A look at the reasons for our current economic and budget mess.

by Tim O’Brien Courtesy of Daily Kos The changes going on in our nation and state have been so rapid and devastating that many people, including most elected officials, are in a mode merely to cope with and get through the immediate problems in front of us. But, especially in our present crisis, those immediate problems are not going to truly get better unless we confront the real reasons for our present crisis and the solutions that are needed to build a better future. It needs to be said. The real problem is outsourcing. The real reason that our economy is in a shambles and, thus, causing the revenue problems for our federal, state and municipal governments, is that Wall Street and the big corporations they run have been undercutting the paychecks of middle class American families by outsourcing to low-wage places in the world. Sometimes the harm has come from moving jobs from places like Connecticut to low-wage parts of our own country, but the real damage has come from moving jobs to low-wage parts of the world - places where yearly wages are often less than weekly wages in Connecticut, places of sweatshops and debt traps of company housing and stores. Even minimum wage jobs here pay many times more than the sweatshop wages (or, worse slave-labor) such as in China. This did not just start in 2008 when the recession began. It has been going since the late 1960s in a four-decade run of Wall Street transferring middle class American manufacturing jobs to countries where they can pay a pittance in wages, and then make a killing in profits by selling those products back here at similar prices to what they were charging when middle-class-wage American workers made them. Over four decades, more and more industrial jobs and more and more of our nation's manufacturing capacity has been (and still is being, by the way) shipped overseas. When our economy was healthy and sustainable, back in the 1960s and before, a quarter of our economic output was in manufacturing. Now it is closer to ten percent, a number that is far too low for a sustainable economy. (Click here to see my previous article on this, "Why the Wall Street crowd wants to blame you for the recession.") Wall Street kept Americans from objecting to this by telling us that the old, dirty manufacturing jobs were, for Americans, being replaced by shiny, new, service-sector office jobs, in which Americans were to be the brains of the world economy, with people in places like Asia and South America doing all the hard, factory work. But, this was a snake-oil sales job the whole time. The real truth is the middle class American economy, minus most of our manufacturing sector, has been increasingly propped-up over these past four decades by debt - massive quantities of consumer and public debt, which Wall Street was very glad to extend in order to keep in motion their buy-low-wage-abroad, sell-high-price-here corporate profit machine. In recent years, this snake-oil salesmanship has been laid bare, as, now, those shiny, office, service sector jobs, too, are being outsourced to low wage countries. Big corporations are figuring out ever more creative ways to outsource abroad for lower wages, so much so that it seem that any job can be outsourced. And this belies the starry-eyed notions that, if only we improve ourselves as Americans, make ourselves better educated, better trained, more productive and invest in better research, that we can create new jobs to replace the ones they were outsourced. The hard truth is that any new jobs that replace the outsourced jobs will likely also be outsourced to low wage countries, too. The cold, hard truth is that corporate outsourcing for lower wages - and the free trade regime that allows it - has been destroying the American middle class. And, if this process is not put in check, our country will become much, much poorer. The economic collapse in 2008 was not just a cyclical recession, and it was also not just a mess caused by irresponsibly exotic derivatives trading on Wall Street. What really happened in 2008 was the moment when middle class America could no longer be propped-up by the fictional economy maintained by the nation-sized ponzi scheme of debt and derivatives Wall Street had been running. In its place, Americans were suddenly exposed to what an economy looks like after outsourcing most of its productive base to low-wage countries. And so over the course of the past two-plus years - in the face of massive layoffs, a jobless "recovery" and general pressure to lower wages, salaries, health coverage and pensions - Americans have been making tough household choices about what parts of their own middle class lives they must cut in order to balance their household budgets. And, in this process, it is becoming painfully evident that the things that they are now forced to do without are leaving them at a lower standard of living. On top of this, those same people are being asked to accept a further reduction in their standard of living in the form of reduced public services from the government. That is because, when political rhetoric gives way to reality, the truth is that most of the people benefiting from public services are the middle class. And so, when politicians elected on a platform of cutting government actually have to do it, they must propose things like cutting Social Security, Medicare and education because the reality is that things like that are most of what "government spending" is. All-in-all, the result of this reduced standard of living is that people are angry - and justifiably. Unfortunately, thanks to a corporate-owned media that would rather not tell people the real reasons behind the reduction in Americans' standard of living - outsourcing and free trade - there is a lot of diffuse blaming going on, but very little real plans for how to get us out of this mess and toward a better future. While a lot of the needed solutions are the responsibility of the federal government - like making our international trade laws fair - I truly believe that there are important things that our state government can do to in order to build a better future.