Forced March To Mediocrity

Throughout our nation’s history, Americans and their democracy have embarked on many amazing binges of progress. We became FDR’s “arsenal of democracy” in the early 40’s, and stayed that way right through the end of the 80’s. We went from budding provincial power at the turn of the 20th Century, to the world’s only superpower at the dawn of the 21st Century. In all of our ventures, the dream’s of many individuals blended with the self-harnessed power of the government of the people, and the innovative power of a capitalist marketplace to form stunning examples of the potential of humans.

It is an uncommon sight these days, a poll that shows Americans believing their nation is on the right track. We seem to have fallen into a reverie; clinging to our past accomplishments, bitter about our present failures, and divided about how to break out of the slump. Our broken two-party system plays a roll in this deep national funk; questions that only allow for a right or wrong answer are by definition limiting. To the dynamic of the two party system we add the most American trait; obsessive competitiveness. We don’t like to lose, and we define victory and defeat along a narrow set of terms.

Our economy, and the energy, transportation, and natural resources that drive and support it, is the most common context through which Americans in the two party system seek victory. Wedge issues like abortion, civil rights, immigration, and even foreign policy come and go; economy always rises above them in the end. James Carville’s famous reminder to the Clinton campaign (and campaigns everywhere regardless of party), “Its the economy stupid!”, frames the politics perfectly. Economy, as a theme, has driven our discourse for the last three decades. For thirty years, we have seen working class wages stagnate, and watched as industry has abandoned our nation. We have seen these things happen despite spending the same thirty years making it easier for major industry and its managers and owners to make money.

To be certain, this isn’t an essay advocating for or attempting to inspire class warfare. The explosion in the number of millionaires and billionaires, at a time when the average American family is making do on less, is an artifact of the average American voter. The running commentary on conspiracy theories, on corporatists and the military-industrial complex, is fine if you are trying to sell books and films, but it misses the real villain. We the people have done this to ourselves by walking away from the American Dream, and wandering into the dreams of easy street.

We the people have made it a habit to vote for candidates who propose lower taxes, and to voice our opposition to the raising of new taxes. The education, physical infrastructure, military capacity, and retirement security that the overwhelming majority of Americans prize costs money. But we have been willing to buy into the pipe dream that we could have those services and pay less in taxes; providing we don’t spend money on “wasteful” projects or those who don’t deserve it. We seldom ask for a justification for why a project is wasteful, and we never ask what happens to people, industries, or economic segments when programs are canceled. As long as our taxes go down (or someone tells us our taxes have gone down), and we don’t lose direct services, we the people remain happy.

And so we wake up on a sunny day in America to find our tax burden at the lowest level in 60 years…we should be overjoyed. Are you overjoyed? Middle class jobs are moving overseas, being replaced by automation (actually a far bigger impact than foreign competition), and are subject to wage and benefit reductions. At what point friends, did it become an evil to have a job that paid a good wage and offered a pension? I have had run-ins with unions both professionally and personally, but at what point did it become an evil for individuals to band together against the overwhelming will of corporations? What will your children do when they grow up? We are falling behind our international competitors in the rate of college graduations, and it is already commonplace for our children to fail to graduate high school. At some point, we have to stop believing as a nation, that we can get something for nothing simply because our forefathers were great.

We don’t need to change America, we don’t need to redefine Americans. We need to adapt to our changing world, and adopt a new strategy. We need a challenge for the 21st Century, some well-defined hurdle that we can jump together. We need a new war to fight that requires the scale of the government of the people, and the inspiration and innovation of our private sector. I submit that the challenge we need is already staring us in the face. It is in fact the economy, and the energy, transportation, and natural resources that support and drive it. The very same that I mentioned earlier as both driver and divider of our politics.

We need an engine to drive the economy for several decades, and we have a number of critical issues that pose problems for our nation now and in the future. Our energy production and delivery system is the product, literally, of 19th Century thinking: coal-fired turbines and transmission lines that Edison first contemplated. Our transportation, water, liquid waste, solid waste, and hazardous waste systems are equally decrepit. The American Society of Civil Engineers gave our physical infrastructure a grade of D in its 2009 assessment, and prescribed a $2 trillion investment over the decade to fix it. Our brown water infrastructure; our rivers and canals and the locks, dams, levees, and other flood control instruments are, quite literally, relics of the Roosevelt Administration. In short, there is tremendous work to be done, and energy, transportation, and the environment are inextricably linked.

We have avoided dealing with most of these problems because of cost. The notion of failing to maintain and upgrade infrastructure because of short term cost is generally thought of as suicidal by operations managers; it is always more costly to fix something later. But far beyond the debate about whether to pass on debt or broken facilities to our children, is our singularly selfish debate about whether to assess and pay the taxes that could finance the jobs now. Economies of scale is a mathematical reality in business; the more units, the lower the cost per unit. Even if the marketplace was motivated to make these upgrades (which it isn’t), it would be far more costly for them to recover their investment from we the people…individual companies have less scale, and must earn profit.

The simple solution is evident, and has been suggested before. Raise per unit taxes on major areas of consumption; kilowatt hours and gallons of gas to be specific. Distribute those funds directly in the form of transparently awarded competitive grants (tax credits are too easily manipulated) to small contractors, utilities, railroads, shipping firms, and large construction interests. Consumption will be reduced as many consumers change their habits, but massive funds would be raised for the effort. The market pressures will open up opportunities for the profitable marketing of green products, and the grants will subsidize the conversion from fossil fuels to clean energy. It is folly to ask utilities and industrial firms to absorb the costs of transformation directly. Remember, all of those trillions represent millions of jobs, jobs that will exist for decades while the modernization of our nation is ongoing.

It is a thought, at any rate. There are countless variations on that theme, and probably many better ideas. But if you are content to stay in the “I can lower your taxes some more with no consequence” game, that is fine. It is your choice in a democracy. Just don’t be surprised if you find again, that the market isn’t the answer you hoped it would be.

The Rational Middle is listening…

5 thoughts on “Forced March To Mediocrity

  1. Michael, did you ever consider lowering government spending as an alternative to increasing taxes? If we cut much of the entitlements, military spending, and high public sector wages, we’ll easily save enough money to spend more on infrastruction.

    – The increased employment from the infrastructure jobs will absorb those that have been weened from the entitlement programs.

    – Closing many of the 700+ military bases around the world will improve our international relations.

    – Removing union activism from the public sector will remove the vested interest of public employees to vote for politicians who promise them jobs and higher pay.

  2. My sincerest apologies. I had your information (age) mixed up with another young blogger whom I understand to be 26. That was an “error”, not an assumption.

    My “assumptions” had nothing to do with your “Political Beliefs”. I feel you are off with your comments about business, economics and the cause and effect of excessive entitlements. And I would further disagree with your characterization of my “anecdotal evidence”. (But I will accept your gratitude for making you 12 years younger!!) :-)

    In view of this information, I’ll have to say I find some of your comments even more befuddling. With that kind of real world experience, I would think you would know better! ;-) Some of the things you say just don’t seem to me to be accurate when applied to the real world.

    I will beat you to the beach. I plan on being there in 4 years or less. But I don’t care for the fruity drinks. And by that time, I won’t care if I’m relevant or not.

    Now, can you comment as to why you disagree with most of the businessmen and economists I listen to?

  3. Hank, thanks for your comments as usual. While I respect your input, as always, I do take issue with your personal assumptions about me. You have told me often that you don’t appreciate personal classification of individuals based on political beliefs, and I think you are correct.

    The great danger in such assumptions, aside from detracting from logical argument and/or relevant exchange of anecdotal evidence (as you give in your comment), the assumptions could prove to be dead wrong.

    In this case, you are way, way off base. I am 38, and the veteran of nearly 20 years of hands-on business management. I have made a living running businesses with revenues of less than $1.5 million annually. I have made a living managing districts with multiple outlets and tens of millions in revenues for a world-leading retailer. I have made a living managing categories for multiple retailers. I have made a living providing guidance to small and mid-size firms on operations, personnel, marketing, loss prevention, and financial management. Finally, I have solid educational credentials (a Bachelor in Supply Chain and an MBA).

    In about 25 years Hank, I will be sitting on a beach drinking fruity beverages with a kick, and maybe teaching a little to stay relevant. At the moment, I would submit that your assumptions missed their mark. Be well my friend.

  4. There is just way too much about this whole comment that I just diametrically disagree with. So I tried to pick my vote for the most egregious example.

    You say, We the people have made it a habit to vote for candidates who propose lower taxes, and to voice our opposition to the raising of new taxes.”

    I think the larger issue is “We the people” have routinely voted for the candidates that promise the most for nothing. The most “free” ride or rides. The most entitlements. And the candidates have acquiesced to those expectations. Not because it was the best thing to do, but because it represented their best opportunity to remain in office, in power.

    Michael, I respect your education and experience in economics, but your commentary screams of inadequate real life experience. Just this morning, I have read or listened to numerous examples of employers having difficulty hiring people away from extended and higher unemployment benefits. They have spoken of the oppressive additional costs to add on employees. One example (loosely) spoke of a 58K employee, that nets 35K, costing the employer up to 74K in total expenses. And he at least alleges that expenses such as this are what is killing hiring in this country.

    Sometimes, common sense rhetoric is just so….well….common sense that it defies rebuttal. “I’ve never been offered or given a job by a poor person.”

    Anyway, a good piece. Well thought out and articulated as usual. I just find it hard to agree with much of your conclusions.

    Let me suggest about another 25 years, out in the real world, applying your methods and theories and seeing if they work! :-)

    And a parting shot…If, as you say, we do not need to “change America, we don’t need to redefine Americans.” (which I might agree to with some caveat) why did we elect a President who promised to do precisely that?

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