Neville Buck Marshall

Wall Street, Trade, and the New Economy Neville Buck Marshall

Between 1998 and 2010 the U. S. trade deficit with low wage countries brought the loss of more than 23 million jobs. The response to this unprecedented job loss was bipartisan rhetoric about reliance in the New Economy on services instead of manufacturing. The reality is that service sector jobs are even more susceptible to offshoring than are jobs in manufacturing. According to Princeton economist Alan Blinder, between 30 million and 40 million jobs in this country are susceptible to offshoring. Globalization of production through supply chains has fundamentally changed the meaning of trade. Trade in finished products between countries has been replaced, by trade in components among production centers around the world. The result is that both the value added in production and the jobs created by manufacturing have been moved out of the country. Reporting on the issue is muted, because there's no conflict between the political parties when it comes to trade. This bipartisan consensus on unrestricted trade has left the U. S. economy stripped of productive capacity and unable to create jobs. Meanwhile, the risk of financial collapse poses an even greater threat to the economy today than in 2008. The largest banks are now much larger, while unregulated trading in derivatives is backed by federal deposit insurance. When the next Wall Street crisis requires government bailout, the losses involved will bankrupt the Treasury. Bipartisan consensus continues to support unregulated finance and unrestricted trade with low wage countries. The consequences have been devastating. Financial speculation has become far more profitable than productive investment, both domestically and all over the world. At the same time, the pattern of world development creates too little demand to support markets for American goods.