What Obama proposes is a "post-material economy." He would de-emphasize the production of ever-more private goods and services, harnessing the economy to achieve broad social goals. In the process, he sets aside the standard logic of economic progress.
We cannot build a productive economy on the foundations of health care and "green" energy. These programs would create burdens for many, benefits for some. Indeed, their weaknesses may feed on each other, as higher health spending requires more taxes that are satisfied by stiffer terms for cap-and-trade. We clearly need changes in these areas: ways to check wasteful health spending and promote efficient energy use. I have long advocated a gasoline tax on national security grounds. But Obama's
vision for economic renewal is mostly a self-serving mirage.
My take on this is that we are now in the throes of 'revisioning' our economy. What it has been is not what it will be.
First, some historical perspective on the 20th Century experience of 'Americana Economus.' We became a great power in the late 19th century, based on our abundant natural resources, the rise of our industrial base, and a vibrant capitalist economic system. After World War II, we were the dominant world superpower, economically and militarily. And with the New Deal reforms in place, wealth flowed to the average person in astounding ways, to the point where we truly became the most affluent nation the world has ever known.
That era basically ended in the early 70s, with the first oil embargo and the rise of stagflation. Our domestic oil had run out. Add to that the rising global economic competition of, first, nations like Germany and Japan, and then China and India, and you have an American economy in relative decline. We went from being the largest creditor nation to the largest debtor nation. With the beginning of the Reagan era in 1981, our affluence continued declining, although now the decline was masked by inflation, rising debt levels, easy money from the Fed, two-income households, various economic bubbles (dot-com and housing), Wall Street innovations such as CDO securitization and derivatives, and technological developments like computers, the internet, and DVDs.
The masking of our three-decade-long economic decline ended with the financial and economic collapse of the last two years. Now we find ourselves in a difficult situation, which will not be easy to get out of. And to some extent, I agree with Samuelson that the Obama team doesn't seem to have come to grips with our dilemma. Many critics are saying that the Obama people think we can return to the status quo ante of prosperity that we knew prior to 2007. I don't think we can.
I believe that we have effectively lost something like a quarter to a third of our 'wealth' in the last two years, wealth that cannot be recovered because it was never real to begin with. It was funny, easy, illusory wealth that only existed on paper. We have continued to outsource and deindustrialize our economy to the point where well-paying jobs are getting harder and harder to find. Many baby boomers are not ready for retirement and probably will never be ready, because of the current economic situation. Younger people are beginning to realize that many of the good things they thought just came with being American will never be within their reach. The extent to which incomes and wealth has been concentrated in the upper 1-2% of the population is outrageous and needs to be reversed, though I'm not sure that our politicians are free enough from their plutocratic masters to do so. If oil has really peaked, as more and more people are thinking, then the future gets even more precarious, because energy supplies will get more expensive.
In other words, we are becoming a much more 'normal' and average country in the world. At this point, only our bloated military (along with our dollar as the world's reserve currency) keeps us in the game, so to speak.
Realistically, I agree with Obama that we've got to get our health care costs under control or it will bankrupt us as a nation. We also have to move quickly on clean energy, because we've got to stop importing so much oil, but also because global warming is a real issue that has to be addressed if we want to have a decent future for ourselves and our kids.
Finally, education is important, although I think we can't sustain our current higher educational structure without significant shrinking. (More Bachelors degrees in Psychology and Physical Education are not going to turn around our economy.) And I think much of the educational problem we have is cultural and not a matter of money spent. Too many kids watching too much TV and video games.
It's hard to wrap your mind around the future of our economy because it is so complicated and there are so many unknowns. I tend to be more pessimistic, partly by nature, but also because I think I'm being more realistic about the direction our economy and society is going. Anyway, these are a few of my thoughts in reaction to Robert Samuelson. He may be partly right in what he's saying, but I also don't see him offering any alternatives that are any better.
Let the 'revisioning' continue.
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