economy.
The same is true of the employment rate. Normally, economic growth leads to an increase in the employment rate when people enter the labour market in order to benefit from jobs. Throughout the supposed economic boom, however, the labor force participation rate has fallen because there are simply no jobs.
The US was decapitalized in the 21st century, and living standards have fallen. For a time, the system was kept alive by an increase in debt, but consumer income could not keep up with it, and the rise in consumer debt has reached its limits.
Money does not drive production
The “fall protection team” of the Federal Reserve (Fed) and the Ministry of Finance can sustain the stock market by buying Standard and Poor’s financial futures . The Fed can pump more money into the system to push up asset prices. Money, however, does not drive up production because the jobs and economic activities that represent the jobs have been moved abroad. So globalization has shifted the US economy to China.
How inflation turns economic growth into
True statistical analysis, in contrast to official propaganda, shows that the happy picture of a booming economy is an illusion — caused by statistical deception. Inflation is undervalued; thus, when deflation in nominal gross domestic product takes place, prices are subsequently seen as higher than output growth — inflation thus becomes real economic growth. Unemployment is not taken into account in terms of numbers; if you have not been looking for a job in the last four weeks, you do not officially count as a worker or as unemployed. The government is collecting unemployment figures in such an extraordinary way that I wonder why the US does not have an unemployment rate of zero.
How does a country recover when it has handed over its economy to a country that is now demonizing it as an enemy? Is there a better example of a completely incompetent ruling class than one that hands over its economy to an enemy, tied up and gagged, just so that its business friends can claim short-term riches?
We can’t blame Trump for that. He inherited the problem and has no advisers who could help him understand the problem and find a solution. Such advisers do not exist among neoliberal economists. I can think of only four economists who could help Trump, and one of them is Russian.
In conclusion, the US is stuck on a path that leads directly to the Third World 60 years ago. And President Trump can’t do anything about it.