2014—Glory or Gloom? Politics, the Economy, and You

This morning the CBS public affairs show Face The Nation celebrated its 60th year on TV with first program on November 7, 1954. Bob Scheiffer got Senate Majority Leader Harry Reid (D-Nevada) on the show and Reid seldom does interviews. Follow up with Congressman King (R-New York) and Congressman Matt Salmon (R-Arizona) as the debate is rising with respect to the issues of extending unemployment benefits and raising the minimum wage. Are we brushing the guardrail on the Schoenhaus Theorem?

I agree with King and Salmon that job creation should have precedence over distribution algorithms for government-sponsored unemployment. But in order to do that, you have to stop outsourcing both menial and manufacturing jobs to foreign lands. Wherever any state or the Federal Government sets the minimum wage, it can only apply in America to American workers. We cannot dictate other nations of the world comply to our standards—this explains why George Washington argued for isolationism. In a free-enterprise system both the 99% and the 1% (albeit 80-20 is what it should be) have rights, the best way to accomplish this is to raise tariffs on foreign produced goods. The problem with that is there are entire of categories of goods, such as television sets and many home electronic products, that are currently not produced at all in the United States. Before you raise tariffs, you first have to resumes state-side manufacturing—something we have to do according to the Schoenhaus Theorem, but it is far easier said than done. Unemployment is a bad thing, but it is a self-inflicted wound on the American economy dating back to early greedy industrialists like H.C. Frick and John Bayer, the monetary cost of The New Deal, and the shifting of manufacturing overseas over the last fifty years. On the one hand, we cannot turn our backs on those with no means of support. On the other hand, states and/or the Federal Government cannot pay the unemployed with money they just don’t have. Spending cuts, limited government, are Hobson’s choices and just cutting funding to Public Television, Planned Parenthood, and the like will not generate enough revenue to make a dent in the deficit. Changes in operating procedures with respect to that so called third rail of politics are pretty much inevitable and they cannot be done without somebody getting hurt so a critical, unpopular decision must be made.

As for raising the minimum wage, I differ from many of my fellow Republicans and say yes; the question is how much? While the Federal minimum wage is $7.25/hr, in my home state of Connecticut, it just went up from $8.25 to $8.70 and according to bill approved by our General Assembly, will be $9.00 even 01-01-2015. President Obama wants to raise the Federal minimum wage all the way to $10.00/hr. Sounds inviting to working class Americans, but be careful what you wish for. I have seen small pizzerias and hobby shops right here in the Naugatuck Valley where I reside (Oxford, CT) go under when the minimum wage was first raised to $8.10. Most small business owners are people persons and want to see their employees happy and do well; they usually (not always) have bigger hearts than large business owners; they just don’t have the wherewithal. The Catch-22 is they cannot just reduce their hours and stay in business so many go belly-up and not only the minimum wage employee is out of work, so is the small business owner. As for large businesses, it is a bigger invitation for them to lay off their menial employees and outsource those jobs. On the other hand, if a minimum wage employee cannot make ends meet whether they work or not, why work? You get more content unemployment recipients who ultimately become part of the Welfare system. Senator John McCain (R-Arizona), said the government gets back 50 cents on every dollar it spends on unemployment compensation. This is not the case with every Welfare dollar, we get nothing back there.

It is very important that my Republican party de-emphasize being the party of no and redefine themselves as the party of not yet. We have limited resources with a $17 Trillion deficit and we are brushing the guardrail with the darkest side of the Schoenhaus Theorem, but I believe the last hope for America to recover with a balanced budget is to invest in something even though it can’t really afford it—education. We can’t raise tariffs on foreign-produced goods if there is no American competitor, it will take the rest of this century to bring back manufacturing to the level it was at the peak of the industrial era; even then it can only be a shadow of what it was due to environmental concerns; even then it can only create a shadow of the jobs it created in its hey day due to automation and robotics. If we can’t raise tariffs, we cannot dictate big business stop outsourcing as we would be infringing on their freedom; not their freedom as businessmen, their freedom as American citizens. If we invest in education and have a world class educational system from Kindergarten to College, we can diffuse the issue of whether menial jobs are done by Americans or foreign outsourcees and whether manufacturing is done by human hands at all or by robots by creating more higher-paying technical jobs; jobs of which we desperately need even in early twenty-first century America but either have to do without or outsource due to the skills gap. This will not create more assembly line jobs, but will allow the building of the robots and the writing of the computer programs that run the robots to be done by Americans. In the technological world we live in today, this is a critical precursor to the twenty-second century industrial America we are trying to conceive.

The other thing America must do, if not invest in monetarily, take a huge interest in, is small business. With those graduating college at the top of their classes not finding suitable work, and the fact that the job market will take another big hit when we are completely out of Afghanistan, our troops come home, and even the military will be facing some layoffs, this should be a no-brainer; one cannot be fired or laid off if they work for themselves. If a 4.0 GPA Computer Science major can write source code for any company in the world (or at least in the United States), why can’t he or she write source code for him or herself, and make it available for sale in other specialty businesses? Prior to the industrial revolution of the early twentieth century, America was primarily an agrarian society and a majority of the farms and plantations were privately owned—per capita there were more farm owners than farm workers (the slavery issue not withstanding). With respect to what America has become over the last three centuries, this is the direction it needs to go. Many costly social programs will become obsolete with a generation of independent owners and then and only then can the Federal Government maintain economic sanity and focus on what services the American people absolutely need.

Alas, this new American Dream is going to require the nation’s youth to dream bigger than just having a white-collar job and representing the upper end of middle class. The potential is still there. The light still shines on the hill overlooking the shining city, but it grows dimmer and dimmer and will go dark unless we act accordingly?

 

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