Down with Upwork

Imagine that you are an IT worker at Disney, and have just been kicked to the curb. You were forced to “dig your own grave” and train a visa-worker from India to do your job. And you get an idea: I will make lemonade out of these lemons, become a freelancer, join the fabulous gig economy, be my own boss, work from home, blah, blah, blah. But you will soon find out that that door has also been slammed in your face thanks to freelancer websites like Upwork.com.

There doesn’t seem to be any research on the subject, but if you go and look at one of these websites you will quickly get the message: these are giant machines for the exportation of work to Asia.

If you sign up for one of these sites, and try to bid on a job, you will immediately find yourself up against many Asians bidding very low. Maybe you are a very skilled C++ programmer. Well guess what? There are thousands of Asian, Eastern European, Egyptian, etc. C++ programmers willing to work for $10 per hour.

Can you compete with them on price? Sure, if you live in the basement of your parents’ house. But not if you have a mortgage to pay. Imagine millions of Americans being forced to work for Asian rates, defaulting on loans, banks failing. Not a pretty picture.

And this is not just hyperbole; we have already become a nation of basement-dwellers. You have probably heard the recent news that 40% of young adults are still living with their parents – the highest rate since 1940. It is literally the Great Depression out there for young people, and freelancer websites are a large part of the cause.

While it feels wrong to restrict the Internet, I think it’s pretty obvious that a tariff needs to be put on these service imports. Some economists like to say that “housing IS the business cycle” and if we can’t get the kids out of the basement, how will they ever be able to buy houses of their own?

Back here, I wrote that we need to:

“…institute an across-the-board tariff on imports of goods and services. A protective tariff that will be high enough to bring back our factories from Mexico and China, our call centers from Eastern Europe, and our IT shops from India.”

And we need to expand that to include freelancing websites. Take a look at this ad that Upwork is running now:

The copy says “Find your perfect freelancer” but the graphic screams “Export your job to Asia.” And look at how small her desk is; just barley big enough to hold a laptop computer. I’ve never seen a desk that small in the USA, but have seen them in photos from Third World countries. I suppose they are needed in cramped living quarters. Also, look at the wall. It’s not stone, but it gives a prison-like impression, right? Is she working in a Foxconn style building with suicide nets? The whole thing screams: cheap foreign labor.

I am not criticizing Third World workers at all. My point is that the integration of cheap, foreign labor into our economy on a mass scale has caused mass poverty for Americans. Freelancer websites are engines of deflation for the USA.

Note: the Upwork ad reminded me of this demeaning female/cheap-labor ad from the 1970s, with a woman posed like a dog fetching a stick:

Stop Calling it “Trade”

Imagine two trucks. One leaves St. Louis with a load of raw widgets, bound for Mexico. Another leaves Indianapolis with a load of green paint, also bound for Mexico. These are fabulous exports, right? Wrong. When the trucks get to McAllen, Texas an SUV joins them in line to cross the border. The SUV is driven by a manager who lives in McAllen, and commutes to work every day in Mexico.

After they cross into Reynosa, the vehicles drive a couple of miles to a maquiladora. The trucks pull up to the loading dock, and the manager lets a group of Mexican workers into the building to unload them. Then they paint the widgets green, and load them back onto the trucks. At the end of the day, the manager pays each worker $10, and he and the trucks head back to the USA. A couple of days later, the green widgets are delivered to a Walmart in Atlanta.

Now, is that what any clear-thinking person would describe as trade? Of course not; don’t be ridiculous. However, it most definitely is counted as trade. Suppose the raw widgets and paint are worth $1 million, and the finished widgets are valued at $2 million. The economists would say that we just created $3 million of wealth thanks to “trade” with Mexico.

But if its not trade, then what is it? Answer: it’s just a scam to cut American workers out of the loop. And like I said back here, this scam can’t be “fixed” by President Trump. It can only be ended. Either American workers are in the loop, or they are not. There is no middle-ground. And since President Trump has promised to give the people their jobs back, he has no choice but to smash NAFTA.

However, even if NAFTA is abrogated, it’s not guaranteed that the American people will go back to work. When China sees the end coming, they will think: “Ah, ha! Now is our chance to steal the widget market from Mexico!” And they will gear-up, and by time NAFTA is done with, they will be flooding the USA with equally-cheap widgets.

So, not only can NAFTA not be fixed, but Trump’s plan to renegotiate trade agreements one-by-one with each nation won’t work. If even one cheap-labor haven is left with the ability to export to the USA tariff-free, then all the production will move there instead of here. Therefore, the only policy that can possibly work is an across-the-board protective tariff.

The moral of the story is that you can’t clean up the mess caused by globalization without ending globalization. Trump made big promises to workers, and if he wants to hold onto the Midwestern states that put him in the White House, he really doesn’t have any other options.

What if you wanted to get all of the 43.6 million people on food-stamps back to work before the 2020 election? You would need to create nearly 1 million jobs per month – that’s five times the current rate. That’s a gargantuan task, and trickle-down economics and infrastructure projects are not going to cut it. Not even close. Ending both globalization and mass-immigration is the only conceivable strategy.

A Second Industrial Revolution

Donald Trump is sounding more like he wants to smash NAFTA, as I recommend, instead of renegotiating it. So, what if a President Trump really did throw up a protective tariff sufficient to cause companies to bring their plants back to the USA? How many are we talking about? To think about this question, I have invented a new term:

The Exo-Economy
The exo-economy is that portion of the US industrial base which is located outside of our borders. You have probably seen estimates of 40,000-60,000 factories that have moved overseas. We can only guess because our government does not keep any official statistics. Nevertheless, if we used an estimate of 50,000 that would be 1,000 new factories for each state in the union.

If all of those factories came home, that would indeed constitute a revolution.

But that is only half of it. The free-trade era is decades old, and during that time, factories have been built in nations like Mexico, China, and Taiwan that were never in the USA to begin with. If you watch Shark Tank, then you know that it is pretty much impossible for an entrepreneur to get funding if they don’t have a “China strategy.” So, the vast bulk of new American manufacturing capacity has been sited overseas for many years now.

How many of these virgin exo-factories are there around the world? God only knows, however we can get an idea by looking at the size and growth of nations and companies whose economies have been constructed to export to the USA. I would like to see a professional economist study this issue and come up with an estimate. Personally, I think that a very large chunk of the emerging-markets “miracle” is comprised of plants that export nearly all of their output to the USA. Think Foxconn; their giant factories that produce phones and tablets for the USA were never here to begin with. A protective tariff would cause that production to relocate to the USA.

Nobody knows how big the exo-economy is, but there is no question that it is huge. We might have to double our estimate of incoming plants from 1,000 per state to 2,000. Of course, if we put up tariffs, other countries would retaliate with tariffs of their own and our exporters would lose business. However, I think the net effect would be enough new jobs to get all of our 43 million citizens on food stamps back to work.

This will be a project of Earth-shaking proportions. Consequently, we need to put a lot of thought into it. We need…

A Globalization End-of-Life Plan
Trump talks about a 35% tariff on Mexico, but that only makes sense if you want to single-out and punish Mexico. Such a tariff wouldn’t cause companies to come back to the USA; it would only cause them to go to Bangladesh, Vietnam, or Singapore. So, any protective tariff would need to be across the board; not designed to punish any one nation, but rather to rebuild the smoking-crater that we call the USA.

In order to give companies time to adjust, it might be a good idea to raise the tariff 10% per year with the first hike as soon as possible. While 10% might not prevent Ford from moving its small-car production to Mexico, it would let them know that the 35% was coming for sure.

Another approach would be to go industry-by-industry. Since the tidal-wave of demand for domestically-produced products would be so huge, we have to make sure that our existing industry could ramp-up swiftly. For example, if we put a tariff on shoes, how long would it be before domestic manufacturers could scale up? Years? Decades? That would be a terrible hardship on female citizens.

Of course, just because we put up a tariff doesn’t mean that products would stop coming in immediately. They would still come, if needed, but cost a little more. In most cases. In other cases, angry countries might just cut us off completely, and that could indeed be debilitating. Remember the dust-up we had with China a few years ago over rare-earth minerals? If Asian nations cut us off from technology, it might be a long time before you could get a new cell phone or laptop. And Mexico could turn the lights off in San Diego:

Mexican windmills export energy to San Diego.

Mexican windmills export energy to San Diego (story here).

Pollution Privilege
There are many more aspects that need to be studied beyond economics. After all, if Trump brought factories back to Detroit, and made it look like Ho Chi Minh City, would he be lauded or reviled?

Ho Chi Min City.

Trump wants to remove “un-needed” regulations on business, but I don’t think Americans will stand for going back to a toxic environment. We know for a fact that companies can manufacture products safely, cleanly, and profitably, so why tolerate anything less?

One of the big “free trade” perks for companies is what we might call the Pollution Privilege. So, not only do you make money on cheap labor, but you make additional profits by not having to worry about poisoning the peasants. This, of course, is a barbaric practice and should not be brought back here.

Retraining
Tim Cook says that Americans are too stupid to make things. Of course, if you send all the factories away, as companies like Apple have done, and then criticize the former workers for having rusty skills, may I suggest the possibility that you are a jackass? Of course the USA is blanketed with rusty-skilled workers. Republicans like Donald Trump tend to think of retraining as a form of welfare. But this should be one of the very first things that Trump does. Even low-tech production like sewing clothes requires a high level of skill. Putting a Nike factory in the hood, or the trailer park, will be like a UFO landing. The factories have been gone for so long that an entire generation has no idea what goes on there. I’ll bet there are lots of old-timers in Detroit who know how to build a carburetor, but even they would need to be retrained on fuel-injectors. We will need thousands of vocational academies, and no, people on food-stamps can’t afford to pay for retraining.

Military Alliances
How many countries tolerate a U.S. military presence only because we allow them a free hand to export to our domestic market? Probably quite a few, so we need to plan for the loss of such “allies.”

Monopolies
When imports undermine a domestic monopoly, that’s a good thing. But why don’t we just break up the monopolies ourselves? If we go back to making things ourselves, this is going to become a bigger issue. If Trump wants a legacy of creating jobs for the people, he would tarnish it by allowing monopolies to gouge people at the cash register.

Unions
In places like Mexico, union organizers are shot in the head and buried in shallow graves. That’s pretty much a requirement for becoming a U.S. trade partner. Trump is an anti-union guy, and started out preaching against the minimum wage. Recently, when speaking to crowds in Oho and Pennsylvania, two pro-union states, Trump told them (paraphrasing): “I will bring the factories back from Mexico, but I can’t promise that they will come here. They might go to other states.” So, he was urging Ohio and Pennsylvania to become “Right to Work” states, which really means “Get Rid of Unions” states. Is that a good strategy for winning the votes of mostly-Democratic union members? Maybe; maybe not. But he seems willing to bet the election on it.

The Gaping Hole in the U.S. Constitution
Re-Industrializing with lax environmental regulations, low pay, and harsh working conditions hardly seems worth the effort. Going back to the age-old struggle between unions and robber-barons is not inspiring. So, why don’t we try for something better? The word “capitalism” does not appear anywhere in the U.S. Constitution. Back then, we were an agrarian nation, not to mention a barbaric slave state. So, it is not surprising that the founding fathers had nothing to say on the subject of labor relations.

If we are going to embark upon a second revolution, why not see if we can’t achieve a grand bargain of labor relations and incorporate it as a constitutional amendment? At first glance, this sounds like tilting at windmills; an impossible task. But in reality, it might be very easy. After all, the Germans have already solved it. It wouldn’t take long to copy their Betriebsrat system. When it comes to industrial success, you can’t do much better than the German approach.

Not Just an Industrial Revolution
Not only will the Second Industrial Revolution be physically huge, it will also constitute a huge political revolution. If you are thinking: “We are the USA; we are a large, powerful sovereign nation, and we can adjust our trade policies as we see fit” then you just haven’t been paying attention. The policies that we have now were written by corporate lobbyists, and rubber-stamped by a bought-and-paid-for Congress & White House.

So, while the multi-national corporations that run this country, and the world, like to keep a low profile, that doesn’t mean that they are not there, and it doesn’t mean that they won’t fight back. Consequently, this isn’t just a second industrial revolution, but a second War of Independence.

The probability is very high that Trump will be Farage’d – or worse.

In other words, don’t be surprised if things turn ugly. Establishing sovereignty the first time wasn’t easy. It’s not likely to be easy the second time either.

Jobs or Jihadis? Trump has the Better Vision

Donald Trump’s popularity has surged among African-Americans recently (see the L.A. Times tracking poll). I think this is because his vision of the future is far superior to that of Hillz. Trump wants to bring the factories home and see to it that some of them go into black neighborhoods. Meanwhile, Bill Clinton wants to repopulate Detroit with Syrian refugees – possibly the dumbest political strategy in the history of American politics.

Advantage: Trump.

But can Hillz change her vision to something better? No, she cannot. She can’t promise to bring jobs to the hood because she, and Obama, are hardcore globalists. They are committed to letting the jobs go to wherever the “invisible hand” thinks best. And that means Bangladesh, not Baltimore.

The hard truth is that Hillz is the torch-bearer of a dying ideology: globalism. Her vision for Urban America is: “sorry, you’re S.O.L. The invisible hand has spoken.”

Consequently, Hillz has decided to decline battle on the jobs front, and instead concentrate on portraying Trump as a racist in order to keep the black vote in the fold. Will it work? Will black people give up the vision of a more prosperous future in exchange for the fleeting satisfaction of dispatching a “racist” candidate? I don’t know, but this is likely what will determine the election.

From Tax-and-Spend to Bribe-and-Spend

Look at this Lear Corp. maquiladora in Ciudad Juárez, just across the border from El Paso (lower-right quadrant):

It is one of dozens that the company has in Mexico, employing thousands of workers. They make car-interior parts like seats and visors. When Lear pays their Mexican workers, there are zero FICA taxes withheld from their checks. Zero dollars go to Washington, D.C. It all goes to Mexico City. And what about the company’s profits? Where do those go? Ireland? The Cayman Islands? I don’t know, but what I do know is that if this plant were located a half-mile north in Texas, there would be more money available for our bureaucrats to tax-and-spend.

But for some reason, they are not clamoring for the return of the former US tax-base now residing in Mexico, China, India, etc. Even as the federal deficit and debt balloon, and the “non-defense discretionary” part of the budget shrinks to only 13%, nobody in Washington makes a peep. Curious, no?

I think that what we are seeing is a transition from FDR’s old-fashioned tax-and-spend model to a shiny, new bribe-and-spend model. In this new system, politicians get their discretionary budgets directly from billionaires. We have hard evidence that this is happening now that George Soros has been hacked. Can it be long before right-wing billionaires like Sheldon Adelson and the Koch Brothers are hacked too?

David Rockefeller designed his Washington Consensus as a massive wealth-transfer program from workers to billionaires. It worked. The world’s 2,473 billionaires now control $7.7 trillion of capital, which is equal to the GDP of Japan plus Germany. Thanks to “free trade,” tax flows that once went to Washington have been diverted into the coffers of multi-national corporations and billionaires who now use the cash to purchase government officials, and make policy. George Soros has flooded Europe and the USA with thousands of jihadis. Sheldon Adelson wants to fire a nuclear warning shot at Iran. Both left-wing and right-wing billionaires are literally insane.

That’s why we got rid of kings in the first place.

Bogus Mexican Trade Stats

During his meeting with Donald Trump, Mexican President Enrique Peña Nieto said:

“Our country buys more from the U.S. than Germany, Spain, France, Italy, Japan, and the U.K. together.”

While that is a true statistic, it is not an apples-to-apples comparison. The idea that trade with Mexico is a fabulous source of wealth for the USA is completely ridiculous.

Imagine a scenario of what actually happens: a million dollars worth of auto parts are “exported” from the USA to Mexico. The parts are assembled into a car, and then a million dollars worth of cars are “exported” from Mexico to the USA. And $2 million in “wealth” has been created.

On paper.

In reality, the whole thing is a giant machine to help multinational corporations eliminate their American workforces. Just as David Rockefeller intended when he architected the system decades ago.

Our trade with Mexico bears no resemblance whatsoever to our trade with countries like Italy. It’s a completely different animal. A very large chunk of the 43 million people that we have on food stamps are NAFTA victims. Getting them back to work will never happen without us abrogating NAFTA (as well as other “trade” agreements).

Will Trump Usher in the North American Union?

Last week, I pointed out the new “hemisphere” talking-point unleashed by Donald Trump when he was in Mexico. Well guess what? Arch-conservative Ann Coulter is now repeating it. In a column on Breitbart, Coulter wrote:

“But he [Trump] also brought up the serious issues of illegal immigration, a border wall, drug cartels, NAFTA and keeping manufacturing in our hemisphere.”

Since when is “keeping manufacturing in our hemisphere” a “serious issue” – or an issue at all?

Since Trump started raising money, that’s when.

amero

Will you, one day during the Trump administration, wake up to find that the USA has been dissolved into the North American Union (NAU)? And the dollars in your bank account converted into Ameros?

It’s starting to look that way.

Remember, without a Bretton-Woods type of system to manage exchange rates, perpetual currency-devaluations (to garner export-market share) will be the order of day. So, we should expect the Amero to be weaker than the dollar, and the North American Union to be one grand exercise in currency devaluation – just like the Germans did by converting the Deutsche Mark into the Euro.

A few months ago, Breitbart effused that the election was going to be a straight up-or-down vote on restoring US sovereignty. Well, it’s starting to look like no such thing. The Democrat is a globalist, and the Republican is now a hemispherist, which amounts to the same thing.

Trump is driven by self-aggrandizement. Getting him to sign-off on the NAU might be as simple as putting his face on the new currency.

What About the Ex-Consumer?

Back in the day, the globalists tried to convince us that exporting factory jobs would eventually lead to more home-office jobs here as companies expanded overseas. That, of course, was a lie, and not even Larry Kudlow tells it anymore because today, everybody knows that exporting jobs has led to mass poverty, burning cities, and The White Plague.

But the globalists won’t quit; there is just too much money to be made from carpetbagging the USA. So, what argument do they use now? Let’s take a look at what right-wing, globalist, National-Review contributor Tom Rogan had to say on the last episode of The McLaughlin Group (transcript here):

“…my support for free trade comes down on the notion that I genuinely believe…that free trade saves American families thousands of dollars a year because it allows, for example, a t-shirt to be made abroad at lower cost than it would be made here. So, that saves families money.”

This is the “Globalization is Good for Consumers” talking point. Interestingly, this exact same argument could be used to justify slavery. T-shirts are made of cotton, so if we could enslave the cotton-workers, we could reduce costs even more for consumers. How about it, Tom?

[Note to self: don’t give them any ideas!]

Globalists like to argue that the USA is a consumer economy, and that anything that raises consumer prices is automatically bad for the nation. And yes, if we discontinue the use of Asian slave children in the production of our sneakers and cell phones, their prices could be expected to rise.

But when we talk about consumers we should really say the remaining consumers because the victims of globalization are no longer full-fledged consumers. Suppose that the factory where you used to work was sent to Mexico, and instead of a paycheck, you now get $127 per month in food stamps. And you spend it on toothpaste and Ramen noodles at the Family Dollar. Are you really a consumer? No, you are now an ex-consumer.

In aggregate, retailers can turn a profit by serving the massive ex-consumer segment of the market. But what if that were the entire economy? Would you still call the USA a consumer economy? No, of course not.

Globalization (which includes mass-immigration) also puts downward pressure on wages for remaining workers. So, are the low prices at Walmart really a windfall from globalization? Or are they a necessity to keep the business of the down-sizing middle class?

So, when you hear a globalist making this argument, ask him about the ex-consumers. And ask him if it is better to have a job in a t-shirt factory, or be on food stamps with the ability to buy a cheap t-shirt from China. And don’t be surprised when he opts for the latter, because that’s what carpetbaggers do. They burn the land and boil the sea just to make a buck.

Read more on this subject in my first book. Search down the page for the “Seductions of Slavery” section.

Trump Can’t “Fix” NAFTA

Imagine a widget factory that was in St. Louis before NAFTA. And now it is in Reynosa, Mexico just across the border from McAllen, Texas. The factory used to employ Americans at $20 per hour. Now it employs Mexicans at $1.25 per hour.

How does Donald Trump negotiate a better deal? Is this not a binary situation? Either the factory is in the USA, or it is in Mexico. Either St. Louis makes the widgets, or St. Louis burns.

No, NAFTA cannot be fixed; it can only be smashed.

So, what if we do smash it? What if we put tariffs on manufactured goods such that it is no longer profitable to locate factories in Mexico? There will be a mass exodus of factories back to the USA, a mad scramble to staff them, and a lot of poor people will be able to live in apartments instead of refrigerator boxes. So, that would be a good thing for the USA.

But Mexico will retaliate. They will absolutely put tariffs on American agricultural exports. Flyover country senators will storm the Oval Office, and Trump’s Secret Service detail will have to beat them back with batons. Those are the guys that Trump will have to negotiate with. And that may not be easy, or even possible. Those senators might be able to block everything that Trump tries to get through Congress.

Agriculture is a much smaller employer than manufacturing. So, if you want to create a lot of jobs, trading agricultural exports for factories is the way to do it. Probably the only way that we will ever be able to substantially reduce the 43 million people that we have on food stamps.

We need to do something dramatic and earth-shaking; not send Carl Icahn to Mexico City to negotiate. This has nothing to do with the Mexicans or the Chinese or the Indians. They are just the lucky recipients of the vast program of carpetbagging set into motion by David Rockefeller long ago.

What we should do is announce to the world that we have screwed up: Don’t take it personally; it’s us, not you. We have dug ourselves a giant hole, our cities are burning, and the only way dowse the flames is to institute an across-the-board tariff on imports of goods and services. A protective tariff that will be high enough to bring back our factories from Mexico and China, our call centers from Eastern Europe, and our IT shops from India.

There are about 3,000 maquiladoras employing 1 million Mexicans along the border. What if we moved all those plants to Texas? That would totally eliminate poverty in the state, right? Wrong. Texas has 3.7 million people on food stamps. The size of our poverty problem (not to mention the corresponding national debt) is GARGANTUAN. Anybody who tells you that there is another way out is living in a dream world.

Note: Mexico and Canada have a lot of oil. However, if we abrogated NAFTA, I suspect that they would still want us as a customer.

Note: Not all of the plants went to the maquiladora belt along the border. There are many more further south. For example, here is a GM plant in Silao:

This is a live map, so you can click the “+” to zoom in, etc. If you own a Chevy Silverado, it may have been built in Silao.

Ted Cruz Sings from the Rockefeller Hymn Book

During last night’s Republican presidential debate, Ted Cruz said: “Smoot-Hawley led to the Great Depression.” But if you look at the chart below, you will see that tariffs during the 1930s were not unusually high by historical standards:

Tariff Table

And I might add that tariffs were very high during the period between the Civil War and World War I when the USA grew into a superpower. And that was no accident. In fact, it was our plan. Tariffs were the centerpiece of the American School of Economics. This is historical fact. High-tariff America didn’t have 45 million people on food stamps like free-trading America does today.

Cruz also said: “…a tariff is a tax on you, the American people…” But that’s only half of the transaction. The tariff would bring some production back to the USA, people would get hired, start spending money again, and your business would have more revenue. Or, if you work for somebody else, their revenue would increase and you could ask for a raise.

Both of Cruz’s statements are straight out of the globalist book of talking points. I wouldn’t go out of my way to criticize him if he weren’t posing as an outsider. But the two quotes discussed here are 100% establishment.

It is painfully obvious that the “grand” experiment of free trade and mass-immigration conducted over the past 25 years has failed. These polices need to be reversed, and Ted Cruz is obviously not the man to do it.