President-elect Obama promises to create 2.5 million jobs and has plans for a massive stimulus package costing at least half a trillion dollars if not $1 trillion dollars.
But where exactly would those jobs be created?
Business Week Journalist Michael Mandel asks Can Obama Keep New Jobs at Home? Mandel points out that a massive stimulus might just well go offshore.
Some startling facts in this article:
Imports have risen from the equivalent of 9% of gross domestic product to almost 19%. Even more astonishing, the value of imported goods now is equal to almost 40% of the output of U.S. manufacturing.
In addition, Mandel notes our new consumer economy is funded by debt:
The financial crisis was caused, in large part, by U.S. consumers borrowing trillions of dollars from the rest of the world to buy imported cars, clothes, and gasoline, even as jobs slipped overseas
Indeed! The infamous debt and more debt spend spin cycle of our new consumer economy. Yet consumers get no break. Now their tax dollars are spent subsidizing the massive consumer credit industry. Already part of our $700 Billion Financial sector bail out has gone to Foreign Central banks.
Economist Alan Tonelson points out that controlling imports would provide a massive domestic economic stimulus and indeed the first $600 dollar check obviously did little to stem off a recession or boost the economy.
Joseph Stiglitz thinks an Obama stimulus should be $1 trillion but here again, no specifics really are mentioned or even lip service paid to keeping these stimulus funds in the United States domestic economy.
Below is the video of President-Elect Obama discussing his massive 2 year Economic Stimulus plan:
Yet without tying those jobs to U.S. citizens, permanent residents, how can one be guaranteed the stimulus stays in the United States, boosting the U.S. worker and the national economy?
Specifics from Obama are lacking. Bottom line the devil is in the details and if his Economic policy team do not face the reality of phantom GDP and the effects of offshore outsourcing and bringing in foreign guest workers to displace U.S. workers, the fact is his stimulus will be precisely the image Business Week presents:
Ten years ago, imports represented 19.46 percent of all manufactured goods bought in the United States. By 2006 – the last year for which data is available – imports had grown to 27.70 percent of a much larger U.S. market for these goods. If manufactures imports had only grown as fast as the domestic manufacturing market over that decade, in 2006, they still would have topped $927 billion. But they would have been $584 billion less than their actual levels that year.
The above quote is from Economist Tonelson proving if the US manufacturing sector simply received some action on bad trade policy, offshore outsourcing, curtailing imports alone would be the biggest economic stimulus this nation could hope for. Once again, the United States needs to transition back to a production economy, a heavy focus on our manufacturing sector. Dealing with globalization, unfair trade and global arbitrage, offshore outsourcing and insourcing truly is the answer to a real economic stimulus. Think green jobs cannot be labor arbitraged and outsourced? Of course they can and so can Research and Development. Still, these global arbitrage issues get scant attention inside the beltway.
Then there is that spending problem by our government. Now the Wall Street Journal reports China will Continue Buying American Debt. They note only America can run massive trade deficits, now being financed by China's surplus, but how long can such a system go on? It's clearly not sustainable.