Job creation … or dissipation?

The dollar keeps going down, and the trade deficit keeps going up. Economists and reporters explain this in terms of American appetite for foreign goods outstripping overseas demand for U.S. goods.

There is another explanation, one perhaps closer to the truth. Americans are buying the same goods as in the past made by the same U.S. multinational corporations — only the goods are no longer made in the United States. Their production has been outsourced or offshored to Asia. The same goods now count as imports, because they are produced offshore.

A country cannot close its trade deficit if its economy is being moved offshore.

Offshore production hits the trade deficit from both ends: Goods once produced domestically become imports, and as production moves offshore the ability to export declines. When a U.S. business moves a factory to China, that factory’s products cease to be potential exports and become imports.

Stephen Roach at Morgan Stanley estimates more than half of our whopping trade deficit with China results from offshore production.

Economists claim outsourcing of U.S. production helps our economy by creating incomes for the Chinese to buy our products. However, increased Chinese incomes are likelier to be spent in China buying products from the U.S. multinationals that have moved their production to China. Outsourcing and offshore production cause the Chinese — not the U.S. — economy to grow.

Offshore production is a new development. It is not your father’s traditional foreign trade. Goods are not being traded. Offshore production is not a case of the United States making good X and trading it to China for good Y. It is a case of the United States ceasing to make good X in the United States and making it in China instead.

Foreign labor is being substituted for U.S. labor in the production of the goods and services Americans consume. Americans lose the incomes and employment associated with the production of goods they consume.

The Bureau of Labor Statistics offers no evidence to support economists’ claims that outsourcing production to Asia creates new and better jobs in the United States. On Feb. 11, the BLS released its 10-year projections of U.S. job growth by industry and occupation. Missing in the BLS lineup are the high-tech and knowledge jobs economists have been falsely promising us are our rewards for losing our manufacturing jobs.

Are you ready for this? The BLS says the bulk of U.S. job growth over the next decade will be in low-paid nontradable services that do not require a college education. Here is America’s job future for the next 10 years:

c Waiters and waitresses.

• Janitors and cleaners.

• Food preparation.

• Nursing aides, orderlies and attendants.

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