Outsourcing The Production Of Virtually Everything Has Brought Us To The Brink Of A Nightmare Scenario For The U.S. Economy

Many of the imbalances that are contributing to the nightmarish shortages that we are currently witnessing are not going to be solved any time soon.  Ever since I started The Economic Collapse Blog, I have been warning that outsourcing the production of just about everything and running massive trade deficits year after year would eventually have very serious consequences down the road.  Well, now we are officially “down the road”, and our incredibly foolish trade policies have put us in a very precarious position.  During the “good times”, being extremely dependent on the rest of the world to make stuff for us wasn’t a problem, but now it is rapidly becoming a national security issue.

For example, without a steady flow of computer chips, our society as it is formulated today simply could not function.  We need computer chips for our vehicles, for the trucks that transport all of our goods, for the farm equipment that produces our food, for the extremely sophisticated equipment in our hospitals and for the millions upon millions of electronic devices that connect to the Internet.

The global chip shortage has been a very painful reminder of how exceedingly dependent we have become on technology, and it has also shown us how unwise it was to outsource production of most of our chips to Asia.

Back in 1990, the United States produced 37 percent of all computer chips in the world.

Today, that number has fallen to just 12 percent.

Business leaders are now pledging to start ramping up production here in the U.S., but that will take an extended period of time, and Intel’s CEO is openly admitting that the current shortage of chips could take “several years” to be resolved…

Intel Corp’s (INTC.O) CEO said on Monday it could take several years for a global shortage of semiconductors to be resolved, a problem that has shuttered some auto production lines and is also being felt in other areas, including consumer electronics.

Sadly, there are many other industries where our outsourcing makes us extremely vulnerable.

Did you know that 60 percent of all apple juice that is sold in this country now comes from China?

Taken together, these laws explain why the apple orchards near my hometown disappeared. Nearly 60 percent of the apple juice sold in the United States comes from China, even though most of America has a climate conducive to apple production. The problem is so bad that salmon caught in the United States is shipped to China for processing and then shipped back to the United States for consumption.

There is no reason why we can’t make our own apples.  In fact, weather conditions are ideal for apple growing in much of the nation.

And how hard can it be to gather apples and squeeze the juice out of them?  We should be able to do that here.

But during the “good times”, big corporations discovered that they could make a little bit more profit by outsourcing to China, and so that is what they did.

Over the decades, big corporations have come to dominate food production in America, and this has pushed small family farmers to the brink of extinction

The design of this framework benefits only the largest farmers who have the resources to produce these commodities at scale. For family farmers, the impact has been devastating. The share of each dollar spent on food that winds up in the hands of farmers has fallen from 53 cents in 1946 to 14 cents today, the lowest level ever recorded. Diversified family farms raising a variety of crops and livestock have been replaced by large industrial operations exclusively growing commodities like corn and soy at scale.

This grimness has caused countless family farms to throw in the towel. Since 1980, America has lost 50 percent of its cattle farms, 80 percent of its dairies, and 90 percent of its hog farms. As Benson and Butz threatened, farmers were forced to choose between getting big or getting out. The average size of a farm nearly doubled from 650 acres in 1987 to 1,201 acres in 2012.

As long as relations with China are good, we will be able to get the apple juice, salmon and other food products that we need from them.

However, if relations with China get really sour, all of a sudden there will be a whole bunch of basic things that will be in short supply and that we won’t be able to make for ourselves.

Speaking of China, there is a very serious shortage of shipping containers right now.  And one factor that is making it worse is that we buy far more from China than they buy from us.  So empty shipping containers are stacking up on our side of the Pacific Ocean because there is not enough commercial traffic going back the other way.

Sometimes empty shipping containers are shipped back to foreign ports without anything in them, but this is exceedingly wasteful

Using export data from U.S. Customs and Border Protections compiled by trader intelligence data firm Import Genius, Earther analyzed thousands of U.S. export records marked “empty container” shipped by Thor Joergensen A/S, a supplier based in Denmark whose largest customer is Maersk Logistics.

We found that in 2020, 668,086 empty containers were shipped to foreign ports around the world, 12 times more than in 2019. At the height of this empty container frenzy, in November 2020, 87,000 ghost containers were exported, 87 times more than at same time in 2019.

Another shortage that is weighing heavily on the U.S. economy is the worker shortage.  Even though employment is still way, way below pre-pandemic levels, millions of Americans have decided that they simply do not want to go back to work because of the generous government benefits that they are now bringing in.

As a result, we are now facing a serious worker shortage, and the U.S. Chamber of Commerce says that it is “getting worse by the day”

“The worker shortage is real — and it’s getting worse by the day,” US Chamber of Commerce President and CEO Suzanne Clark said.

Most big corporations can easily pay more to bring in new workers, but many small businesses that are barely scraping by cannot afford to shell out higher wages.  Along with other factors such as widespread shortages and higher commodity prices, this is creating a “perfect storm” that threatens to force many more small businesses to shut their doors.  In fact, one recent survey found that 35 percent of all small businesses in America are “at risk of closing permanently by the end of the summer”

As small businesses complain that it has never been harder for them to hire workers according to a recent NFIB survey, many are facing growing pressure to survive. As the American economy continues to reopen, some fear it might not happen soon enough to save thousands of small businesses. Data from Alignable’s June Revenue Poll shows that 35% of all small business owners are still at risk of closing permanently by the end of the summer.

Among the 3,772 small business owners in the 10 days ended June 1, Alignable’s June Revenue Poll showed a myriad of factors – including the remaining closures and restrictions, growing inflationary pressures on prices, rising gas and transportation prices and labor shortages – are creating problems that affect small businesses more intensely than their corporate partners.

The U.S. economy has proven to be quite resilient, but the extreme imbalances that we are witnessing now threaten to cause immense damage in the months ahead, and they won’t be solved any time soon.  In fact, I believe that our economic challenges will soon escalate dramatically.

Before I end this article, I want to take a moment to acknowledge the passing of Robert Wenzel.  He was an important voice for liberty, and I always enjoyed his commentary on The Economic Policy Journal.

So many people have been dying lately.  Robert was only 63, and he will be missed.

It has been said that life is like a coin.  You can spend it any way that you want, but you can only spend it once.

Be sure to spend your life on something that really matters.

***Michael’s new book entitled “Lost Prophecies Of The Future Of America” is now available in paperback and for the Kindle on Amazon.***

About the Author: My name is Michael Snyder and my brand new book entitled “Lost Prophecies Of The Future Of America” is now available on Amazon.com.  In addition to my new book, I have written four others that are available on Amazon.com including The Beginning Of The EndGet Prepared Now, and Living A Life That Really Matters. (#CommissionsEarned)  By purchasing the books you help to support the work that my wife and I are doing, and by giving it to others you help to multiply the impact that we are having on people all over the globe.  I have published thousands of articles on The Economic Collapse BlogEnd Of The American Dream and The Most Important News, and the articles that I publish on those sites are republished on dozens of other prominent websites all over the globe.  I always freely and happily allow others to republish my articles on their own websites, but I also ask that they include this “About the Author” section with each article.  The material contained in this article is for general information purposes only, and readers should consult licensed professionals before making any legal, business, financial or health decisions.  I encourage you to follow me on social media on FacebookTwitter and Parler, and any way that you can share these articles with others is a great help.  During these very challenging times, people will need hope more than ever before, and it is our goal to share the gospel of Jesus Christ with as many people as we possibly can.

Obama And Romney Both Favor A One World Economic System That Kills American Jobs

Either way this election turns out, American jobs are going to continue to get slaughtered by the millions.  During this campaign, Mitt Romney and Barack Obama have both attempted to portray each other as the “outsourcer in chief“.  Unfortunately, they are both right.  Barack Obama and Mitt Romney have both participated in the outsourcing of American jobs, and both are openly admitting to the American people that they favor the emerging one world economic system which will continue to destroy millions of American jobs.  In fact, they argue with each other about which of them will be more aggressive in pursuing more “free trade” agreements over the next four years.  Unfortunately, the “free trade” agreements that the U.S. government enters into are never “fair trade” agreements.  As a result, over the past decade we have lost tens of thousands of businesses, millions of jobs and trillions of dollars of national wealth.  This year alone, we will buy about half a trillion dollars more stuff from the rest of the world than they will buy from us.  This trade deficit will be about 7 times larger than the trade deficit of any other nation on earth.  Our economy will continue to bleed jobs at a horrifying pace, but Obama and Romney insist that the answer to our problems is even more “free trade”.  What makes all of this even more dreadful is that most Americans continue to fall for this nonsense.

It doesn’t take a genius to figure out that merging our labor pool with the labor pools of nations where it is legal to pay slave labor wages was going to kill American jobs and drive down wages for the jobs that remain in the United States.

Why should some giant predator corporation pay you 15 dollars an hour plus benefits when they can pay a worker on the other side of the planet a dollar an hour with no benefits to do the same job?

During the second presidential debate, when Obama was asked why high tech products such as the iPhone could not be made here in the United States, Obama openly admitted that there are some jobs that aren’t ever going to come back.

But why does that have to be so?

Why can’t those jobs come back to America?

It seems to me that if you cracked down on nations that are cheating such as China, imposed a system of common sense tariffs and cut the corporate tax rate to a level more consistent with the rest of the world that you could get a lot of those jobs flooding back in by the end of next year.

But Obama is so blinded by his faith in the emerging one world economy that such measures are unimaginable to him.

In recent years, the Obama administration has entered into new “free trade” agreements with Panama, South Korea and Colombia.  In addition, the Obama administration is making the Trans-Pacific Partnership (“the NAFTA of the Pacific“) a very high priority.

Considering what a nightmare the first NAFTA was, do we really need another one?

The Trans-Pacific Partnership is a treaty that would essentially ban all “Buy American” laws.  It is being touted as one of the most comprehensive “free trade” agreements in history, and it would open up the door for millions more good jobs to be shipped out of the country.

The workers of America simply cannot afford another four years of Barack Obama.

In fact, the Obama administration has actually spent billions of taxpayer dollars to create jobs in other countries.  The following is from a pro-Republican website

Over his four years in office, Obama promised that he would focus on creating “jobs that pay well and can’t be outsourced.” However, as he racked up trillions in new debt, billions of dollars did go to create jobs that were outsourced or spent overseas. Whether it is electric cars made in Finland or solar panels in Mexico, taxpayers would be astonished to learn that their hard earned money went abroad for jobs that weren’t created in the United States.

You can get all the details right here.  Needless to say, the Obama administration has been an absolute disaster on these issues.

So would Romney be an improvement when it comes to trade?

That is very doubtful.

The truth is that Mitt Romney was involved in outsourcing jobs while he was at Bain Capital.  The following is from a recent article posted on Forbes.com

David Corn of Mother Jones reports that “according to government documents . . . Romney, when he was in charge of Bain [Capital], invested heavily in a Chinese manufacturing company that depended on US outsourcing for its profits—and that explicitly stated that such outsourcing was crucial to its success.”

This didn’t happen after 1999, when Mitt Romney says he left Bain Capital to run the Salt Lake City Olympics (Corn was one of the first reporters to raise questions, now gaining wide exposure, of whether Romney really left Bain then), but the year before. On April 17, 1998, Brookside Capital Partners Fund, a Bain Capital affiliate of which Romney was the sole shareholder, sole director, president, and chief executive, invested an estimated $14.2 million in Global-Tech, an appliance maker in Dongguan, China. Global-Tech made products for American companies like Sunbeam, Hamilton Beach, Mr. Coffee, and Proctor-Silex. In September 1998 Global-Tech’s CEO announced that the company was postponing a factory expansion because Sunbeam was slowing its rate of outsourcing, and said, “Although it appears that customers such as Sunbeam are not outsourcing their manufacturing as quickly as we had anticipated, we still believe that the long-term trend toward outsourcing will continue.”

Since Romney left, Bain Capital has become even more aggressive with outsourcing jobs.  In fact, Bain Capital has been forcing American workers to train their Chinese replacements even in the midst of this campaign.  Aren’t they concerned that they are making their former boss look bad?  The following is from an article written by an American worker that is having his job shipped to China by Bain Capital…

On Monday, November 5th Bain Capital is outsourcing my job to China. On Tuesday, November 6th I’m casting my vote against Mitt Romney.

Yes, I blame Mitt Romney for the loss of my job. Here’s why.

I’ve worked at the same factory in Freeport, Ill. for thirty-three years, making sensors and controls for the auto industry. It’s tough work, but it pays a living wage with health benefits that folks can count on, and it fuels our town’s economy and tax base.

That’s been changing since Bain Capital came to town. Two years ago, our factory was sold to Sensata Technologies, a company created by Bain Capital, and they told us that by December 2012, all 170 of our jobs would be shipped to China. They even made us train our Chinese replacements.

Layoff notices have been sent out, and some folks have already been laid off. Where there was once lots of people and energy and life, now there’s only the discoloration on the floor where the machinery used to be. It’s depressing. They’re not just dismantling the equipment and the plant; they’re dismantling our community.

All of this outsourcing is killing America.

Back in 1950, the population of this country was less than half of what it is now, and yet there were more Americans working in manufacturing back in 1950 than there are today.

The decline in manufacturing jobs in the United States has been really dramatic since the year 2000.

In 2000, there were more than 17 million Americans working in manufacturing, but now there are less than 12 million

I think that it is interesting to note that China joined the WTO in 2001.  Since that time we have been losing jobs to them at an astounding pace.  According to a new report by the Economic Policy Institute, U.S. trade with China “cost more than 2.7 million jobs between 2001 and 2011”.

The Chinese slap huge tariffs on many of our goods, they manipulate currency rates to make sure that U.S. companies cannot compete, they steal our intellectual property and they deeply subsidize their own businesses.

And yet Obama and Romney insist that this is “free trade”.

What a joke.

And our tax structure is absolutely killing us as well.  The following is from a recent article by Ernest F. Hollings

A U.S. manufacturer exporting to China pays the 35% Corporate Tax and a 17% VAT when its exports reach Shanghai.  A China manufacturer exports tax free to the U.S.

Are you starting to get the picture?

Our trade policy is a complete and total disaster, and yet Obama and Romney continue to insist that we just need to become even more integrated with the emerging one world economic system.

Well, in a previous article I listed 22 statistics which prove that the current path that we are on has been absolutely disastrous for American workers…

#1 One professor has estimated that cutting the U.S. trade deficit in half would create 5 million more jobs in the United States.

#2 The United States has a trade imbalance that is more than 7 times larger than any other nation on earth has.

#3 Overall, the United States has run a trade deficit of more than 8 trillion dollars with the rest of the globe since 1975.  That 8 trillion dollars could have gone to support U.S. businesses and pay the wages of U.S. workers.  Federal, state and local taxes would have been paid on that 8 trillion dollars if it had stayed in the United States.

#4 When NAFTA was passed in 1993, the United States had a trade surplus with Mexico of 1.6 billion dollars.  In 2010, we had a trade deficit with Mexico of 61.6 billion dollars.

#5 In 2001, American consumers spent 102 billion dollars on products made in China.  In 2011, American consumers spent 399 billion dollars on products made in China.

#6 The Chinese undervalue their currency by about 40 percent in order to gain a critical advantage over foreign competitors.  This means that many Chinese companies are able to absolutely thrive while their competition in the United States goes out of business.  The following is from a recent Fox News article….

To keep Chinese products artificially inexpensive on US store shelves, Beijing undervalues the yuan by 40 percent. It pirates US technology, subsidizes exports and imposes high tariffs on imports.

#7 According to the New York Times, a Jeep Grand Cherokee that costs $27,490 in the United States costs about $85,000 in China thanks to all the tariffs.

#8 The U.S. trade deficit with China during 2011 was 295.4 billion dollars.  That was the largest trade deficit that one nation has had with another nation in the history of the world.

#9 Back in 1985, our trade deficit with China was only about 6 million dollars (million with an “m”) for the entire year.

#10 U.S. consumers spend about 4 dollars on goods and services from China for every one dollar that Chinese consumers spend on goods and services from the United States.

#11 The United States has actually lost an average of about 50,000 manufacturing jobs a month since China joined the World Trade Organization in 2001.

#12 According to the Economic Policy Institute, America is losing about half a million jobs to China every single year.

#13 The United States has lost more than 56,000 manufacturing facilities since 2001.

#14 During 2010 alone, an average of 23 manufacturing facilities closed their doors in America every single day.

#15 Since the auto industry bailout, approximately 70 percent of all GM vehicles have been built outside the United States.

#16 As I have written about previously, 95 percent of the jobs lost during the last recession were middle class jobs.

#17 According to Professor Alan Blinder of Princeton University, 40 million more U.S. jobs could be sent offshore over the next two decades if current trends continue.

#18 The percentage of working age Americans that are employed right now is actually smaller than it was at the end of the last recession.

#19 The average duration of unemployment in the United States is nearly three times as long as it was back in the year 2000.

#20 Due in part to the globalization of the labor pool, only about 24 percent of all jobs in the United States are “good jobs” at this point.

#21 Without enough good jobs, more Americans than ever before are falling into poverty.  Today, more than 100 million Americans are on welfare.

#22 In recent years the U.S. economy has embraced “free trade” and the emerging one world economy like never before.  Instead of increasing the number of jobs in our economy, it has resulted in the worst stretch of job creation in the United States in modern history….

If any single number captures the state of the American economy over the last decade, it is zero. That was the net gain in jobs between 1999 and 2009—nada, nil, zip. By painful contrast, from the 1940s through the 1990s, recessions came and went, but no decade ended without at least a 20 percent increase in the number of jobs.

At this point, more than 41 percent of all working age Americans do not have a job, and the vast majority of the new jobs that are being created are low paying jobs.

Median household income has fallen for four years in a row.  In fact, median household income is down by more than $4000 since Barack Obama entered the White House.

One recent survey found that about 40 percent of all Americans have $500 or less in savings.  We are a country that is full of broke people.

What we need are more good jobs.  But Obama and Romney are both determined to keep shipping good jobs out of the country.

The path that we are on will only lead to disaster.  Please wake up America.

Is Moving Out Of The United States A Way To Escape The Coming Economic Collapse?

With the U.S. economy in a death spiral, many Americans have been wondering if moving out of the United States is a way to escape the coming economic collapse.  While it is true that the U.S. economy will drag down the rest of the economies around the globe at least to an extent, the reality is that someone living on an island in the middle of nowhere will be able to weather the coming economic storm a whole lot better than someone in New York or Los Angeles.  But is moving out of the United States a practical alternative?  First of all, it is very important to realize that moving some to another country can cause a massive culture shock.  Even a nation that you would think would be somewhat similar such as the U.K. can be radically different from what most Americans are accustomed to.  In addition, in some cases there can be huge taxes and fees imposed on those moving to a new country.

But if you are looking for a change and are ready for something different, moving to another country may work out for you.  In particular, moving to another country tends to work out for those who already have money and do not have to work.  The dollar is still strong in many areas of the world (especially the third world), so if you have a sufficient bankroll saved up there are areas of the world where you can literally live like a king.

However, if you still need to work, moving to another country can present a huge challenge.  The truth is that wages in many areas of the world (especially in the third world) are much lower than in the United States.  On the flip side, the cost of living is often much lower in other areas of the world.

So is moving to another country the right answer for everyone?  No, of course not.  But for some people it may be a wonderful alternative.

To give you more of a perspective on moving out of the United States, we have posted two comments from our readers below.  The first is from a reader named Chris who is very excited about moving his family to the Philippines.  The second is from a reader named John who provides an alternative viewpoint on what living in the Philippines is like….

Chris:

Well I feel the same way as Mae does. I can see what is the possible outcome; a deflationary depression, an inflationary depression, dollar devaluation, confiscation of our money, confiscation of gold, a “freeze” on our savings accounts, etc…

Well so what is our solution? Well my wife is a Filipino American. She was born here. But she has very close ties to her ancestral homeland. So we are going to move in April 2010. We are going to move to a remote town/village. We already bought some land under her father’s name who lives there now and had a beautiful 3000 square foot Spanish villa built two years ago. Plus we bought lots and lots of land where we can grow our own organic food and raise chickens.

Even though as a whole the Philippines is a poor society, they are moving forward. If you have about $150,000 or more, you can live like a king with all of the Western accommodations. If you are living in the U.S.A. then move. Our country won’t be the same in the next coming years. I will wait for this storm to pass. Then I can either choose to stay in the Philippines or come back to America.

Remember, whatever you do, prepare yourself. “Prepare for the worst and hope for the best”.

John:

I was talking to a friend here in the Philippines this afternoon who has two young adult children who are both working full time jobs. He is worried that they will NEVER be able to have a home of their own or even ever an apartment. They both work for Call centers and their jobs USED to based in the USA. They are happy to have a job but they are only earning 13,000 pesos a month. That is about $300 !!!

The same exact job in the states is paying over $400 a week! The of living is less in the Philippines BUT things are NOT so cheap that you could have a home of your own. $300 a month is NOT very much money NO MATTER where in the world you live. The cost of gasoline is MORE here, about $4.00 a gallon. Going out to eat at McDonalds appears to cost less BUT the serving sizes are less so in the long run you pay the same. The wages for a McDonalds employee is about $7 a day so the employees can not even afford to eat at McDonalds!

The employers are making MILLIONS off of the cheap labor. The jobs that used to be in the states are NOW here but the BOSS MAN is making even MORE PROFIT. The employers do not have the misc. taxes to pay like they would in the states. The wages are obviously several hundred dollars or more LESS than the same job in the states. These employers have NOT reduced the cost of their products or services so they are really raking in the bucks.

The american people have lost their jobs and they will NOT see them return. And the people here who are now doing those same jobs are not much better off. The filipino employees are wise enough to understand they are being taken advantage of but there is nothing they can do. They need a job also, so complaining about the low wages does nothing. There are thousands that will take the job you do not want.

Many areas in the Philippines are incredibly wealthy. You see housing developments that the average american could not afford to live in. I see cars that cost tens of thousands of dollars on the road everyday. They have huge shopping malls that are bursting at the seams with stores in EVERY retail location. Unlike the mall in my home town of Cedar Rapids Iowa. The mall there looks like a GHOST TOWN.

The only people that are winning are the CORPORATIONS that are raking in huge profits while the little guy suffers.

The Economic Collapse