With Most of Their Facilities Abroad
Two Industry Leaders Blame Washington
For America's Economic Decline
by Dan Ehrlich


Recently I watched Starbuck’s honcho Howard Schultz and Caterpillar CEO Doug Oberhelman proclaim on network TV that Washington was broken, the people had no faith in it, our politicians were liars and for America’s economy to become strong again will take massive investment in US industry and education

And while I agree with their views, I couldn’t help thinking of some hypocrisy in their words. The majority of Caterpillar plants and Starbucks coffee houses are now in foreign countries. And most of the Starbucks’ recent cutbacks have been in America. Schultz didn’t mention this.

The official “recession is over” claim has been a feel good attempt designed to divert our attention from high unemployment, the declining middle class and the fact that the bulk of American industry is anything but patriotic.

The Economic Policy Institute, a Washington think tank, says American companies have created 1.4 million jobs overseas last year, compared with less than 1 million in the U.S. Robert Scott, the institute's senior international economist says the additional 1.4 million jobs would have lowered the U.S. unemployment rate to 8.9 percent.

“There's a huge difference between what is good for American companies versus what is good for the American economy," Scott says. The fact is: American jobs have been moving overseas for more than two decades. But now, the products being made are high tech goods as well as clothes and toys.
D.C. Uncertainty Deters US Business Investment
It is Schultz’s view the fault of our economic decline lies squarely with our politicians, claiming US industry is fearful of investing its huge profits back into America because of the anxiety and the uncertainty that exists with regard to the political system.

He pointed out only 9 million Americans currently work in our industrial sector. “Can you believe that? I mean, that's a stunning statistic.” His words came when Ford, also with has more factories abroad than in America, was announcing still another plant under construction in India where 5,000 Indians will be employed.

Profits at major American corporations are up, the stock market is soaring and our leaders repeatedly tell us the great recession of 2008 is history. When in fact it will still be with us through 2011 and probably 2012. That’s because the nation is carrying record high unemployment of 9.8 percent, or 17 percent in real terms.

On top of this, much of what US firms are making abroad is staying abroad…being bought by foreigners while the US domestic market still is in a subdued recession mode.

“It’s the economy stupid,” that Clinton era rallying cry is what today’s politicians keep skirting around, diverting us with a few key side issues, such as gays in the military, abortion, gay marriage and the Israeli-Palestinian conflict, from the reality of globalization… that vague locale where the political Right and Left meet.
When Right and Left Meet
The Left sees the global market as the death of the nation state, which it loathes, and the birth of a global society of growing equality, where the lion will lie down with the lamb. The Right sees it as the normal progression of free market capitalism with new markets for American industry, the end result being world economic zones controlled largely by super banks.

So far the Right is far ahead of the Left. Much of the world has been divided into economic and political zones, including NAFTA, the EU, SEATO and the African Union. And globalization has allowed, or forced, American firms to open up profitable operations abroad, while leaving their home country in the dust.

The main success the Left can claim is a growing middle class, if you can call it that, in overpopulated developing nations. By 2015, for the first time, the number of consumers in Asia's middle class will equal those in Europe and North America combined. Which is understandable since the American Middle Class has been in decline for several years and the Asian version is growing by virtue of the West's appetite for its cheap goods and services.

"All of the growth over the next 10 years is happening in Asia," says Homi Kharas, a senior fellow at the Brookings Institute and formerly the World Bank's chief economist for East Asia and the Pacific.

And, who serves these new consumers? US firms do, such as that most all-American icon Coca Cola. Of Coke's 93,000 global employees, less than 13 percent were in the U.S. in 2009, down from 19 percent five years ago.
More than Half New Caterpillar Hires Overseas
More than half of the 15,000 people that Caterpillar has hired this year were outside the U.S. The tractor maker from Moline, Ill. has opened two plants in China.

So, while Bill Gates and Warren Buffet are busy backing America with their millions, other major players are backing the very people that are helping to impoverish America. There may come a time when we won’t be able to afford the stuff China makes. But that won’t matter so much if China develops its domestic market…which will be a neat trick given the repressive nature of the Communist nation.

Yet, we know little of this back home. We are more likely to know the finalists on Dancing with the Stars or America’s Got Talent, the latter show pointing out an irony of the times as to who really has the talent these days.

Since WW2 we have been involved in four major military conflicts plus the Cold War, which enriched the Military Industrial Complex but did nothing for our population.

This plus more light entertaining such as Olympic Games, sports, social networking, the cult of celebrity and entertainment help blind us to real issues such as the economy, poverty, pollution, global warming, overpopulation, dwindling energy and other essential resources that are becoming more serious with each passing year.

Oberhelman says that an open and honest dialogue with our leaders is missing. “I don't believe that this situation about our budget is anything new. And it is beyond me that we can't have an open, honest dialogue with our people.”
American Education System isn't Good Enough Today
Underpinning much of this is the growing lack of quality education among America’s young. As Oberhelman explains, “What we find is a lot of the applicants need retraining, they need basic education, maybe they didn't get through high school, there are all kinds of problems.

“So we spend a lot of time training and retraining. It's heartbreaking because our education system has failed all of us. And again you go to China, even Mexico, Brazil the education systems are valued - ours are not in this country at K-12 level. It's amazing how that change has transpired in my lifetime.”

When asked why unemployment was remaining so high for so long, Schultz again blamed the isolationist atmosphere inside the D.C. Beltway.

“When I examined the cost of what the election cycle was in 2008, which was more than $4 billion, and it's estimated in 2012 $5.5 billion is going to be spent on congressional re-election and the presidential election.

“Just think about that - $5.5 billion when we have 9 percent unemployment in America. And people don't know where their next meal is coming from. The system is completely broken.”

And speaking of the election, Oberhelman said, “Any politician that says no tax revenue or zero spending cuts does not deserve reelection.”