Media Ignores Reason for Foreclosures
Loss of good jobs through ‘free’ trade is at heart of foreclosure epidemic
By Mark Anderson
With the mortgage crisis reaching critical mass, it’s time for Americans to see past the media reports that are keeping them in the dark. Take Shaker Heights, a suburb of Cleveland. Foreclosures have emptied most of the houses. This town was “ravaged by the subprime mortgage crisis roiling the United States,” stated a typical mainstream news report.
Many former residents were “evicted for non-payment of their mortgages,” some left in search of new jobs “after the factories shut down.”
This report represents the usual shallow, worn-out “explanation” of the crisis. If people were not given so much worthless information, they might understand what is happening. The media blathers about careless lenders that gave mortgages to risky recipients who didn’t keep up their payments. But the real story is that the destruction of middle-class jobs, especially in the manufacturing realm, is destroying the ability of Americans to earn, save, invest, pay taxes, reduce personal debts etc.
Gainfully employed people earn money and can buy homes; people with money can make large down payments to obtain smaller mortgage payments; people with money can pay cash for their car so they don’t have vehicle payments; people with money can avoid too much or any borrowing in the first place.
Unless one is born into wealth, one must work. And the types of jobs people need to be secure homeowners are disappearing. These jobs left the nation aboard the “free trade express.”
The Clinton-Bush dynasties gave us these poisons in nearly lethal doses. NAFTA, approved by Bush the Elder, was signed by Bill Clinton and protected by Dubya, who pushed through CAFTA. Congress has aided and abetted the whole process, perhaps believing in the fool’s gold of free trade.
Free traders may believe that just being able to buy stuff for cheap—with nothing else taken into consideration—is the source of prosperity, and that it does not matter where things are made. This is premised on the “consumer is king” nonsense that Americans have been taught. As former General Motors executive Gus Stelzer noted many times, production is the key. But notice how often the media invokes the word “consumer” when referring to Americans. Never do they seriously talk about the vital process of production. Why?
Production consists of taking the Earth’s raw materials and forging them into useful products. This value-added process lays the groundwork for an economy to function. Back when Americans were producing most of the things they needed—from shoes and clothes to cars and electronics—they were paid well; their purchases would help the very companies for which they worked. Imports usually cost more back then because they were supposed to (any item shipped long distances ought to cost more, for travel expenses alone).
There was a time when one could graduate from high school, skip college, go right to a company and work for decades, with a decent retirement. America was so productive that surpluses were exported. We were the world’s leading creditor nation, with no trade deficit.
Look at us now. It is the height of absurdity to believe that a national economy can function without production. But, under the thrall of the free traders, we close factories, outsource what used to be American production jobs to overseas locales, and then we build retail outlets here for selling the merchandise. Working at retail outlets does not generally enable one to buy a home (unless you’re in management), and every item made somewhere else and shipped here further injures the U.S. economy.We’re sinking in quicksand.
Nor can we just employ people in tax-eating government jobs. As people slip down the job ladder and face eviction from their homes, they are even less able to pay taxes to support the mushrooming number of government jobs. And the pressure to spend more tax dollars and enact new taxes to cover the increased government employment eats away at the ability of remaining businesses and private individuals to keep their stores and homes (and home-based businesses) afloat. When they lose their grip, they become unemployment and welfare statistics.
It means nothing when the media reports the unemployment rate and talks about jobs in abstract quantities with no consideration of the quality of jobs lost. And those whose unemployment benefits have stopped are no longer included in the statistics.
“Based on a very conservative 4-to-1 ripple effect, if the goods represented by America’s current yearly trade deficit were produced in the United States, they would generate $2 trillion in added national income, equal to about $16,600 per household,” said Stelzer.
An immediate need is to put sizable tariffs on all imports, particularly those from China, to offset the advantage of having things made overseas for dirt cheap, and to create a strong incentive to make things in America. From there, all levels of government must be cut back so taxes can be lowered, regulations relaxed and a good business climate re-installed in the U.S.
And as presidential candidate Ron Paul says—no more policing the world (and the trillions of dollars it requires).
AFP Corresponding Editor Mark Anderson can be reached at [email protected]
(Issue #7, February 18, 2008)