Congress's betrayal of the American worker

The following Acts of congress were ostensible made in order to keep American workers fully employed and to create a healthy economy:

The Full Employment Bill of 1946 was designed for the federal government to "promote maximum employment, production, and purchasing power". Amendments removed a guarantee by the government to explicitly provide full unemployment, but certainly the intent of the bill was to provide this as indicated by it's title.

The Full Employment and Balanced Growth Act of 1978 was designed to attain full employment, growth in production, price stability, and balance of trade and budget. Goals were established including a maximum of 3% to 4% unemployment rate, an attempt to balance the federal budget, and the avoidance of trade deficits. If private business interests did not attain these goals the government was entitled to create a "reservoir of public employment." The Act explicitly prohibits discrimination on the basis of age as well.. .

There was no effort to carry out the intent of these Acts. They were passed to create an appearance that these goals were being pursued while congress passed laws which did just the opposite. "Gloabalization" was intended to allow American businessmen to replace American workers with low-priced foreign ones. Since american corporations own much of the foreign manufacturing businesses, a foreign worker is simply an employee of an american firm hired overseas to replace an american worker stateside. The congress threw in an added tax sweetener to further facilitate this givaway. NAFTA and CAFTA had the same intent. So much for "promoting" full employment for U.S. citizens. Immigration policy, legal and illegal as well, was designed to do the same. No real serious efforts were made to stop the border crossings. The proof of this is in the number of illegal immigrants who suceeded. Legal immigration in the high-tech sector was a fraud from the get-go. Businessmen simply wanted younger,less expensive, and more pliable employees. Those older native ones wanted to be fairly treated and paid appropriately for a highly-trained engineer. Again, it was the government that legally made this jobs givaway possible. The age-discrimation laws were ignored and tons of young (inexperienced) but low-salaried foreigners came surging in. The immigration laws themselves were violated from the very beginning, proof being that high-tech salary levels immediately took a big dip violating the law's requirement that immigrants were to be paid equal wages. When it was obvious that wages were falling, the congress did nothing. The following is a excerpt of the law regarding age discrimination :

The Age Discrimination in Employment Act of 1967
PROHIBITION OF AGE DISCRIMINATION SEC. 623.
SEC. 2.
(a) The Congress hereby finds and declares that:
(1) in the face of rising productivity and affluence, older workers find themselves disadvantaged in their efforts to retain employment, and especially to regain employment ....
(b) It is therefore the purpose of this Act to promote employment of older persons based on their ability rather than age; to prohibit arbitrary age discrimination in employment...
Section 4
(a) It shall be unlawful for an employer- (1) to fail or refuse to hire or to discharge any individual orotherwise discriminate against any individual with respect to hiscompensation, terms, conditions, or privileges of employment, because ofsuch individual's age; (2) to limit, segregate, or classify his employees in any way whichwould deprive or tend to deprive any individual of employmentopportunities or otherwise adversely affect his status as an employee,because of such individual's age;

Again the government claimed to be interested in "promoting" employment for this group when it was blatently passing laws giving away the jobs of these older persons(younger ones as well). No effort was made to modify or reform these immigration laws even after it was obvious that american businessmen were violating them on a massive scale.

But the primary reason behind these givaways was really not disclosed. The dollar's exchage rate has been manipulated over the last 30 years in order to suit the wishes of the rich causing american worker's wages to become progressively less and less competive. This ultimately resulted in american manufacturing wage levels , on average, of ten times those of foreign workers in those less-developed countries which had been perfecting their manufacturing capabilities. Only if an american wage earner agreed to work for $2-$3/hr. would he have been competitive.

In contrast to this policy of overpricing american workers, Japan has built the world's third largest economy by consistently doing just the opposite. Every time the Yen's exchange rate appreciated, causing a potential loss in production(and employment), the Japanese reserve bank acted to lower its exchange rate. Thailand has recently attempted to do the same when the appreciation of it's currency caused a possible overpricing of the Thai worker's wage levels. Investors reacted negatively but Thai worker's jobs may ultimately prove to have been saved. The U.S. government, by doing just the opposite, has not only caused U.S. jobs to surge to overseas locations, but has resulted in the massive trade deficits which may ultimately threaten a catastrophic fall in the value of the dollar.

This exchange rate manipulation resulted in the failure of one of the major goals of the aforementioned Full Employment and Balanced Growth Act of 1978 , a balanced trade. The other goals of that Act, concerning employment and and a "balanced budget", have failed as well. Needless to say, an effort to establish a "reservoir of public employment" went nowhere.

The public's inability or unwillingness to face up these betrayals will result in the destruction of the working class in the U.S. The people will get the government that they deserve.

The Betrayal of the American Worker

The american working class has been betrayed again by the Federal Reserve Board and the current administration. The FED has been raising interest rates for the past year solely to support the american dollar's exchange rate. They have been telling the public that it is because of an incipient inflation. This is a patent lie which should be obvious to anyone who knows the slightest bit about economics. The FED did this in 1980-1983 in order to stop an inflation which was serious at that time. How did the people at the FED know that the economy was overheating then? It was easy. Interest rates were sky high reflecting a great demand for the money needed to purchase the new equipment and support the increased consumer spending characteristic of an inflation. Interest rates at that time were in the 8 percent range. They were in the 1-2 percent range when the FED started the current interest rate increases. They were that low for a reason. The U.S. has been in recession for quite some time due primarily to poor government policies over the past 20 years, including previous and persistent fiddling with the exchange rate. First for some history.
The exchange rate actually increased in the 1980-1983 period just at the time that large trade deficits indicated it should be decreasing. The rich were overjoyed and the government did nothing for 3 years to correct it. The result was a further increase in america's trade deficit and a downsizing of american (stateside) production which has continued to this day. Globalization hasn't hurt the interests of the working classes as much as this exchange rate tinkering.
So why is the government doing this? Just so that the rich can maintain their purchasing power. During the past 45 years inflation in the U.S. has decreased the dollar's purchasing power stateside. But the rich wouldn't allow this inflation to affect it's purchasing power over foreign-made goods. So they kept the exchange rate high even though foreign trade deficits indicated that it should be lowered. That's the reason production has moved overseas. But the government pretends that it is working in the interest of all the people. The media have helped to spread the myth that inflation hurts the poor most of all. What a joke that is on the public. Inflation is the result of more production and employment, and more money in the hands of the workers. Yes, prices go up as well. They go up for a very good reason. The working classes have more money to spend!
By continuing the "tight money" policy implemented by interest rate increases the FED will most probably "save the dollar". It will also without doubt cause continued (and unsustainable)american trade deficits and the resulting asset transfers to foreigners. It will also prolong the recession in the U.S. and stifle any business recovery or expansion (that's what interest rate increases are suppose to do.) The american worker's large wage differentials will continue to cause jobs to leave the country. And the greatest insult of all is another great myth spread by the rich in america, that american workers have only themselves to blame when they become unemployed. They have refused to train themselves properly or to retrain themselves in different high-tech careers. The sad truth is that the U.S. government has been betraying its working classes for the benefit of the rich mainly because the rich have the money and money keeps them in office. The U.S. is no longer a democracy, if ever it was one. The government is no longer one "of the people, for the people, and by the people". It is now a government "of the people, by the rich,for the rich". The government passes laws that are meant to control the people(working folks), which the rich believe should not apply to themselves. Any problems arising from their breaking of these laws are resolved legally by tricky high-paid lawyers. Other laws are simply designed to directly benefit the rich. David Cay Johnston, in his book Perfectly Legal explains many of the ways these gifts to the rich have been done legally. The congress has passed laws that have made it legal for the rich to exploit the american working class. NAFTA, CAFTA, tariff "reform", legal immigration, and globalization were all designed to teach the american worker a lesson, and the lesson was "Don't keep demanding a bigger slice of the pie". This lesson has been a good one for the american worker. He knows that now , if he wants to have a job, he must work at an "international" wage level. And the trade unions that past reformers worked so hard to create have been crippled.
So it is now time for the government to end this "lesson". Americans cannot survive on the $2-3 per hour "international" wages necessary for them to compete in a "global" economy. Government policy must change to reestablish high wages for these workers who are really the bulk of the middle class. The establishment of international unions and international minimum wages would go a long way to accomplish this. If something isn't done quickly the american working classes will fail, and the country will fail along with them.

Why American Corporations will not hire American workers

American corporations have been moving their export-oriented jobs overseas and will not be hiring American workers until differential wage rates decrease substantially. U. S. Wage rates, as well as EU wage rates, are considerably above the wage rates of those of workers in Asia. At the end of the second world war this may have been appropriate because the productivity of foreign workers was greatly diminished with the destruction of plant and equipment during the war, but things are different now. There is an abundance of capital throughout the world and foreign workers have access to the same advanced production technology and equipment previously enjoyed only by western workers. Low productivity of foreign workers had resulted in low wage rates in order for these workers to be competitive worldwide. Now, with foreign productivity nearly equal to that of western workers, these foreign workers should be paid more. But they are not. This results in the wage disparity between them and western workers, resulting in the movement of jobs overseas. If this wage disparity is not corrected all jobs which can be done by overseas workers will reside overseas . Now, after most blue collar production work has been moved overseas, white collar workers as well as many professionals in the U.S. will see their jobs disappearing as well. This group includes accountants, lawyers, researchers, engineers, scientists, microbiologists, biologists, and so on. Anything which a person can do at a desk in the U.S. can be done at a desk in Asia(and at a third of the cost in the U.S.), and any interaction with others can be done via teleconferencing or facs/telephone.
The big questions are: how this occurred in the first place, what will be the consequences, and how it can be resolved.
This problem started with the failure of the international exchange rates to adjust to
changes in the productivity of foreign workers. This was due to the failure of the U.S. government to allow the dollar exchange value to adjust properly to trade imbalances. After 1970, the exchange rates needed to float in order to prevent the loss of bank assets(especially gold) in the U.S . Floating exchange rates would have corrected the trade imbalances by a reduction in wage differential between U.S. and foreign workers and consequent enhanced price competitiveness of American-made goods. Various administrations allowed increases in the dollars exchange rate, but stopped it from falling. A particularly egregious one occurred in 1980-1984 during the Reagan years. In effect, the dollar was allowed an unhampered rise but not allowed to fall, completely undermining the effectiveness of floating exchange rates. This caused substantial(international) price increases for U.S.-made goods. This period initiated the vast increases in trade deficits we are currently experiencing. The foreign trade imbalances increased but the U.S. Federal Reserve was not required to give foreign dollarholders gold to offset these imbalances. Instead, these foreign dollarholders have accepted government IOU's(treasuries) and have been spending the remainder of the vast excess of dollars on U.S. real estate(causing the current bubble) and U.S. stocks and bonds(further exacerbating the stock market bubble and crash of 2001). But even real estate and stocks/bonds are not unlimited and these overseas buyers will soon run out of things to buy. In the meantime, jobs will be steadily ending up on foreign shores.
The ultimate consequence of these government policies will be a 'hollowing out" of the productive capabilities of the U.S. and the demise of the middle class(and serious damage to the profession classes). Worse yet, ultimately the U.S. will run out of assets to sell to foreigners and the dollar will will be bypassed as a hard currency. If this happens, the exchange rate will experience a drastic fall and the standard of living of all citizens will fall with it. But unluckily for all, current government policy being what it is, this will occur only after the great majority of assets in the U.S. are foreign-owned.
Many workers in the U.S. do not care who they work for, but foreign ownership has many pitfalls. Foreign owners of large manufacturing facilities can simply slow down production improvements and efficiency in the U.S. so that manufacturers in their home country will have a competitive advantage over their U.S. counterparts. They may also move the company headquarters overseas, diminishing already insufficient U.S taxes collections. They could undermine wartime manufacturing to benefit their home countries. These actions would cause: increased unemployment in the U.S., decrease social spending in the U.S., and increased production problems during potential world conflicts. For this reason, most foreign countries restrict foreign ownership of home corporations to less than 50 percent, and greatly limit the extent of foreign investment(to avoid stock market/real estate bubbles). They also severely restrict foreign ownership of a host of strategic manufacturing, mining, and petroleum-based businesses. The U.S. government should be doing the same.
I will leave what can be done to correct these circumstances for a future article. A good start would be to reverse those policies which have caused these problems, one of which is exchange rate manipulations which undermine U.S. worker's ability to earn a living. While China refuses to raise its exchange rate, the U.S. refuses to allow its to fall, which ultimately would have the same effect. Other policies which would enhance U.S. worker's chances to compete internationally would be the establishment of international minimum wage and work standards, and the establishment of penalties for non-compliance by our competitors. The establishment of an international minimum wage would solve not only the American worker's dilemma, but would increase the standard of living of citizens throughout the world . The first step which should be taken, however, is to make the American public aware of those policies that have got us into this mess, and to encourage them to take action to prevent them from occurring again.