by Robert L. Terrell
[dropcap]T[/dropcap]he United States’ current economic doldrums threaten the nation’s long-term viability. And it is obvious to me that we need to implement major economic and social reforms if disaster is to be averted.
The signs of stagnation and decline stemming from the nation’s economic weakness are both numerous, and deeply troubling. They include the persistent high level of unemployment and underemployment, the tens of millions of people who have lost their homes, expanding debt at every level of government, massive annual trade imbalances, and a shell-shocked populace burdened by exorbitant debt.
However much the stock market has gone up in the past year or so, the destructive impact of the recent Great Recession continues to haunt the pocketbooks and lives of most citizens. Recognition that the federal government’s debt load has climbed to $100,000 for each individual citizen is also a growing source of alarm among those who understand its long-term, negative ramifications.
Those who wonder what such ramifications might be should consider the current dilemmas of Greece and Ireland, or even the hardships faced by residents of the former Soviet Union in the immediate aftermath of that particular empire’s inglorious collapse.
Here in the United States these days, fear and uncertainty about the economy dominate daily life, and few serious conversations go on beyond a few minutes before one or all the participants mention some aspect of the financial uncertainty that haunts our lives. As a result, workers in virtually every sector of our society are experiencing unprecedented anxiety. And this includes many of those employed in industries and occupations that have heretofore been considered safe havens from economic distress.
Much of the anxiety is obviously tied to the nation’s stubbornly high rate of unemployment. Government statistics indicate that approximately one out of every ten workers is unemployed. Thus, virtually every citizen knows someone who is out of work, with few prospects of being employed any time soon.
Hunger is another source of anxiety and suffering. Last year, 17 percent of U.S. households experienced significant food insecurity. One in every four children in the nation resides in a home suffering chronic food insecurity. Food banks and shelters do what they can to provide assistance to those in need, but there are few indications that this problem will disappear for the next several years.
The chaos permeating the housing sector, which is engaged in a slow-motion collapse, is an additional major source of anxiety and fear. Millions of homeowners are “underwater” on their mortgages because they owe more on their homes than they are currently worth. Moreover, the bewildering dilemma of those caught in this economic tsunami is being made worse by the continuing downward drift in the value of their homes.
Millions have been evicted from their homes because they could no longer afford to pay their mortgages, and current projections indicate that several millions more will lose their homes during the next three to four years. Moreover, each home lost because of unemployment, or a bank’s foreclosure, deals yet another wound to the neighborhood in which it is located because of the corresponding decline in taxes collected by municipal governments already strapped for cash. At this point, there seems to be no clear end point for the downward spiral in government and community resources due to the ominously expanding housing crisis.
The net result of crises such as the imploding housing market is that the United States is in an economically weakened state compared to recent decades. On the other hand, China, India, and several South American and African nations are amassing impressive economic clout via rapidly expanding economies.
Moreover, current economic trends indicate that during the decades immediately ahead, such locales will pose serious, and possibly destabilizing, economic competition for the United States.
Unfortunately, most indications are that the full ramifications of economic challenges emanating from previously poor and downtrodden sectors of the world are barely understood by this nation’s leaders, and even less so by most citizens.
The jingoistic, know-nothing, angry and irrational Tea Party partisans can be cited to highlight the nature of our dilemma. The Tea Party crowd wants to turn back the clock, and re-embrace policies and procedures that were only barely appropriate when they were in use decades ago. Unfortunately, the world they seek to live in no longer exists.
And their mantras extolling the benefits of “small government” are based on simplistic, if not totally ignorant, perceptions of the world in which we currently live, not to mention the one we will inhabit in the years immediately ahead.
The China factor can be used to elaborate the point. Current commentary in Washington, D.C., about China’s allegedly undervalued currency is indicative of broad confusion in this nation regarding the Middle Kingdom’s awesome economic performance during the past three decades. China’s economy is not outperforming ours solely because of its currency valuation. Better organization of national priorities, including strategic investments in industries and people, is probably more important to China’s overall economic success than the yuan’s contested valuation.
In any event, my best sense is that alarmed dialogue about China’s economic prowess will inevitably expand, and become more urgent. Moreover, as the full extent, and global ramifications, of China’s rapidly expanding economic clout become more readily apparent in this nation, the critical significance of the commentary presented here now will be more readily apparent.
Moreover, a recent cover story in The Economist asserted that India’s economy is poised to exceed China’s in the not-too-distant future. Expansive, global change of the sort that realigns the grand, geopolitical balance of power is clearly under way. The process will, of course, produce winners and losers. Economic viability will be one of the ultimate determinants for nations hoping to end up among the ranks of the winners.
Much more serious attention needs to be devoted to the long-term viability of the United States in the increasingly integrated, global economic system. Given the nation’s abundant resources, the possibility of auspicious prosperity is on the so-called table. Unfortunately, the United States has numerous structural peculiarities that also render it vulnerable to being eclipsed in the economic sphere by nations better prepared to compete in the global economic arena.
One of the most ominous early indicators regarding the overall fitness of the United States to meet the unprecedented challenges dead ahead is the high rate of unemployment in the nation. Republican Party spokespersons, and their running-dog Tea Party accomplices, lay much of the blame for high unemployment on President Obama’s policies. It is not clear whether they actually believe this to be the case. Some of them obviously do, but the probability is that the vast majority of those who make the charge simply find the nation’s first non-white president to be a convenient whipping boy.
Mainstream members of the Democratic Party provide different explanations as to why the nation’s rate of unemployment remains worrisomely high. Their consensus seems to be that the business community is being unreasonably cautious, and that when that caution dissipates happy days will return. I beg to differ. The high U.S. unemployment rate is due to many factors; one of the most important being the fact that much of the work previously performed here has migrated across the globe to places such as India and China. Moreover, as Bruce Springsteen noted, those jobs are not coming back.
In order to get U.S. workers back to work in numbers commensurate with the best interests of workers, and the nation at large, we need to acknowledge that if we continue along the current course, the inevitable outcome will be more unemployment, and precipitous national decline.
China is not surging ahead of the United States in terms of productivity and overall economic growth because its leaders are unfairly manipulating their currency. If auspicious prosperity could be achieved by such a simple maneuver, the United States, and much of Western Europe, would be aggressively engaged in doing the same. The Chinese are outperforming us because their system is better suited to compete in the global arena than ours.
Given this, U.S. leaders in every sector need to devote far more attention to studying the Chinese system, and far less to accusing them of improper trading practices. Our leaders need to acquire better understanding of the manner in which the Chinese coordinate government and business operations such that they function as a unified entity, easily capable of dominating would-be competitors.
Our current economic strategies are not sufficient to withstand the challenge. Therefore, we need to implement major reforms, or prepare to be eclipsed, probably during the decade dead ahead.