Right now, the United States is spending billions and endangering its youth, to bring peace to a section of the world that is no longer viable. I’m speaking, of course, about the Middle East, which is so shattered that even the idea of peace across the area, is preposterous at this time.
Asia not the Middle East is the place we should be investing our resources, and after that, Africa. Right now we are ass deep in unwinnable wars all over the Middle East and we get almost nothing but more trouble for it. The people are, for the most part, religious fanatics, the nations, almost universally unstable accumulations of medieval tribes who all hate each other. The one product that made the Middle East attractive, oil, is now a glut on the international markets with our country almost self sufficient, Russia awash in it, and many other countries looking to sell to a diminishing market as clean renewable fuels show themselves to be the energy source of the future, thus leaving the Middle East without another viable product, unless, of course, you consider terrorism or slaves a sustainable export.
This is, of course the great failure in an otherwise successful Obama administration foreign policy; allowing us remain mired in this dry swamp, entered and destroyed by the Bush administration, when we should be spending our resources in the more tempting fields of Africa and Asia.
We currently sport an economy that still, despite China’s advances, is leading the world. But despite this leadership it is failing our people in their basic search for the American Dream. Why is this? It’s probably because the country is dealing with what Larry Summers calls “secular stagnation.” This means that despite advances in the market, despite shrinking of the deficit to a point lower than at any time since Clinton left office and despite significant job growth the GDP this year is just not going to be very high. Why?
The answer is probably because we are holding onto too much cash. We have a huge savings rate, established by the super rich, which sounds great but doesn’t really help when we are looking for investment in production and job creation. This is at least partly to blame for the fact that we have created almost no demand for product produced here. This lack of demand comes from consumers not having the expendable capital to push the needed demand.
It’s very simple. Despite what the backers of trickle down economics would have you believe, the rich neither push demand, nor create product without it. They, for the most part, have what they need and even if they don’t, there aren’t enough of them to cause a trend, simply because despite having all the money, it’s just not possible to spend all the money, and spending is what drives demand. Those below them on the economic scale don’t have the money to spend because wages are so low they can barely pay for what they need. So there is no demand and nothing gets financed or built because there is no buyer for what we would produce. Sounds like a Catch 22 doesn’t it. Well it is.
Your average billionaire or corporation looks at this scenario and decides to hold onto its money, put it into classic holdings in the market, or invest it overseas, which actually produces nothing here.
So how do we get out of this? There is one sure way and it was clearly demonstrated to this country and the world in the 1930s when we induced government spending to create a whole new infrastructure for this country. Now, almost a century later, that infrastructure desperately needs repair and replacement. Our bridges are collapsing, our roads decaying, the electronic grid rotting away. In addition we aren’t doing enough research and development to keep up with the rest of the world and it’s R&D that has traditionally produced the new products that create demand and which keep the US ahead of the rest of the world in manufacturing. The answer to the problem is, as it was in the 1930s, government spending to prod these areas of investment and employment that are completely stagnant. Interest rates are at an all time low and it’s just nuts not to use this situation to fix the structural nation.
In doing this, the government doesn’t have to pick up the check for everything. It can simply guarantee the bottom line on certain projects. This will get the private sector involved in the actual work, using some of those banked dollars to finance projects in a no-risk situation. Then, by demanding that a living minimum wage be paid on any government contracts, the government could force the whole wage structure up. All private industry would have to meet the government rate or risk suffering the loss of its top people to government sponsored projects.
Such an across the board wage hike would put more money in the hands poor or the middle class who, because they have more immediate needs, historically spend it faster and save it less. This would create a new demand for product that would encourage private industry to stop sitting on its hands and get back into the manufacturing fray. This in return would create more work, generating higher wages as management fought for the best workers and thence for even grater demand as the circle of economic growth continued to expand. This is reality, as opposed to the fantasy that giving the rich tax breaks will encourage them to build plant with the saved money. Historically all that tax saving has ever generated is bigger gambles in the market and second yachts.
One of the best ways to finance the government’s move into this area would be to reform the tax laws to eliminate deductions and exemptions for big companies and industries that don’t need them to make a profit and because of them never need to pay any tax.
But before we get into all that, let’s face a couple of hard truths. We can worry all we want about getting our jobs back from here or there but there is a certain genre of jobs that are gone and are never coming back, at least not until this country falls back into the status of Third World. I’m speaking here about low level manufacturing jobs that have fled to Third World countries and have by now established a labor cost of around fifty cents an hour with no benefits. This job will never return to the US nor will many manufacturing jobs right here that have already been replaced by robotic techniques. In much of what remains of our manufacturing base these techniques have erased whole job forces and replaced them with much smaller numbers who have much higher educational levels. So what happens to those who held these now extinct jobs?
Unfortunately, not much; many of them will simply age out of the work force. Those who are too young to consider such an alternative must be re-employed and many of them would fit very well into the kind of jobs that would be made available by infrastructure investment. The rest must look to re-education and again the government must be the engine of that pursuit, especially through lowering tuition in technical schools and lowering student loan rates across the board. Right now a college education is prohibitively expensive. Too many of our best schools spend billions on construction while that money would be better spent on scholarships. With interest rates hovering around 1% it is criminal that our government allows student loans to soar to 8% or more.
It’s time we got it together and solved this not particularly exotic problem. We are a nation, known for its inventiveness and entrepreneurial spirit. It’s about time we stopped futzing around and got down to cases. The best way is to elect a president and congress, who understand the needs of the entire country and not just the top one percent, an administration that will lead us into he second quarter of the 21st Century with a plan and a desire to help all citizens accomplish the American Dream.