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Some Good Points, and Some Ridiculous Ideas!
on December 10, 2011
Listening to the public debate, says Faktor, you'd think we solved all the important problems already. We argue over innumerable topics that rarely are of consequence, and never reach resolution. (Eg. We're still fighting over Roe v. Wade - 38 years later.)
Author Faktor believes our decline began with the election of Ronald Reagan and his sea-to-sea optimism. During his presidency, our debt tripled, China's resurgence began, voodoo (supply-side/trickle-down) economics began, and we pumped ourselves up by talking down the Communists while bloating up our military. Then came Clinton and his push for free trade and the initial ruinous deregulation of financial services, followed by Bush II's starting two wars, massive tax cuts, adding a Medicare drug benefit, tax breaks to move jobs overseas, extension and solidification of the Greenspan 'put,' 9/11 - not just a human tragedy, but also a diversion from our deteriorating economy, high and rapidly rising health care costs, mushrooming debt, the realization that the 12 million or so illegal Mexicans we'd winked at were undermining our economy, and clear evidence that any stimulus efforts would likely end up in China. We were now trapped.
What to do? Supposedly wise economists and policymakers, along with vested economic interests with PAC cash, contend that innovation will lift us out of this economic malaise. Conveniently, they ignore the fact that our having abandoned commodity manufacturing (eg. CRT TVs) has locked us out of many of tomorrow's emerging industries (eg. flat panel displays - plasma, LED, LCD, and organic; solar panel manufacturing), and even where we have innovated (eg. most new millennium Apple products), the majority of those new jobs (manufacturing) end up overseas. Sounds like 'New Age' dreaming.
The new economy is not what we were promised just a decade ago - innumerable high-paying high-technology jobs. Facebook as a $90 billion valuation, but only employs 2,000 worldwide. Top earning service industries (software, pharmaceuticals, financial services, engineering, medical research) employ less than a million in the U.S. - far less than the 8 million jobs lost in the Great Recession. And the top 1% now control 34% of wealth, vs. the bottom 50% having only 2%, 47% pay no federal taxes - increases all attributable to Free Trade and the offshoring of American jobs. Further, an education that once gave an $800,000 lifetime advantage in earnings now offers only a $280,000 advantage, if that. (Just think of how much your plumber and electricians are making.) And now millions more jobs are vulnerable to offshoring - in the service sector (everything that doesn't require hands on, right here).
Demand for the dollar is dropping - in 2011 the chaos in the mid-East sent money into the safety of precious metals, not American treasuries as in the past. That same year the BRIC and OPEC nations agreed to trade with each other in their own currencies - instead of using dollars. Both actions lower the value of the dollar.
Instead of offering foreign manufacturers (or threatening with loss of access to our markets - aka China) to produce here, we have state and cities competing with each other for shopping centers, offices, etc., in a zero-sum game. We pride ourselves in having laws against U.S. firms bribing foreign officials, yet think nothing of large corporate campaign 'bribes' given to U.S. candidates.
A fairly good job up to this point - summarizing problems. Then it's time for recommendations, and Faktor's brain shifts into nonsense. He recommends selling actualization, building a capital magnet, 'making makers' (improving and lowering the cost of education via greater use of software, limiting the inflationary impact of student loans by limiting their amounts, teaching technical skills - beginning in kindergarten????), micropreneurship, and becoming an incentive nation (incentives now boost financial engineering and marketing, instead of product engineering). Superficial, vapid, and ignoring the responses of other nations, environmental complications (eg. approving a pipeline from Canada that would boost highly polluting oil production), etc.