The single most important consideration our Congress and our President should have when deciding how to balance the federal budget (and, this consideration should apply to state and local political budget issues as well) is how every proposal will affect the health and well being of the middle class of this country. So much talk time and fussing is being spent on whether the dollar is headed for hyperinflation, whether the continuing deficits will bankrupt the country, etc., when these are only symptoms of the disease.
The disease is the potential decline and destruction of the middle class. This nation does not want that. In spite of far right thinking that thinning the middle class will drive up competition for jobs and reduce labor costs, making the United States’ production and manufacturing companies more competitive on the world stage, thinning the middle class is a major social, political and economic mistake. It is a mistake only people so blinkered by greed and allegiance to the dogma of “free trade’ could make. It is a mistake made by the intelligent myopics in our society. The intelligent myopics are that group in a society who are smart enough to BS and bedazzle the majority but are so intensely focused on a narrow objective, in our case maximizing the return on private capital to the exclusion of all else, so as to lose sight of the unintended consequences of such a short sighted policy. Unfortunately, this is the group that has dominated national economic policy for at least the past six decades.
Even more unfortunate is the lack of appreciation this group has of the critical importance of maintaining and expanding the middle class in the United States. Things did not fall apart in this nation during the Civil War and its aftermath because there was, in the Union states, a vibrant middle class. Likewise, after that war, perhaps for the first time, there was an emerging and vibrant middle class in the rebuilding Southern States. Things did not fall apart during the Panic of the 1880’s because the nation was anchored by a vibrant and optimistic middle class. Things did not fall apart during the Great depression for the same reason.
Now we are lead by a gaggle of men and women who have no experience outside of government and finance. These folk believe the middle class can be restored if we just protect the banks and other financial institutions and the value of the ownership in those banks and institutions. They believe that the critical thing of importance is the preservation of wealth. Therefore, the resources of the nation have been put to that use above all else.
Reality is exactly the opposite. The banks and financial institutions in this nation will remain healthy only if the middle class remains healthy. The banks and financial institutions in this nation can grow only to the extent that the nation’s middle class prospers and expands. Let’s be clear, banks and financial folk do nothing other than shuffle money. They do not make anything. They do not create national wealth. They don’t create any wealth. At most, they simply aggregate wealth and rake a large chunk of wealth off the top while doing so.
This is not to say that the Goldman Sachs of the world will not continue to grow and prosper as the United States middle class dwindles and shrinks. It may and probably will. It just won’t do it here. It will continue to grow and prosper from investments in nations where the middle class is vibrant, growing and optimistic. These nations will not be the ones with the lowest tax rates or the strongest military or the least regulated economies. These nations will be the ones that follow policies that foster middle class prosperity and growth.
No doubt, in the service of short-term profits, the Goldman Sachs of the world will immediately begin to simultaneously pump their devil’s elixir into whatever host nation’s neck they sink their parasitic fangs while sucking the life blood from it as well. No doubt they will, over time, be able to buy the national governments of those new hosts as they have done here and, in so doing, they will begin the process of draining those nations of vitality and vigor, as they have done and are doing here.
Indeed, their here work may be done and it may be time they moved on. Whether or not that proves to be the case, we should look at the potential to turn this train wreck around.
The current budget crisis is a pretty good place to start. Rahm Emanuel borrowed a line from Saul Alinsky, who probably borrowed it from someone else, that says, “Never waste a good crisis.” Not withstanding the fact that Emanuel and his, then, boss, President Obama, did exactly that, the sentiment is still a valuable truth.
In solving this “crisis” the President and Congress can elect to swap it for another, worse, crisis or really use it to turn things around. To accomplish the latter our leaders should measure every proposal to bring the budget under control by whether or not the proposal will help or hinder the prosperity and expansion of the American middle class. If it does, vote it in. If it does not, vote it out.
This consideration should be far more important than our relative military might. As it is, we spend more on “defense” than all the rest of the world’s nations combined. Maybe we could scale back to no more than the cumulative total of all the other nations’ of the world expenditures on military. If thing get really tough deficit-wise, maybe we could consider spending no more than seventy-five percent of the combined total of the rest of the world. That still sounds like quite a bit of money relative to all the folks out there we may someday need to fight.
The truth is scaling back to the seventy-five percent number would probably bring the budget into balance. But, maybe that is unrealistic. Maybe, the world will dissolve into chaos if we try to do that. Maybe we have to continue to play policeman to the Earth. If so, isn’t that a service? Are we the only nation benefiting from that service? Jesus, I hope not. If so, it isn’t doing us a great deal of good.
While we are busy policing the world, keeping the sea lanes open, making sure the air traffic paths are open to all, in short, making international globalization of the economy possible, our economy is headed to the crapper. So, somebody else is benefiting from all this policing. Why don’t we ask them to help defray the cost. After all, if we just keep borrowing the money from China and India, money they make in international commerce our military makes possible, sooner or later we will be working for them in an even more overt manner than we are now. If we charge them, we can use the money to pay back what we have already borrowed from them so they could take away all our markets and have the money to lend us. Seems fair to me.
If they choose not to pay a service fee then we scale back. Provide policing action for our businesses and let the rest go. Then they can build their own forces up and take care of their own interests. Either way, our budget gets balanced.
Okay, I hear the grousing already. “If we pull back militarily and China and India and God knows who build up their military to shoulder some of the load, we will lose control and soon there will be three or more major regional powers with whom we will have to contend.”
The grousing is correct, to a degree. Unfortunately, we are now on a trajectory we cannot sustain. If we continue to follow this course, we will have to eliminate most, if not all of the social services network that sustains the social fabric of the nation. In the end it will still not be enough. In the end the current path leads to economic collapse and civil disruption and distress. In the end we will be a powerless, toothless shell of a power unable to protect ourselves or anybody else. Better to demand payment and, if we don’t get it, pull back and let other nations share the burden. If the global economy is so important, other nations will step up. They will step up and become more militarily oriented, even so, we can still be strong, economically and militarily, and first among our peers.
So, my first proposal is that we put the health and well being of the middle class before the “needs” of the military. However, that is not enough. We need to expand social services to the middle class. Things like a real national health care service, not that pathetic, sick joke Obama has foisted upon us. We need free or seriously subsidized higher education for everybody whether there is a “needs base” or not (Believe me, the way costs for higher education are escalating, everybody is needs based.). Most importantly, we need a thorough reworking of all out trade treaties. We need a system of fair trade, not free trade. Only by migrating to a fair trade system can we rebuild an economy that creates blue collar jobs a man or woman can have and still provide for his or her family while leading a middle class life.
Why shouldn’t we make this migration? There has never really been any such thing as free trade. What we have is a system that defines “efficiency of production” in very narrow terms. Where the return on invested capital (sometimes return on all capital is substituted) is the only measure of efficiency of production. In other words, wherever the most profit is to be had from the making of widgets that is deemed the most efficient place on the planet to make widgets.
There is no accounting for the social costs, environmental pollution, exploitation of child labor, etc., in this calculus. There is no accounting for human costs, either in the nation losing the capital and jobs or in the nation “gaining” them. There is no accounting for the damage done to the social fabric of either nation. Return on capital is easy to calculate, all the rest is not. Therefore, to keep it simple, the international tradesters calculate only that which is easy and precise.
The only thing wrong with this notion of efficiency is it leads to destruction and catastrophe. It not only does damage to human systems, it results in damage to the world’s physical environment as well. Since Bangladesh, to pick a name, is not required, in order to compete for industry, to intelligently regulate its industry to protect the environment, it does not do so. Why would it? Environmental regulation is a common problem that, as global warming proves, affects the entire world, not just Bangladesh. Why would Bangladesh want to deal with global issues that result in local costs if it does not have to? Likewise, for reasonable and fair labor laws and wages. Why suffer the costs of those when you can get the money and the jobs and the payoffs and what not without worrying about all that?
If developing nations do not have to compete fairly and on a level playing field with other nations, why would they voluntarily suffer the costs of doing so? If, however, such nations did have to follow some reasonable international standard of regulation and wage and hour and labor protection laws in order to compete in the world market, they would do so. The current measure of “efficiency” punishes everybody, developed world, undeveloped world and those caught in between. Even in nations, like China, that are powerful players in international commerce, workers are finding it is proving a poor bargain having to sacrifice breathing in return for a job.
The protection and expansion of the American middle class, and similar policies in any other country, is good for everybody. It promotes civil order and stability. It promotes fair trade and the social/common benefits that derive from that. It makes it possible for a middle class American family to be headed by one or two blue collar workers and still have a middle class life and future.
The rich, separated from their context and environment, really aren’t important. They are like a queen bee ensconced in her hive. She has a dominant position, that is true and, if she isn’t efficiently replaced, the hive would be lost without her. However, she can be replaced but she could not survive a day without a vibrant, working, functioning hive supporting her.
All those fat, bitchy Queens preening about in the halls of the financial world, in Congress and the Treasury Department are greedy for more and more honey while the hive dies. Time to put them on a diet or let them find another hive to pollute.