Economics 101. The rest of it is stupid.
There is one basic reality that involves our potential, as a nation, for long term economic growth. I’m not talking about cyclical ups and downs or the next 5 or 10 years. This is about the rest of the 21st century. This isn’t about your economic interests. This is about leaving a great nation to the generations that have to face the 22nd century. For an explanation we have to look back a few hundred years.
In the 1800’s economic expansion was fueled by conquest. We moved over the Appalachian Mountains and took everything we could from whoever was there. Indigenous Americans of several nations were conquered, driven from their homes and wiped out in appalling numbers. Santa Ana was forced to cede Texas and later, the entire southwest from Mexico as a result of historic military defeats. We had sustained growth.
In the 1900’s we became industrialized in every market sector and developed the Financial Markets in a way that created a middle-class that was the envy of the world. Even farming became industrialized and controlled by market economics. It was a new and exciting way to create jobs, wealth and expand the economy. The success was identifiable by the post World War II increase in security and growth of the middle-class.
Now how could you dispute these two assertions? There are those that might try. They will split hairs and argue minutia and prove their ignorance every time, yet, this is the bleeding glimpse of the bloody obvious. Everything else doesn’t matter. The rest is stupid.
So the question is what will do it for the next hundred years? We can’t conquer anything. Everything is industrialized. Nobody goes to the old woman down the street with the wool off of their 2 sheep and asks her to weave them another blanket for next winter. The future is upon us and we need to determine what our greatest potential area for sustained growth is. The answer is really in front of your face.
Human and national infrastructure. National infrastructure is maybe more obvious than human infrastructure so we’ll start there.
Ideas have to be tried that require partnerships between the Government and its citizens. In Germany today 30% of all residential electricity consumption is produced at home. This fundamental accomplishment was the result of grants, incentives and subsidies from the government and the self-interest of property owners. These kind of things that advance the project we call society are always possible but, go against many private interests and in this particular example the energy industry had 30% of their residential market share lost to a better idea. That requires political will and enlightened leadership.
Transportation, including roads, rail, air, pipeline and water born methods present great opportunities to try something different, paradigm altering, and ultimately better and more effective (read: efficient).
This is never, ever going to happen at the insistence of, with the cooperation of or with the blessing of the financial markets. Ain’t gonna happen. But, it sorely needs to happen.
The energy market place, correctly described as cartels, is another infrastructure challenge that other advanced nations have been changing the reality of in ways where it appears there might be a light at the end of the tunnel. Climate degradation and energy dependence leading to inevitable human conflict is not the only solution to running your lawn mower. The opportunities are endless.
The problem here is the markets will not ever invest in what is not proven. They make investments for return. The quality of an investment is measured in two ways. The size of the return and the amount of time it takes to get it. They have to go with what works now, not what may be a better idea 35 years from now that we need to start investing in last week. The markets lack truly long term vision that is easily witnessed in concerned and loving grandparents.
This brings us to human infrastructure and what that means. Let’s start with an economic given. The sustained growth of our economy is directly proportional to the sustained growth and security of our middle classes. Find me the fool that says I’m wrong. I haven’t called anyone stupid for a few days and I’m feeling frisky. Bring them to me.
How do you expand the Middle class? There are only two ways. If someone knows of a third, I’m very interested. As a society we need to show a steady, effective and sustained long-term investment in the people who are below the poverty level and the next generation. Where else are you going to find new members of the middle-class. We can’t demote rich people and we can’t limit entrepreneurs from becoming rich. That’s just not right.
So our future as a world superpower is directly related to our ability to work with what we have. That’s a reasonable assumption. Common sense tells us that the future requires society to make investments in child-care, daycare, adult education and training. Head start and flexible elementary education to fit the needs of individual communities and demographics. Challenging middle-school curriculum and high-school that is relevant to the individual student’s ability to be educated and trained beyond high-school.
And entitlements. Not blame. I see no net gain in requiring a single mother of 2 to accept responsibility for being young and uneducated with two small children. We make her take an absolutely dead-end job that makes it difficult to feed, clothe and house her children and tell her that to get out of the “system” she has to advance where there is no advancement. She raises her hungry children without enough security to do well in school, or in life. We feed the school to prison pipeline. It is not sustainable.
As we enter the 2016 political season, this is all the real economic theory you need to know. The rest is just stupid.