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“How the Economy Was Lost”

January 1, 2011

(This, from an Amazon review of How the Economy Was Lost: The War of the Worlds), wherein Paul Craig Roberts, Assistant Secretary of the Treasury under Reagan, describes in common sense detail the path to the dismantling of the United States economy.


This book is an organized collection of his columns (Part 1) that deal with the American Economic Crisis we find ourselves in and how we got there. While some of his earlier columns (going back about 5 years) may appear slightly dated, it’s interesting to watch his predictions (particularly those about Unregulated Derivatives as a disaster just waiting to happen) come true.

And by the way Derivatives are STILL unregulated! Talk about corruption and malfeasances in high places. I don’t think they have even re-instituted the uptick rule on short sellers (this was a rule passed after the crash of 1929 to force traders to wait for the stock to go up a little before they could short it again)

Like many of the other post 1929 laws and regulations, quietly tossed aside as “antiquated and unnecessary”.

Later in the book, Part 2 is devoted to an explanation in ordinary language of why free trade doesn’t actually always create the win-win scenario that it’s boosters insist on. Also a very important explanation of why Outsourcing is not really free trade at all. And insourcing (replacing American workers with cheaper foreign workers) is not free trade by any stretch of the imagination.

– The outsourcing of manufacturing and good blue-collar jobs, among its other nasty effects, threatens to destroy the middle class. One chapter deals extensively with the soaring income disparity that is developing in America (one of the classic hallmarks of a Third World Nation)

– The death of American manufacturing and the outsourcing of Research & Development jobs to India and China and the insourcing of professional jobs here in America, are destroying the career opportunities in engineering and technical fields for our own children. Even before the current economic collapse many American engineering graduates could not find work.

As he says in one chapter – “the United States is the first country in history to destroy the prospects and living standards of its own working people”

On American firms openly advertising for foreign engineers on H-1b visas (or using slippery tricks to get around the few laws that protect American workers) he says;

– “What kind of country gives preference to foreigners over its own engineering graduates?….How much longer will parents shell out $100,000 for a college education for a son or a daughter who ends up employed as a bartender, waitress or temp?”




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