Interview with Paul Craig Roberts – Economic Disaster Approaching
Rob Kall: [...] I thought that collapse of the Soviet Union was a pretty good thing. Why are you saying it's so bad for the US?
Paul Craig Roberts: Well, you know, Rob, it led to that Neoconservative nonsense about the end of History, which of course unleashed the notion of American hegemony over the world, and the ideology behind all of the wars and the aggression that the United States has been conducting since the George W. Bush administration. But I'm speaking in the book economically; and what happened economically because of the collapse of the Soviet Union and the rise of the high speed internet is that it made it possible for Western corporations (corporations in the United States, Europe) to arbitrage labor across national borders.
In other words, when the Soviets collapsed, it had a big impact on thinking in Communist China and Socialist India. Their response to the failure of the Soviet Union was to open their vast, underutilized labor to Western capital. So the corporations found out that they could produce for their home market offshore in India or China, dramatically drop the labor cost, and thereby dramatically increase the profits flowing in capital gains to shareholders and in performance bonuses to executives.
So the collapse of the Soviet Union began the arbitrage of of labor, and it ended up separating Americans from the production of the goods and services that they consume. The economy has been dead in the water ever since, and the Federal Reserve under Alan Greenspan tried to substitute - for the missing growth in consumer income in employment - consumer indebtedness. So we had the rise in consumer indebtedness, the real estate bubble, the various financial frauds, and the ongoing financial crisis.