Paul Craig Roberts

President Trump’s economic proposals, with one exception, constitute a coherent package. I will address his proposals in a later column. Today I address his bad idea that would cause the failure of Trump’s renewal of the American economy. That bad idea is H-1B and L-1 work visas. For the past three decades, American manufacturing, engineering, and design jobs have been moved offshore. US corporations use foreign labor to design, engineer, and manufacture the products that they sell to Americans. The consequence is to deny Americans the income from producing the goods and services that they consume. Wall Street and the corporations have imposed deindustrialization on the United States, thereby putting it on the road to a third world economy.

H-1B and L-1 visas add to this loss of American employment and income from jobs offshoring. A minimum of 85,000 H-1B visas are granted each year. This means that 85,000 Americans are displaced from working in the IT and engineering sectors of the US economy. By the time the visas expire, the foreigners are integrated into the work force and are on their way to receiving green cards, Over a 10 year period, 850,000 American jobs have been given to non-citizens.

According to the US Bureau of Labor Statistics, in December 2024 there were only 1,083,000 people employed in the US in computer and electronic product manufacturing. Computer systems design and related services shows 2,545,000 US jobs. Obviously, of the jobs left in America, those on H-1B visas are taking a sizable chunk.

There is no annual limit on the number of L-1 visas. In 2019 there were 77,000 L-1 visas issued.

For three decades I have addressed the problem of the American work force being denied the income associated with the production of the goods and services that they consume. This policy was initially forced on American corporations by Wall Street. Today it is the source of high stock prices, executive “performance bonuses,” and the massive US trade deficit. Wall Street and a few executives have benefitted greatly at the expense of the American work force, city and state tax bases in former manufacturing states, and the US trade deficit. Trump mistakenly believes that America’s trade deficit is China’s fault. It is not. It is entirely the fault of the American corporations who offshore their production for the US market. When the US corporations bring their foreign produced goods and services back to America to sell, they come in as imports. Apparently, American corporations and Trump’s advisers have managed to keep the facts from Trump.

Part of the problem is that American economists are so incompetent that they think jobs offshoring is free trade from which everyone benefits. These economists would benefit from visiting the American cities from which manufacturing was moved offshore. Then they should go visit the cities hosting offshored manufacturing, and they will see who has benefitted. China’s rapid economic rise was caused by US corporations offshoring American jobs.

In actual fact American economists are as corrupt as all other professions, because they are paid to write the narratives for those with the money.

During the 30 years of American jobs offshoring, the large wage difference between the US and China, Vietnam, Indonesia, Mexico has accounted for the bulk of corporate reported earnings. To be clear, stockholders and executives have benefited from American corporations forcing the American work force into lowly paid jobs stocking shelves in big box stores with products made abroad.

There is no way that Trump is going to bring jobs back to America when he endorses work visas for foreigners that take away American jobs.

I have written endlessly about this to no effect. The political campaign donations from the offshoring corporations, every one a traitor to America, speaks more forcibly than my voice.

It is not only my voice that is not heard. It is also the voices of billionaires Sir James Goldsmith and Roger Milliken, both now deceased, and the voices of Ralph Gomery and Michael Teitelbaum of the Alfred P. Sloan Foundation. I think the reason facts could not be heard is that conservatives think in terms of business vs. government. Business is good and government is bad. Consequently, conservatives do not understand that government is what business uses to feather its own nest. Similarly, free market economists confuse free trade with business feathering its own nest. Thus, they dismiss opposition to jobs offshoring as an attack on free trade.

From my book, The Failure of Laissez Faire Capitalism (2013):

On November 6, 2006, Michael S. Teitelbaum, vice president of the Alfred P. Sloan Foundation, explained to a subcommittee of the House Committee on Science and Technology the difference between the conventional or false portrait that there is a shortage of US scientists and engineers and reality. The reality, Teitelbaum explained, is that the combination of offshoring, foreign guest workers, and educational subsidies have produced a surplus of US engineers and scientists that leaves many facing unstable and failed careers.

As two examples of the false portrait, Teitelbaum cited the 2005 report, Tapping America’s Potential, led by the Business Roundtable and signed onto by 14 other business associations and the 2006 National Academies report, Rising Above the Gathering Storm, “which was the basis for substantial parts of what eventually evolved into the American COMPETES Act.”

Teitelbaum posed the question to the US Representatives: “Why do you continue to hear energetic re-assertions of the conventional portrait of shortages, shortfalls, failures of K-12 science and math teaching, declining interest among US students [in science and engineering], and the necessity of importing more foreign scientists and engineers?”

Teitelbaum’s answer: “In my judgment what you are hearing is simply the expressions of interests by interest groups and their lobbyists. This phenomenon is, of course, very familiar to everyone on the Hill. Interest groups that are well organized and funded have the capacity to make their claims heard by you, either directly or via echoes in the mass press. Meanwhile those who are not well-organized and funded can express their views, but only as individuals.”

Using the biomedical research sector as an example, Teitelbaum explained to the congressmen how research funding creates an oversupply of scientists that requires ever larger funding to keep employed. Teitelbaum made it clear that it is nonsensical to simultaneously increase the supply of American scientists while forestalling their employment with a shortage myth that is used to import foreigners on work visas.

Integrity is so lacking in America that the shortage myth serves the short-term financial interests of universities, funding agencies, employers, and immigration attorneys at the expense of American students, whose economic prospects are harmed by their naive pursuit of professions in which their prospects are dim. Initially it was blue-collar factory workers who were abandoned by US corporations and politicians. Now its is white-collar employees and Americans trained in science and technology.

Congress has had a parade of CEOs ranging from Bill Gates of Microsoft and IBM executives on down the line to testify that they desperately need more H-1B work visas for foreign employees as they cannot find enough American software engineers and IT workers to grow their businesses. Yet, all the companies who sing this song have established records of replacing American employees with H-1B workers.

For example, in 2009 Microsoft, IBM, Texas Instruments, Sprint Nextel, Motorola, and scores of other corporations announced thousands of layoffs of the qualified American engineers who “are in short supply.”

IBM has offered to help to relocate its “redundant” but ”scarce” American engineers to its operations in India, China, Nigeria, and the United Arab Emirates at the salaries prevailing in those countries.

On January 28, 2009, USA Today reported: “In 2007, the last full year for which detailed employment numbers are available, 121,000 of IBM’s 387,000 workers (31%) were in the US. Meanwhile, staffing in India has jumped from just 9,000 workers in 2003 to 74,000 workers in 2007.”

In order to penetrate and serve foreign markets, US corporations need overseas operations. There is nothing unusual or unpatriotic about direct foreign investment in plant and equipment. However, many US companies use foreign labor to manufacture abroad the products that they sell in American markets. If Henry Ford had used Indian, Chinese, or Mexican workers to manufacture his cars, Indians, Chinese and Mexicans could possibly have purchased Fords, but not Americans.

The ruins of America’s once great manufacturing and industrial cities stand as monuments to the success that the US Chamber of Commerce and global corporations have had “in saving Americans from protectionism.” According to the 2010 US census data, the population of Detroit, Michigan, once America’s 4th largest city and a powerhouse of US manufacturing, declined by 25% in the first decade of the 21st century. With large areas of the one great city consisting of abandoned buildings and houses, the city is attempting to shrink its border by 40 square miles.

In the first decade of the 21st century, Gary, Indiana, lost 22% of its population. Flint, Michigan, lost 18%, Cleveland, Ohio, lost 17%, Pittsburgh, Pennsylvania lost 7%, South Bend, Indiana, lost 6%, and Rochester, New York, lost 4%. These cities were once the home of American manufacturing and industrial might.

Between 1990 and 2010, St. Louis, Missouri, lost 20% of its population, and 19% of its housing units stand vacant. As the United States’ ability to make things disappears, the hubris of America’s leaders rises as they fancy themselves to be a hegemonic superpower. Photographs of the ruins that now comprise what once were centers of US productive might are abundantly supplied on the Internet. See, for example, “The Ruins of Detroit.”

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An Economic Lesson for President Trump
https://www.paulcraigroberts.org/2025/01/28/an-economic-lesson-for-president-trump/