More on The Economy

I am pleased that so many of you are being thoughtful and willing to share your views. My sense is that if we do not express our views, find common ground we can not coalesce behind the political leadership we need to keep America from sliding into third rate nation status.

I received the following and offer it for your consideration:


Comments on the Current Economic/Political Situation in America
Sam Ginsburg / October 4, 2010

Americans tend to limit their vision of the world to the borders of the United States and to a time no earlier than the last election, or in some circles, to the last quarter. In a world that is being globalized at an every increasing rate, this near sightedness and lack of historical perspective is foolhardy and perilous to the future of this country.

America received a wakeup call warning us of the impending impact of economic globalism in the 1970’s when the Arab oil producers nationalized their oil, raised oil prices and threw the American economy into a tailspin that did not end until Paul Volcker brought rampant inflation under control by inducing a recession some ten years later during the Reagan years. Reagan then promptly dismissed Volcker so he could introduce the Free Market - Anti Regulation -Trickle down ideology espoused by his fellow Republicans. During this period, Japan grew its economy to become the second largest in the world by becoming the largest exporter to the United States by closely managing its government protected industries to increase exports while restricting imports. At about the same time, after the death of Mao-Tse-Tung, China began, what now can be seen, as the greatest national economic expansion in the history of the world – an expansion based on exports that has yielded double digit GDP growth over decades and has yet to show any sign of slowing down – a record of historical dimension totally orchestrated by a government, not private enterprise, and a Communist one no less.

The result of these changes and that of other “exporting” nations in Asia and the oil and gas producing countries of the world has been the greatest transfer of wealth and of jobs in the history of the world – from the Western, free nations, of the world to the exporting, nations of the world. Americans were told, not to worry when our industrial base shrunk from 60% of GDP to less than 10% - we were now transforming into an “information technology” economy and we would grow jobs in cleaner, safer, environments. Americans compensated for the loss of high paying factory jobs by sending their wives to work thus transforming the adage that two can live as cheaply as one to two workers can earn as much as one.

Every decade since the 1970’s has seen increasing erosion to the American way of life, most Americans aspire to, by countries outside of the United States. Clean office technology jobs began to be outsourced to other countries where the labor costs were less. High paying construction jobs have been decimated by alien workers from Mexico. Today, highly skilled legal, medical and architectural services are being outsourced to countries like India and China. And 30 years of ever increasing trade deficits with China and Japan has transformed the mighty American state into a debtor nation and 30 years of Free Market economics has brought us to the brink of another Great Depression from which no one knows when we will exit.

The argument about whether business or government is better at creating jobs in the country or which should be put in charge of getting this country back on track has to be seen in its historical context. The history of the last several decades has clearly proven that the free market, anti regulatory policies of the past have failed and new strategies are needed to address the reality that state-controlled foreign nations have exploited the American version of free market competition and have seriously impacted our economy and our labor force and that private corporations cannot possibly fix this problem. Nor can private corporations solve the numerous other problems confronting our nation such as global warming, alternative energy, heath care and education without the guidance of a government as effective as the Chinese state. We need to learn from our major competitors to combine the forces of private enterprise with long-term government strategies and assistance to produce growth and prosperity.

Having arrived at this conclusion, I am sad to say that America’s government no longer works. It is torn between two parties that can no longer work together and whose goals are limited to the next election. As for large business, their goals are limited to the force that fuels capitalism, Greed - defined by the results of the upcoming quarter and/or the goals prescribed by their executive’s bonus agreements. Tom Friedman, of the NY Times, in his latest editorial talks about the dysfunction of our government and the possibility of a third party entering the forthcoming presidential election. I wish I could believe this was possible. Instead I believe that, for years to come, America will continue to fumble from election to election and quarter to quarter and the nation will continue to decline as a world power and its influence will decline as our European partners seek to replace the dollar as the international currency and strengthen their connections to China and Russia and to the other extravagantly rich Sovereign wealth fund nations of the world who are sitting on rapidly expanding troves of trillions of dollars of private equity capital flowing to them from us and the rest of the western world who continue to import their products on a massive scale.