THE SERVANT ECONOMY: WHERE AMERICA'S ELITE IS SENDING THE MIDDLE CLASS by Jeff Faux

John Wiley & Sons 2012. ISBN 978-0470182390

In this excellent book, the author shows the quasi-religious nature of neo-liberal economics with its dogmatic refusal to consider obvious reasons for the U.S.A.'s economic problems.

Towards the end of the book he makes a list of "Off The Table" issues which include for example, - serious regulation of Wall St., - abandoning the role of world policeman, - a single payer health care system like Canada's, - industry and trade policies, - strengthening the bargaining position of workers, - with the key unacceptable heretical words being "Protectionism" and "Nationalism".

Never mind that America's main industrial competitors Germany, China and Japan have overt national interest policies with regard to protecting and developing key industries and guarding their own intellectual property. These countries don't automatically look to outsource production and none of them allow key industries to entirely disappear overseas.

The author doesn't dispute the greater marginally efficiency from a global point of view of manufacturing in China but he also shows that the much more important (for the U.S.) income distribution aspects are "Off The Table". The reality of the situation is that CEO's like Jack Welch have for years been applying his 70/70/70 rule (70% of research and development should be outsourced, 70% of that should be outsourced offshore, 70% should be outsourced overseas and sent to India) and forty years of determined outsourcing = an impressive trade deficit + loss of entire industries = US unemployment + loss of skilled work = dangerous structural budget deficits.

And the story doesn't stop there. Faux refers to a study undertaken in 2006 by a Princeton economist and former Vice-Chairman of the Federal Reserve, Alan Blinder, which concluded that approximately 42 million US jobs were potentially off-shoreable, and his focus was not on manufacturing jobs but on the high-tech service occupations that were supposed to compensate for the loss of manufacturing jobs.  (top)		 As Blinder said, "Perhaps contrary to what we have come to believe in recent years, people skills will become more valuable than computer skills. The geeks may not inherit the earth after all.", so he seems to be talking about the $14 an hour waitress, pizza delivery and shop assistant jobs.

The author interestingly goes on to show that economically successful countries carry out national political/economic policies. They emphasize the efficiency of government and 1) build infrastructure 2) educated their people to a high standard 3) set national priorities and employ benchmarking to see how their country compares internationally in key areas.

The U,S, does none of this and is obviously failing in infrastructure, education, health costs and actively rejects the idea of benchmarking so the author suggests that it is heading down in world economic rankings rather than up.

The book sees the core of the problem in the capture of Washington by special interests with their big money flooding into campaign contributions, lobbies, think tanks and even academia to buy policies that are highly profitable for them but disastrous for most of the rest of America that is outside the gilded circle, so much so that the role of government now seems to be restricted to clearing up the regular speculative messes and engaging in futile arguments about hopelessly large deficits.

Other interesting issues that the book doesn't cover are technological unemployment(a good book here is The Lights in the Tunnel: Automation, Accelerating Technology and the Economy of the Future: 1) and the dangerous complexity of US government in for example the tax code ( a good general book on this is Repeatability: Build Enduring Businesses for a World of Constant Change ) but nevertheless this is one of the best books I've read about the U.S. political gridlock.