Facing Unpleasant Reality

Both of our major political parties seem to be sure they know how to “get America going again”.  The conservative crowd says it is all about individual initiative.  Free Americans from useless and restrictive regulation, and watch what Americans can do.  Progressives tell a different story.  They warn of leaving some behind and the need to break the poverty cycle.  A strong middle class is the way to return to greatness, progressives say.  So which side has the best answer?

Maybe neither.

The US finds itself in a unfamiliar spot.  Beyond China, no other major country has as strong or growing economy as the US.  What?  Yes, even though the US economic growth rate is well below our goals, and we complain about the unemployment rate and the general dissatisfaction with the employment market, the US has done much better than most of the world, particularly Europe or Japan.  So what is the problem, then?

We must step back and ask when were those great days we all remember, and what is different today?

The 50’s, 60’s, and 70’s were for most Americans the “good time”,  a time of increasing wealth.  Families were getting the first TV and many their second automobile.  Americans were sending their children to college and taking nice vacations.  Being a union work meant good pay and a secure retirement.

So what’s different?

First, the concentration of manufacturing capacity has slow spread far more evenly throughout the world.  Where once the US possessed 60% of the entire world’s manufacturing capacity (read jobs),  today, the US possesses only 21% (read less jobs and at lower pay).  While so many of these manufacturing jobs have gone to China, the real issue is that even the similar jobs that have not left the US have become low paying.  With the capability in third world countries to manufacture and ship at high quality levels, there is no chance for those manufacturing jobs to pay more than what the lowest labor market will permit.

Second, the concentration of wealth has evolved to where the average American family is earning about what they did 40 years ago.  While America remains the wealthiest country in the world, that wealth is concentrating in fewer and fewer hands.  This is not an issue of class, rather it is an issue of practicality.  Where will consumers come from who will demand more goods and services?

So, when the major parties speak of tax cuts, do you think tax cuts will impact either of these major shifts?

When the major parties speak of “job creators”, do you think the jobs that will be created will be good paying jobs, ones that will narrow the income distribution?

When corporations promise analysts that next quarter earnings will be even higher, do you think they mean they will reward employees as well as shareholders?

When banks urge relaxation of regulatory rules, will they seek profits that minimize the risk that their depositors are exposed to and will help create new jobs?  Or will they try to make bets that if successful, put a bulge in bank profits (without having lent money to the community)?

There are no magic bullets to return America to the 50’s.  The 2012 political rhetoric seems oblivious to the two great underlying issues, good paying jobs, and a fairer distribution of income (wealth).  The political talk does not recognize the shared sacrifice that is necessary and that unless we all win, sooner or later we will all lose.

Good paying jobs will result in more demand, more demand will bring more jobs.  A fairer distribution of income (wealth) will enable more people to partake in the American dream.

As far as I can see, neither party is speaking directly to this.  President Obama with his emphasis on investment in education and infrastructure is close.  But neither, President Obama nor Mitt Romney are telling Americans how we can get good paying jobs again, or why we should want them.  Neither is calling for a broad based effort to make the game fair for everyone.

If nothing changes in the political rhetoric department, America will be voting for the least dangerous candidate.   Worse, Congress will not get the message they need to hear.

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