Our Economic Way Forward and Other Miscellaneous Topics

I have argued that Democrats need a plan for our future that provides a stark contrast to Republicans’, you are on your own, justice comes to good people (and those that already have money). So once again, I will try to explain what the way forward is, and why.

But before I get there, I would like to comment on the coverage of the pedestrian bridge that failed yesterday in Florida. I have been reading the stories hungrily looking for what caused it. Well of course they don’t know yet, but for a structural engineer, there would be hints. Yet the coverage provides none of the clues one would need because the reporters are clueless about structural engineering. I would want to know if it was a post-tensioned structure, had it been post-tensioned, did it use high-early concrete, was it, as I saw in one artist rendition, a cable suspended final structure? Even a close up of the structure would tell me what the reinforcement looked like.

Now all of those would give a hint about possible failure modes but the focus is on the deaths, who the company is, and the PR for building the bridge. The only reason I raise this is because it is about logic. Knowing how many died and who built it is certainly headline news, but tells you nothing about a possible failure modes, hints to a root cause, or a fix going forward. Now draw the line between that and how we report on many issues that affect our lives. Enough said.

In order to come up with an economic plan for our future, it helps to look at our past, but not too hard as Republicans do. You can’t recreate the past. Here are some of my assumptions. America as a country outpaced the rest of the world because we had built the engine of capitalism and it was ready to roar. And while trade was important, domestic demand really drove our economy. We did have fewer regulations, but let’s not forget the Robber Barron’s or the anti-trust work of Teddy Roosevelt. So there were problems. Who can forget the Great Depression. We had this amazing pent-up demand after WWII with an amazing industrial machine that could be turned to peace time building. Innovation was amazing and remember when all Japanese products were considered cheap?  Many blue color jobs were lifetime, with good benefits and retirement.  But the economy changed.

First we have been on probably a 60-year trend of more and more of the income going to fewer and fewer.  Markets changed and capital became king.  As domestic demand feel, market places were expanded to a world economy, and with the focus on Corporate profits, labor costs were suppressed or moved overseas.  Lower wages equal lower demand. We are still in that world with mechanization changing the jobs that will remain.  Tech companies have taken off benefiting the educated younger class who can code while the old blue and white-collar jobs are taking hits.  Oh, and we are depleting resources on the planet at an accelerated rate. So what to do?

Well, first do not throw out the baby with the bath water.   Capitalism is what drove our miracle, and is driving giant leaps in the undeveloped countries, but it is also wreaking havoc with those left behind and our biosphere.  In its present form it is not sustainable. So what to do?  Enter the conservatives, you work hard and you will get ahead, losers lose, and the poor are responsible for their plight.  It is the I got mine crowd working with the whatever I got, I am not going to share crowd.  It only works for the I got mine crowd and does not work in our economy as more and more hard-working people find themselves left behind.  The latest is pandering, bring back jobs that are never coming back, and tariffs to protect us. And as what was just seen in the last special election in Pennsylvania, that may not be selling anymore.  One reason is that it simply doesn’t work.  Those jobs aren’t coming back and people know it.

So enter the Democrats who have always been the party of the softer, kinder, gentler Republicans.  They have been labeled the tax and spend, big government, bust the budget Party (note that that common belief is not supported by how deficits and the economy actually do under Democrats).  Whatever solutions could be implemented,gvoernment just get is the way is the conservative line.  But more and more people are coming to the realization that the market place has no answers for them, tax cuts don’t flow down, and tariffs are taking an ax to brain surgery. Democrats see innovation and education as the way forward, but tell that to the 60-year old iron worker without healthcare. He voted for President DFF because he was tired of the status quo, but found out it was the same old tired ideas on steroids.  Yesterday is not coming back.

Okay, that sets the table.  Capitalism is the best tool to allocate capital for investments in future jobs.  It has also become one of the worst, because it is controlled by those who profit from the status quo.  It is short-term profits driven, and its basic mentality is winners and losers. So we are not  throwing out capitalism, just making it work for everyone, not just the few.  Don’t kid yourself about “free markets”.  They are not free and the rules they operate by right now are set by conservatives who have set it up to benefit themselves.  So step one is to “Rewrite the Rules.”  The good news is that we don’t have to make this up on the fly .  Economists like Joseph Stiglitz, Dean Baker, and others have already done this and made some great recommendations.  Now when running a campaign, getting into these kinds of details usually puts people to sleep, so what Democrats have to do is get behind and sell it as changing the rules to make capitalism work for all of us.  Here is a short summary:

  • Bring back competition to force the system to change and evolve.  Start limiting rents and intellectual property to allow the system to evolve.
  • Fixed the Financial Sector so that the high risks with big gains is limited where it can destroy the economy (remember 2008?).
  • Incentivize Long-Term Growth, and more importantly, sustainable businesses.
  • Rebalance the Tax and Transfer System.  Return the profits to the people in terms of security, and investment in our future
  • Reform Labor Markets to ensure that everyone benefits.
  • Expand Access to Labor Markets for everyone (that is equal rights, education, equal pay for equal work, etc.)

Now there are all kinds of sub-policies to get this stuff working for the rest of us including negotiating trade agreements that do not promote growing economic inequality.  But that brings me to the second part of this that you heard and hear from Bernie and a few other Progressives, but considered too left-wing for the status quo.  Probably not anymore.  We don’t know where markets are going in the future or what the next big idea is.  Government should not be deciding those kinds of things (really bad at it) except to put their thumb on the scale to ensure it recognizes our long-term interests like alternate reliable energy, sustainable growth, and the environment and global warming.  But what is it that makes markets thrive and gives us an advantage.  Hint:  Take a lesson from the 1950s.

  1. Well educated workforce
  2. Strong infrastruction and workforce
  3. Freedom to innovate

And the amazing thing is we already have the tools to do all this.  Here is what is required:

  1. A strong investment in our infrastructure, transportation, and communications systems so that people, capital, and ideas can easily flow to where they are required.  That would be government people, and investment in infrastructure, communications systems, and transportation.  The data is overwhelming that this creates an upwardly mobile workforce with increasing wages because they can move to where better jobs are and train for them.
  2. A strong education system that allows for all those able, to learn and continue to learn throughout their lives.  That would be government again in working to improve our education system (pay teachers more), improve curriculums (less testing), and make advanced education affordable, not a loan program to support tax cuts for the wealthy.
  3. A strong retirement system (It’s called Social Security), so that all of us can afford to retire and if we supplement it, retire well.  Once again, government.   Seen how business have thrown off that responsibility as too costly and dependence on the stock market has wiped people out when they need it most?
  4. A strong single payer healthcare system that allows us to quit worrying about not leaving a job, or how we are going to afford healthcare.

Note thatall of them been accomplished in other countries and unlike what conservatives want you to believe, it does not create a hammock for the lazy, it reduces risk for changing jobs and innovating.  Once again the data is unequivocal, but conservative know that will upset their status quo apple cart.  That is what Bernie was pushing when Hillary said it was unrealistic.  That is what the Progressive model should be, rewrite the rules and create the environment for a strong innovative economy.  Sure it will cost a lot in taxes.  But it is being done in other countries and unless you haven’t noticed, things are not going swimmingly here.  Second, yes there will be rules that get in the way of profits and innovation.  But those rules consider the long-term benefit, not the short-term one, and consider everyone’s children.

That is the future if we want to embrace it.  Or we can stay with what we got and most people will find their place in the economic world eroding.  On the way, we are going to have to have many intermediate steps, and some redirection as we see that one approach does not work.  But that is progress.  That is what made America great.  If we can get it back, where everyone has a fair chance at a future, then we will be great again.  The road President DFF and his supporters have us on is a quick ride to oblivion.

 

 

 

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