Coming out of Washington is all sorts of debate on how to decrease the federal debt. They are all throwing out all sorts of various solutions involving cutting spending, raising taxes, what have you. What is a problem with this is that the solutions do not address the reasons for the slow down in the economy that has lead to higher unemployment and less domestics spending.
Among the causes is the simple fact that, for most of the 20th Century, manufacturing for American products was mostly done in the US. In the past couple decades, however, more and more production has gone outside the U.S. While companies like Toyota have been setting up car factories in the U.S., all the products that are the major consumption of the U.S. economy, such as electronics, clothing, toys and games, are mostly made in places like Mexico, China, Korea. Many companies even contract out their phone support to India. This ultimately hurts the ability of people to get jobs of any kind in the United States. If people have these jobs all going outside the U.S., and so, there being fewer jobs available, then, of course, unemployment is going to be a bigger and bigger problem.
Of course, there is another issues linked to this. That many companies in the U.S. now are bringing in foreign workers to do jobs such as housekeeping in hotels, cooking and kitchen work at restaurants and fastfood places, or pretty much any other work at convenience stores, various other menial jobs. Of course, the reasons stated are that “Americans don’t want to do those kinds of work.” After all, these are jobs at minimum wage, and everyone wants to make more money. The problem is that bringing in foreign workers specifically to do these jobs results in the jobs staying at or just above minimum wage, instead of allowing natural market pressure to raise the wages to levels Americans would willingly work for.
Related to the bringing the foreign workers is another issue. Many of these foreign workers, after they pay their rent and bills and food, have money left over. Many of them come from countries like the Phillipines, various South and Central American countries, and various Eastern European countries, where U.S. dollars can purchase alot more then they could in our country. The amount of money these foreign workers have remaining is often sent home to their families. After all, these foreign workers are only going to be here temporarily, so they have little point in being consumers beyond the necessities in the U.S. Thus, the foreign workers end up taking jobs from Americans, and then taking money out of the U.S. economy. With money going abroad, and not staying in the U.S., even if the income is taxed, businesses are not making as much money as they could be, so are able to hire fewer people, and must pay those they hire lower rates.
Now, admittedly, some people will point out that money is not wealth. That instead, wealth is “goods and services.” In essence, money is, effectively, a proxy for the work one does. If you get paid 10 dollars an hour, then your work is worth food for two people at a fast food restaurant. In essence, those 10 dollars are worth those sorts of goods and services. So, money not going into the U.S., money not going to Americans, regardless of the reasons, is taking from our economy by taking the value of our work. Without this money staying in the U.S., people will stay at lower pay-rates, if they are hired at all, because the money is not going into the pockets of those who do the paying.