One thing is becoming painfully obvious: the way we, as Americans, view economic opportunity is out of step with the way the world operates today. It is time that we recognize this and address it in a positive manner, without the political fire-bombing that is hurled daily on both the left and the right.
The left is stuck with an early 20th century Keyensian view of economics. I’d argue that particular view didn’t really work then and won’t work today. Massive infusions of government capital during the 1930’s into public works projects did build some marvelous edifices, such as the Hoover Dam, but did not absolutely nothing to end the Great Depression. America didn’t return to full employment until the advent of World War 2 – the result of increased war production and more than 10 million men entering military service. Once the war ended, the economy again returned to near-Depression era levels of unemployment. What finally proved the cure for the economic ills of the 1st half of the 20th century was that in the post-war period, only the US remained capable of providing the goods and services needed by the world. It was an export economy, fueled by international demand, which put America back to work.
The right seems permanently wed to supply-side economics. Strict adherence to that model might have worked, but we’ll never know. While government receipts during the supply-side era (1981-2008) outpaced inflation by (See fig. 1), government spending at all levels increased at an even more dramatic pace, leaving us with unsustainable levels of debt and continuing government deficits – and a seemingly insatiable public demand for services that we cannot afford.
The current model being followed is a strange amalgam of the two diametrically opposed economic philosophies, with government interventions and expanded spending coupled with “targeted” tax breaks. In one sense, this new model has worked: businesses are sitting on a virtual mountain of cash. But in a much larger sense, these haven’t worked to stoke the economy – and for one simple reason, the demand needed by businesses to invest that capital doesn’t exist now. Employment data continues to remain bleak, representative of the fact that businesses are not investing in human capital. Part of the reason is undoubtedly tied to regulatory uncertainty, since anyone running a business needs to properly plan and account for the funds allocated for human resources. But that uncertainty alone cannot account for the downward pressure July’s economic data displayed on employment.
What is needed is recognition by both those on the right and the left that a new demand model is required for our current age. Modern technologies have made many labor-intensive occupations of the late 20th century redundant. Cloud computing and SaaS technology reduce the need for office and technical staffing, closing off two of the high-growth industries of the past 30 years. Manufacturing tasks that once required dozens of people can now be fully automated, with only one operator required. (Just last night I watched a documentary on Zippo lighters – the entire assembly line only needs 5 people to run it; a perfect example). Even many low-wage jobs have been replaced – the other day I went food shopping. No cashiers were available; the entire checkout line was self-service with two people running 20 checkout lanes.
In other words, there are two possibilities now facing the country:
- Current unemployment levels are now the “new normal” and a return to sub-5% unemployment is unlikely. In this event, the current social services are inadequate and need serious revamping. Unemployment insurance as currently exists needs to be discarded, replaced by a system that is more proactive in returning the unemployable to the workforce while ensuring that people are not discarded like yesterdays news. Such a program needs to be structured so that chronic unemployment and other abuses are not permitted. In short, in such a world, unemployment services should not be a state duty, they should very much be a federal-corporate symbiosis. It is impossible – and against a state’s interests – to train somebody for employment opportunities in another state, but it is in a company’s best interest to do so.
- Current unemployment levels are an aberration; a temporary result of career displacement due to a technology upheaval. Such upheavals have occurred before and the nation weathered those storms, most recently in the late-1970’s as the nation shifted from a manufacturing base to a services based economy. In this case, the government needn’t do much of anything, except make career retraining available and mandatory, in order to continue receiving unemployment insurance payments. Once, that is, the new employment needs are identified.
I’m not going to pretend I’m smart enough to know which of the two scenarios is correct. What I do know is that until we begin to honestly discuss them, no action can be planned or undertaken. But as I mentioned at the top of this post, neither side seems ready to abandon decades-old dogma. I doubt either will over the next 90 days, as we begin a new national election cycle and both sides seem to only care about scoring political points by feeding raw meat to their adherents.
It’s up to the American people to put aside our natural inclination to fear in uncertain times and force our political leaders to engage in an honest discussion of the situation. And if they won’t?
Then it’s up to us to replace them this November with people who will.
Tomorrow is primary day in Missouri. Though I live in New Jersey, there is one item on the statewide ballot there that has captured my attention. If you live in Missouri, I certainly hope you’ve studied Proposition C and plan to vote for it. Missourians, this is your opportunity to show the rest of the nation that government intrusion on the personal liberties of Americans will not be tolerated.
For the uninitiated: Proposition C is a ballot measure that would, by statute, exempt all Missourians from the oppressive federal mandate to purchase heath insurance or face stiff penalties. By its passage, Missouri would send a message to the folks in Washington that Americans do not want the government subverting personal liberty in order to cover for a mess the federal government created. Although other states have enacted similar measures, those have been passed by legislative action – not by direct vote. With this ballot initiative, the good people of Missouri have the chance to show that it isn’t only legislators who are opposed to the “progressive” ideal that the Nanny State knows what is best for you and your family. It is ordinary Americans who are opposed to an usurpation of the long-established tradition that “those rights not especially enumerated in the Constitution are considered as belonging to a free people…The powers delegated by the proposed Constitution to the federal government are few and defined.” James Madison wrote that phrase in the Federalist Papers, and he meant it to illustrate to a skeptical populace that the federal government would not and could not take away a fundamental freedom simply because it had not been mentioned in the Constitution.
Certainly, decisions about which types of products to purchase are a fundamental right. Should the federal government assume he power to direct the citizenry to purchase a particular product (in this case, medical insurance) then our nation has ceded the a fundamental right. More, the nation will have undermined the very Constitution and the principle on which the nation was founded. If you do not have a fundamental right to decide when, whether and how to purchase any product, then are you truly free to pursue life liberty and happiness?
The Obama administration realizes the fallacy of their central argument during the run-up to passage of Health Care Reform; that essentially, the Commerce Clause grants this power to the federal government. This is why, in their preparations for the defense of the indefensible in court, they have resorted to declaring the mandate is essentially a tax – a power that is reserved by the Constitution for the Congress. If that is the case, then this is the largest tax hike in history and also paves the way for a federal take-over of the entire health care industry. In short, the Obama administration is trying to lay the groundwork that by declaring medical insurance is a de facto tax, then those who provide that product are, in essence, appendages to the federal government. To anyone who has any concern about personal freedom, this is an affront to the very ideals of national identity.
Already, the “progressive” forces are hard at work to discredit Proposition C’s passage. They are making numerous and rather spurious claims that its passage are only due to an intemperate electorate that will be heavily Republican on primary day. They are claiming that it will not hold any import, since a state law cannot supersede a federal mandate (this, by the way is currently winding its way through the court system and is certain to end in a decision by the Supreme Court).
What “progressives” are afraid of is a state law, passed not by legislative fiat but by popular vote, that directly tells an over-reaching federal government it has overstepped its bounds. The reason is, as always, the ideal of progressive theology is that individuals are not intelligent enough to make sound decisions and only an apparatchik of federal authority should have such authority. It was this very notion, in the past called “monarchism,” that both angered and frightened those that created our nation from the dust of their boots. It is the same principle applied by socialists and communists in defining the role government.
So Missouri: pass Propostition C. Do it in overwhelming numbers. And show the rest of us that our nation still exists for the purpose of guaranteeing the ideals of liberty and freedom.
You can read the full Proposition here.