I’m not an economist. In fact, I don’t think I’ve ever taken a single class in economics. But I think I’m reasonably intelligent and I’ve tried to pay attention to what has happened in our economy during my lifetime, so I think it might be possible that some of my ideas might work. If not, perhaps they’ll provide some amusement for those out there who actually do understand what’s going on.
I don’t understand exactly what has happened to collapse our economy, but there are some things that have been going on for a long time that I believe played a role. If they aren’t fixed, I think we’ll either fail to recover, or we’ll go on to have another enormous collapse at some future date that dwarfs this one. I’ll just list them here. See if any make sense to you.
- Oil – This is one where most people agree. When you import half the raw material you need to burn to generate the energy you need, you are draining your country dry. That’s especially true when you are giving the money to people who fund criminals who attack our citizens. That oil wealth itself has created the terrorism problem by propping up bad governments that deny their citizens the basic freedoms we enjoy. Without money for weapons, most of those regimes would have fallen, to be replaced – one can hope – by more representational governments. If the money had been going into a democratic country, it would have created jobs and increased the size of the middle class, which would have generated demand for products we produce. Instead, most of that money has gone into the hands of individuals who are already wealthy where it does very little for anyone.
- Playing Favorites – If you want capitalism and free markets to work, everyone has to have an equal chance. All businesses need to have equal access to markets, to financing, and to government services. But that’s not how it works in the U.S. Here, we favor the largest businesses over all others. This is foolish, because large businesses do NOT create lots of new jobs. They aren’t particularly innovative. What they do best, is sue other businesses, try to form monopolies, jack up prices, and worry more about quarterly profits than if the consumer actually likes their product.On the other hand, small and medium-sized businesses employ half the people in this country and are always the fastest to enter new markets, generate new technologies, and create innovations.Hewlett-Packard laughed off Steve Jobs and Steve Wozniack, when they presented their idea for a personal computer to the company. It wasn’t IBM, or Digital, or any of the other giant computer companies that invented one of the most important new industries on the planet.
One of the worst problems with huge companies like Ford, GM, Fanny Mae, and Freddie Mac, is that they are ‘too large to fail.’ The economic consequences of allowing any of these huge companies to fail are dire. Millions of people get laid off in a short period, causing a shockwave that travels through the economy like a wrecking ball.
The CEOs and Presidents of these huge companies demand enormous power and extravagant salaries way beyond the actual worth of the individual to the business. As these companies get larger and gobble up other companies, the number of people making critical decisions in that industry gets smaller and smaller.
The common argument for huge companies is that there is no other way. That some jobs are too big to be done by smaller companies. That’s a load of caca. There is no reason you can’t have a group of companies work together on big jobs. There will be inefficiencies, but those same inefficiencies might also make it harder for a single person to bankrupt the entire enterprise.
If we really want to have a healthy capitalistic free-market economy, we need to stop giving any assistance to companies once they reach a certain size. Our government policies need to be focused on improving the health of the small and medium-sized businesses. Big companies should give way to hosts of smaller competitors all out to do a better job than the other guy. When one of them fails, a much smaller number of people will be out-of-work, and they should be able to find employment among their former competitors, or even start up their own business.
Like gigantic stars warp space, huge companies warp the economy around themselves.
- Regulations – Regulations aren’t bad. If an industry is not constantly whining and bitching about how the regulations are keeping it from achieving maximum profitability, then you need more regulations. Regulations keep an industry healthy. Regulators try to make sure that the players in their industry follow the rules. As we have seen, you can not depend on businesses to act in their own best interest when it looks like there’s a quick profit to be made. Some of the brightest business people in our country were involved in these sub-prime mortgages. They weren’t stupid people, and most of them weren’t evil, but they fell victim to peer pressure and greed, just like all of us can.To me, the idea that people will act in their own rational self-interest is one of the biggest pipe-dreams anyone has ever come up with, and it is central to Adam Smith’s economic ideas and the principles of conservative thinking. If people were able to be rational, why do people smoke cigarettes? Why do so many people gamble? It’s because we are not rational. We need rules, and we need people to make sure we actually follow the rules.
- Education – It was World War II that pulled us out of the Great Depression. We can’t afford to wage another war like that in order to pull out of this one, so we need to understand why WWII helped and find ways to replicate that effect. It seems obvious to me that it was the incredible ramping up in industrial production capability that was needed to provide logistics for the war that saved us. But it was something else that helped keep things going afterward, and that was the GI Bill and an unprecedented number of young men going to college after the war. That’s what helped give us the prosperity of the fifties.The U.S. has been falling behind in education. We all moan and groan about it, but we never actually do anything. When proposals come up in our towns to raise taxes in order to improve public schools, the proposals are voted down. The rich in the communities don’t care, since they send their kids to private schools. The government’s moronic endorsement of charter schools, which is basically a poorly disguised way to fund religious schools with public money, drains more resources away from public schools.
Public schools are one of the few places where all members of our society can meet and get to know each other. If all our children go to the same schools, than we really would be saying, this is a country in which we strive to give everyone an equal chance. Instead we have been racing away from that idea ever more quickly.
We need to re-embrace the commitment to public education. Voucher programs primarily help the wealthy, who are doing just fine already, which is why we call them wealthy. We need to be doing whatever is needed to make sure that our schools are second to none.
Improving our schools does NOT mean teaching by rote or “going back to basics” or any other such rubbish. It does not mean putting every kid in the country through batteries of meaningless standardized tests. We need to develop teaching methods using science. We need to harness the power of our new computing and presentation technologies to make it possible to tailor the education of every student in America to his or her needs
Our children are the ones who the economy will depend on in the future, when we are all retired. It will be the energy, creativity, and willingness to work of our children that determines what our own final years will be like. So call it rational self-interest to make sure that our kids are given the best possible education.
It used to be that your educational progress was measured primarily by your grades. The assumption was that your teachers had the most comprehensive knowledge of you as an individual and that they could see both problems and talents that tests would miss. We need to put the evaluation of the students back on the teachers, where it belongs, and try to give the teachers better tools for evaluating the student.
- Population - Here’s one no one will talk about. There are too many people. The conservatives won’t talk about it because then they might have to talk about birth control, which gives them hives. I don’t know why the rest of us avoid it. Maybe because it’s felt like open season on liberals in the U.S. for the past eight years. Still, that’s a big part of the problem. We need to be teaching effective birth control here in the U.S. and everywhere else in the world. Someone has got to convince the Catholic Church and the Mormons that encouraging poor people to have as many children as possible is no longer a good idea and is mostly good at keeping poor people poor.
One of the big upticks in the world economy happened back in the middle-ages about the time of the plague. Over about a hundred years, half the population was killed. Farms and whole towns were left empty, and wound up being reclaimed by the forest. All of a sudden, there were a lot fewer people, but most of the industrial capacity, in the form of tools and buildings was still intact. Around the same time, the horse collar came into widespread use, allowing an individual to farm more land than he needed for his family. That meant extra crops that could be sold in town. And that’s how we got the middle-class.
I’m not advocating a plague. But I am pointing out that our world might be a lot better if we all had fewer children. Not only would it mean there were more resources per capita, it would also mean that we’d have less of an impact on our environment.
Water and oil are going to become very scarce in the future, and if we don’t take any measures to control population growth, it will be wars that do it for us.
- Environment - Global warming isn’t some made-up thing to scare rich folks, it’s real. We’re already seeing the effects in longer growing seasons, stronger storms, and rising seas. While the effects might seem gradual to you and I, they are terrifyingly fast to those who study the climate. The world has had high CO2 levels before, as high as 1000 parts per million (ppm). So what’s the big deal about 400ppm or 500ppm? The big deal is that while levels have risen in the past, right now they are rising at a rate a thousand times greater than anything in the historical record. During past times of rapid growth in CO2 there were massive extinctions, which is the same thing we are seeing now. In fact, almost a quarter of all mammal species are now threatened in some way by climate change, poaching, environment destruction or some other problem we’ve caused.
Why should you care if some animals go extinct? Because we don’t know how our ecology works. One of the animals that is suddenly having serious problems is the honey bee. Without the honey bee, it will be difficult to raise many crops like citrus, nuts, and dozens of others. A substantial fraction of our food supply might go away. No one had even though about that kind of possibility until recently, when bee colonies all over the U.S. started disappearing.
Heard any good frogs lately? I hope so, because all amphibians seem to be in danger, too. That’s a whole class of animals. It’s possible that your grand kids children might not be able to go out and catch frogs and toads on those warm summer nights, like you used to.
At some point, a key species will be eliminated and it will cause a chain reaction that will kill off entire ecological communities. Since we have no idea how to recover a lost species, that could lead to scenarios where most of the life on Earth perishes.
Climate change isn’t just about things getting warmer. When the climate changes the way it has been, there are incredibly complex interactions, which will produce unpredictable consequences.
We need to reinvigorate our basic sciences and encourage the study of the climate and the changes that are happening. During the last eight years, most of the researchers at the EPA have reported some kind of censorship. That has to stop. Without good information, we cannot possibly make the right decisions in dealing with the environmental problems that we’ve caused.
It might seem like we have to put the environment on the back burner in order to deal with the economic issues, but if we do so, will there be an environment to save later?
On the other hand, if we develop the technologies needed by the entire world to deal with these issues, we’ll have a new industry that will generate new jobs and new wealth.
