Guest Post: We Don't Need No Stinkin' Jobs (In The U.S.)

Tyler Durden's picture

Submitted by Charles Hugh Smith from Of Two Minds

We Don't Need No Stinkin' Jobs (In The U.S.)

Global Corporate America has decoupled from the American middle class; its interests are now international rather than domestic.

Global Corporate America has been decoupling from its country of origin for a long time, and the last weak bonds appear to be snapping.

Longtime correspondent Cheryl A. recently submitted this snippet from a recent The Atlantic article The Rise of the New Global Elite and this summary: "This is disturbing on so many levels."

The U.S.-based CEO of one of the world’s largest hedge funds told me that his firm’s investment committee often discusses the question of who wins and who loses in today’s economy. In a recent internal debate, he said, one of his senior colleagues had argued that the hollowing-out of the American middle class didn’t really matter. "His point was that if the transformation of the world economy lifts four people in China and India out of poverty and into the middle class, and meanwhile means one American drops out of the middle class, that’s not such a bad trade," the CEO recalled.

The growing dependence of Global Corporate America on non-U.S. growth and profits, and the concurrent rise of its political power at the expense of the middle class, is displayed in this chart:

Let's look at the number of consumers of global U.S. corporations' goods and services in aggregate. According to the FDIC, about 25% of Americans have little or no access to credit. This is an excellent metric of proverty: in other words, 75 million Americans are too poor to purchase much more than rent (subsidized by Section 8 vouchers, etc.) food (subsidized by SNAP food stamps), minimal healthcare (subsidized by Medicaid), toothpaste, cable TV, mobile phone service and fancy footwear made in Asia. (Every "poor" person above the level of homeless I see on the subway or bus has fancy footwear and a cellphone.)

That leaves about 225 million Americans with enough discretionary income to be more rabid consumers of global corporate America's goods and services.

Alas, the U.S. is a mature consumer economy and the limits of consumer debt and leveraging seem to have been reached. As a result, corporate revenue growth in the domestic market is limited to GDP growth (most of which is generated by Federal borrowing and spending at this point): roughly 2-3%.

You can't "grow profits" 10% a year on this sort of tepid growth. So Corporate America's focus on international markets is not just rational but essential: there is no other way to grow revenues and profits.

The vast majority of new revenues and profits come from non-U.S. sales. Here is a snippet from David Rosenberg:

We scoured the data as best we could and found that almost all the growth in sales is coming from outside the U.S.A. where revenues are growing at barely a 3% annual rate. The pace is around 20% for foreign-derived sources.

Here are some "back of the envelope" estimates for global consumers of U.S.-based corporations' goods and services.

China: 450 million consumers of toothpaste, etc., 225 million consumers of autos, smart phones, "financial services," etc.

India: 450 million consumers of toothpaste, etc., 150 million consumers of autos, smart phones, "financial services," etc.

Greater Europe: 450 million consumers of toothpaste, etc. 350 million consumers of autos, smart phones, "financial services," etc.

East and South Asia: 450 million consumers of toothpaste, etc. 225 million consumers of autos, smart phones, "financial services," etc.

Mideast/Africa: 450 million consumers of toothpaste, etc. 50 million consumers of autos, smart phones, "financial services," etc.

Oceania/Philippines/Australia/New Zealand: 100 million consumers of toothpaste, etc. 50 million consumers of autos, smart phones, "financial services," etc.

That's roughly 2.25 billion potential consumers of toothpaste and 1 billion potential consumers of other goods and services sold by Global Corporate America.

That means the domestic populace is around 15% of all potential consumers of at least some goods, and at best a mere quarter of all consumers of higher-cost goods and services.

One of the more eye-opening elements of global travel is to enter a tiny village store in Japan, Korea, China, Thailand, etc. and find Oreos and Crest toothpaste for sale.

How many more units of toothpaste and Oreos can be sold in the U.S.? Not many. How many more could be sold to 2 billion other people? A lot.

Corporations are operated by people. Their loyalty during their working hours is to the corporation, and the goal of the corporation is to maximize return on investment for the shareholders, owners and senior managers who will profit most from rising revenues and profits.

To expect corporations to extend loyalty to a nation is to misunderstand the entire purpose and directive of the corporation as an enterprise.

Is it merely coincidental that corporate profits from non-U.S. sales were flat during the heyday of the U.S. middle class, and that they have been rising as the middle class loses ground? I think this chart makes a strong case for a direct correlation. Global corporations now have the resources to influence the machinery of governance in their favor, and as noted above, this is the rational and necessary result of their prime directives and loyalties.

To decline to lobby the Federal government could spell disaster for a company's revenues and profits should competitors succeed in wiring the market to their advantage. Thus there is no choice now but to lobby for one's own interests. With corporate profits exceeding $1 trillion, the costs of influencing politics is now trivial.

The middle class is comparatively powerless: it is not a source of campaign funding, and half of its members don't even bother to vote. Most of those who do vote are swayed by easily purchased, expertly contrived propaganda.

The ideal setup for Global Corporate America is domestic stability. The erosion of the American middle class is of little concern for one simple reason: it no longer matters much on the global stage. All that Global Corporate America needs from America is a stable foundation that won't offer up any surprises or spots of bother.

As the discretionary purchasing power of the American middle class erodes, four times as many new potential customers appear elsewhere, hungry to taste the Oreos, become consumed by the iPhone, etc., and ten times as many are potential buyers of toothpaste and other basics.

The concern for domestic jobs is mere political expediency. U.S. corporations are pulling $500 billion in profits from non-U.S. sales, and they hold $1 trillion in stashed overseas profits in various tax havens. All the growth in their revenues and profits are coming from non-U.S. sources. Spending $3-$5 billion on lobbying and campaign contributions is an "investment" with extremely high returns: for that small sum, U.S.-based global corporations make sure the U.S. government and citizenry don't become overly burdensome or obstructive.

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topcallingtroll's picture

Plocequ is our daoist zen philosopher. Sometimes he enlightens us with blank comment fields too.

Rogerwilco's picture

Hey, the piss-on-'em strategy works quite well in North Korea and China. Besides, where else can you buy a pair of 4XL stretch pants for $9? That's right, nowhere else, USA!, USA!, USA!

jus_lite_reading's picture

4XL nylon stretch pants and 6XXL T shirts with size 14 sneakers all bought with the unempoloyment check/food stamp card. God shave the queen!

buzzsaw99's picture

By Jove he's got it!

ak_khanna's picture

The developed countries cannot create jobs in their own country as the major multinatio­­­­­­­nal companies have permanentl­­­­­­­y shipped the manufactur­­­­­­­ing and service jobs to the low cost developing countries to maximize their own profits.

Th­e rich corporatio­­­­ns and the too big to fail bunch of banksters have a lot of influence on the political class, the rule makers and the rule enforcers due to their enormous purchasing power. So irrespecti­­­­­­­­­ve of the position in the government­­­­­­­­­, everyone works for their benefit.

The politician­­­­­s around the world are nothing more than auction items which can be sold to the highest bidder. They will do whatever they can for the lobbyist paying them the maximum amount of money or votes, be it the unions, the banksters, the richest corporatio­­­­­ns or individual­­­­­s. They are in the power seat to extract maximum advantage for themselves in the small time frame they occupy the seat of power.

The rest of the population is least of their concerns. The only activity they do is pacify the majority of the population using false statistics and promises of a better future so that they do not lynch them and their masters while they are robbing the taxpayers.


Jim in MN's picture

This has been openly admitted as in the recent cover story in The Atlantic.  The global elite is only loyal to themselves and to the extent that they like to think of themselves as principled, they think that paying Americans too much compared to Chinese is basically evil. 

It's still too dangerous for them to say what they really think, but there are more efforts to get to the "God's Work" model for future rhetorical self-congratulations.... they betray the very people they owe their lousy Communist bailout livelihoods to.

lemonobrien's picture

It is evil, in a capitalist system you maximize profits for the share holders; if Americans are stupid and wanna smoke crack, eat potato chips, major in bidness/marketing and expect to get paid big bucks cause they're entitled by race/nationality to get more than a chinese. Fuck them. The problem with Americans is they're not willing to do the hard work; they all wanna be rich without doing actual work. They're lazy; this is why we import illegals/slaves to scrub our toilets.

Jim in MN's picture

Oh, I thought you meant the bailouts were evil.  And the crack-smoking financial disclosures.

But you are instead a proponent of deflationary collapse, while using what's left of the middle class net worth to stuff banker's bonus envelopes, so that's cool.

Commie.  :*)

lemonobrien's picture

Don't fool yourself; this system will fall; I just plan on making a profit from it.

topcallingtroll's picture

The usa government and citizenry became overly burdensome and obstructive a long time ago. Even small cap biotech is heading overseas due to the regulatory nighmare that real businesses face.

Buckaroo Banzai's picture

This is all part of the plan-- making it impossible to do business in the USA via creeping socialism, regulation, taxation, health care inflation, etc. accomplishes the following:

1) Eliminates domestic competition from emerging.

2) Creates a justification for relocating overseas.

3) Creates a permanent domestic underclass that can be manipulated and exploited


RockyRacoon's picture

The middle class is comparatively powerless: it is not a source of campaign funding, and half of its members don't even bother to vote. Most of those who do vote are swayed by easily purchased, expertly contrived propaganda.

Did this situation arise from corporate shenanigans?  Nope.  Pogo said it best: "Yep, son, we have met the enemy and he is us."

alien-IQ's picture

"All centralized power, once restraints and regulations are abolished, once it is no longer accountable to citizens, knows no limit to internal and external plunder. The corporate state, which has emasculated our government, is creating a new form of feudalism, a world of masters and serfs. It speaks to those who remain in a state of self-delusion in the comforting and familiar language of liberty, freedom, prosperity and electoral democracy. It speaks to the poor and the oppressed in the language of naked coercion. But, here too, all will end up in the same place."

Chris Hedges
Recognizing the Language of Tyranny

Triggernometry's picture

Good to know someone else on here reads ICH.

I think I need to buy a gun's picture

its all fun and games until theres a gold revaluation

NOTW777's picture

big mistake to under estimate the american middle class.

if you think they will go quietly in the night, be prepared

corruption and greed reign for a time and then they are crushed

God is still in control

Internet Tough Guy's picture

What makes you think God is American?

NOTW777's picture

I didnt say God was american.  The earth is the Lord's and everything in it, the world and all who live in it.  Psalm 24:1

NOTW777's picture

so, you saw it on the internet - it must  be true?

good luck with that

MiddleMeThis's picture

Are you kidding?  Religion and God is what those in power use the control their sheep.  Empires use God and Religion to cover up their evils while they feed the people lies. Show me one time in history that an empire has not been ruled in the name of a God. And of those "godly" empires of yore, how many exist today and still hold an elite status?  If you say America, it's only because we are still quite young.  But, don't worry, we're on our way out too as One Nation Under "God."  

Give me an athiest society any day.  I guarantee you we'd be a better people.

Buckaroo Banzai's picture

Really? Please stop confusing religion with God. Try reading the New Testament sometime. Jesus had His biggest problem with the Pharisees, who were the religious establishment of that place and time.

If you think we'd be better off under atheism, then consider the state-sponsored atheist societies of the Soviet Union and Communist China, and the hundreds of millions they slaughtered in the name of the Atheist State. When there is no God, then man becomes your god. And man makes the shittiest god imaginable.

Rogerwilco's picture

"When there is no God, then man becomes your god. And man makes the shittiest god imaginable."

+150E6 (Mao + Stalin + Pol Pot)

Freddie's picture

Add Obama and The Bernank to the list.

MiddleMeThis's picture

I've read the bible, both old and new testament, the koran, the torah and even the Tao Te Ching.  So, it's not that I haven't read those man-made works of fiction, it's just that I have no belief in a divine being. Nor is there any proof that one exists.

And you're confusing atheism with communism.  The atrocities done by Stalin and Mao were done under their communistic and psychotic beliefs, not because of their lack of belief in God.  Every day people kill becasue of their belief or idea in a God.  You rarely (if ever) hear people killing in the name of Atheism.

"When there is no God, then man becomes your god. And man makes the shittiest god imaginable."  Why must there be a god (man-made or supreme being) at all? Because it's easier to control man when they can be lead, "under" a God (and that is done through Religion).

But I digress...


Buckaroo Banzai's picture

Of course there is no proof that God exists. Do you imagine that your 5 senses can completely circumscribe the entire universe? That would be exceedingly unlikely, and in fact is a fairly absurd premise. But that is what would be required for you to perceive God. What proof can you offer a blind man that the sky is blue? Once you accept that human beings have rather concrete sensory and cognitive limitations, the existence of God can be fairly easily derived from first principles.

Communism is simply the political expression of atheism. Communism begins with the premise that the entire world can be run by the direct conscious efforts of a particular man, or small group of men. By elevating certain men to all-seeing/all-knowing status, communism makes itself the godless form of totalitarianism.

The fact that men can be so easily led (or rather, misled) is a problem with the nature of man, not the nature of God.

MiddleMeThis's picture

What you describe here:  "Communism begins with the premise that the entire world can be run by the direct conscious efforts of a particular man, or small group of men. By elevating certain men to all-seeing/all-knowing status..."  Is not atheism, but the ultimate expression of theism.  Belief in a God, even if that God is oneself - in the case of a communistic dictator, is indeed theism; regardless of the name of the God. Running the entire world with a direct consciousness by an all-seeing/all-knowing being describes your God, does it not?

So based on your argument, you have just proven communism to be theistic, not atheistic.

Now with that said, I have absolutely no problem with the common man's belief in a God. For the majority it is a benign belief.  But, sadly in the wrong hands (which happens quite often), coupled with power, that belief becomes quite destructive.  And when our empires use this belief to keep us in line we are lead blindly to our demise and the demise of other peoples.

Cathartes Aura's picture

"man makes the shittiest god imaginable"

in his own image no less. . .

NOTW777's picture

dont confuse earthly empires of men with God.


"Give me an athiest society any day.  I guarantee you we'd be a better people."

  people without God are guaranteed hell


MiddleMeThis's picture

If I believed in hell, I'd say we were already there.

Sheepneck's picture

I've got an atheist society for you.  The Soviet Union.  Boy, times sure were good back then...

MiddleMeThis's picture

I think it's rather amusing that the theists who are directed by God to "do unto others as you would have done to you" (in essense treat people with respect, accept others, etc.) are the one's junking me just for having a belief that is not theirs.  Ironic.

jus_lite_reading's picture

The middle class is too busy watching Dancing with the Stars and Jersey Whore to notice what is going on... spread thy word.

uhb's picture

are you sure those people *should* be in the middle class?

Gordon Freeman's picture

That's completely at odds with the FACTS.  The reason the AMC is getting bitch slapped so hard is they are completely unable to fight back against the authorities--and the authorities damn well know it!

The idea that Americans will somehow rise up and throw off their chains is absurd

Pants McPants's picture

Yeah right - I'm right there with you, after this commercial break.  Did you see Aaron Rogers in the Super Bowls?? 

But you're right.  I have little to no faith in the US population's ability to correctly to grasp (1) the causes of this crisis, (2) correctly prosecute those responsible, and (3) implement a new system based on liberty vice equality.

More likely than not they will run into street when the power goes out, wondering where in hell the low quality starch went.

Rainman's picture

It will all work well until the knockoff Chinese Oreos and Crest toothpaste hit those markets at a quarter of the price. For developing consumers it kinda  sorta tastes like chicken.....close enough for the price.

macholatte's picture

What you're missing is that the quality of the foreign products is crap and couldn't be sold in USA or even Mexico. However, the foreign consumers don't know the difference between a fresh Oreo and a stale one. They've never had them before and have nothing to compare them to. It's heaven for the manufacturers.

Cathartes Aura's picture


Sugar, wheat flour, vegetable fats (with antioxidants: E-306, E-304), fat-reduced cocoa powder (7%), glucose and fructose syrup, raising agents (sodium and ammonium bicarbonates), whey powder (from milk), cocoa mass, salt, emulsifier (soya lecithin), flavouring (vanillin).

3 lovely "sugar" variants, 2 artificial "E" numbered hidden chemicals, GMO wheat & emulsifiers. . . plus, no doubt the "ingredient experience may vary" from nationstate to nationstate, depending on how paid off the rulers are.

must. export. death.

Iam_Silverman's picture

"That's roughly 2.25 billion potential consumers of toothpaste and 1 billion potential consumers of other goods and services sold by Global Corporate America."

The problem is, how much of that toothpaste is counterfeit?  Almost all American brand names in China are fake.  So, who gets the profit then?



buzzsaw99's picture

As long as a person has clownbux what the hell do they need a job for?

lieutenantjohnchard's picture

no brilliant analysis on my part because it's self-evident but i posted this precise point (u.s. citizens/workers thrown under the bus by big bz which happen to have a charter to conduct affairs here) a few months back.

got news for the you-know-whats. i threw them under the bus first after figuring the gig out. so did tens of millions of other u.s. citizens. there's little sympathy for them as expressed by the extreme resistance to the tarp bailouts etc ... these you-know-whats exist (would have gone under) only because of the extreme patience of americans with the political class.

Vashta Nerada's picture

This is a bit of a non sequitur.  If the US consumer market is saturated, of course developing countries will be the target of corporations to sell their goods.  I don't see how this relates to American jobs.  American jobs are factored on the production side, and that is influenced by prevailing wages, regulations, and distribution cost.  If the US backed off of the regulatory burden, plenty of jobs producing goods that developing countries want would flow here.

lieutenantjohnchard's picture

respectfully, you are woefully naive if you believe "If the US backed off of the regulatory burden, plenty of jobs producing goods that developing countries want would flow here."

as ricardo made abundantly clear free trade is designed for commerce between developed nations. there's no way to run an operation in the usa against coolie labor in china, india, vietnam etc even if we had less regulation.

got news for you. this very topic was discussed ad infinitum back in the 1980's when the whole globalism, free trade, offshoring etc got rolling. and many folks laid out exactly what would happen (hollowing out of usa manufacturing etc) as in fact it has.

Watauga's picture

e.g., Pat Buchanan, who tried to run twice for the Republican nomination for President on a proposed platform that was based largely on what he foresaw, in globalization and purported free trade, as the loss of American jobs, the loss of the American Middle Class, and the loss of America's soul.  Pat always was right.  He just wasn't a real Republican (the RINOs are the real Republicans).  He was an anti-Statist, liberty-loving, Foundationist who was well ahead of the Tea Party and today's pretend conservatives.  But America would rather have GHWB, Bill Clinton, GWB, and Barack Hussein Obama than Pat Buchanan--and look where that got us.

RockyRacoon's picture

Let's not forget Ross Perot.  And he is still doing it: