October 4, 2010

The American Era: Pausing…Dying…or Committing Suicide

by Hal Gershowitz

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Let us stipulate that it has been a long, slow process, this erosion of American exceptionalism and those uniquely American qualities that made this country and its citizens the envy of the world.  Some say we are “crying over spilled milk” and that the proverbial train (in this case, the abandonment of the American dream) has already left the station. “It’s too late,” they tell us, to fret over America’s abandonment of individual liberty as its raison d’être in deference to European style-statism.  Besides, we are reminded, the drift toward European statism has been a by-product of both political parties.  Fair enough.  But, perhaps, it is time to pause and really think about the course we are on. Let’s take a hard, close look at what we are doing…to ourselves.

It is very seductive to take comfort in the notion that we are the mightiest nation in the world and that, one way or another, we will remain that way.  But we would be kidding ourselves. While we have had a clear field for nearly one hundred years, from this point on we will have to compete vigorously to maintain (or regain) our position of leadership.  Yes, we have the lion’s share of the world’s greatest universities, and we have won approximately half of all the Nobel Prizes that have ever been awarded, and, yes, our economy has been the engine that has lifted more people out of poverty than any in the history of the world, and, yes, our economy (our total output of goods and services) is, substantially, the world’s largest.  But we can’t proceed into a very uncertain future looking into a rear-view mirror.  The road we are on portends a very rough ride.

We are living in a knowledge age. Brawn power, which may have been king during America’s great industrial era, has largely given way to brainpower as the most prized coin of the realm.  Sadly, recent data show, rather conclusively, that the current generation of students is, for the first time in our history, less educated than were their parents or grandparents.  Of all the industrialized nations of the world, only we are producing graduates who are, qualitatively, less well educated than were their parents and grandparents.  Every day, more than 7,200 high-school students become dropouts.  That equates to 1.3 million students who are failing to graduate each year.  Where will they go and what will they do in the knowledge age in which they and we find ourselves.

Our education system isn’t failing for want of trying, nor is it failing for want of funding.  We spend as much or more per student than any other industrialized country, but we rank 15th for reading literacy, 21st in scientific literacy and 25th in math.  We alone, among our global industrialized trading partners, graduate from our universities a declining number of math, engineering and science students each year.

Who do we think we are kidding?  This is not the result of some mysterious plague that has descended upon us.  This is a self-inflicted tragedy, largely (certainly not entirely) the result of the unionization of public education and the pandering of politicians to these immense special interests.  Education unions have fought reform, voucher programs and merit pay for teachers for years and, as a result, we are producing an immense knowledge-deficient, skills-deficient, under-performing generation in America.  Notwithstanding the ruminations of left-leaning economists such as Paul Krugman who insist that there is nothing structural about our unemployment rate in America, (New York Times, September 27th) the imbalance we are building between needed skills and available skills poses a huge dilemma for the country, a dilemma about which we are doing nothing.  George Bush, who increased spending for education substantially, gained little traction, and President Obama who has, on occasion, addressed the issue eloquently has spent virtually all of his political capital on a healthcare program that the majority of the people do not embrace and stimulus programs that do not seem to have stimulated much of anything.

Curiously, with respect to the economy and the role of government, the Administration often seems out of touch not only with the pulse of the nation, but with the tide sweeping much of the developed and the developing world.  As the statist nations of Europe and Asia struggle to pare spending, cut deficits and reduce debt the White House and the Democratic Congress have been increasing spending, and, thus, the deficit ($1.3 trillion last fiscal year) adding to the public debt ($1.9 trillion last fiscal year) and largely ignoring growing concern within their own party about increasing taxes on anyone in the midst of a severe economic malaise that no one in government or the Fed seems fully to grasp.

The economic and military rise of China in particular, but also the fast growing economies of India, South Korea, and Brazil have also presented America with unprecedented challenges.  China is an export machine, assisted in part by the equivalent of a government subsidy in its undervalued yuan.  The cash they have accumulated has financed a twenty-first century military capability, particularly its burgeoning navy.  At some not too distant date China will have mooted our ability to defend our interests in the South China Sea, particularly to prevent a takeover of Taiwan.  They have purchased control of the vast majority of the rare earth minerals necessary to produce high technology products.  To make their challenge especially ironic, the American military efforts in Iraq and Afghanistan are protecting Chinese mineral gathering in those mineral rich nations while we bleed our own economic resources trying to stabilize the government in Iraq, and stopping the Taliban and their Al Qaeda allies from returning to power in Afghanistan.  The fights we are waging in those two countries, which add to the massive debt the Administration continues to amass, is a gift that keeps on giving to the cash rich Chinese government.  It is quite an unhappy picture.

Earlier this year we reported on an interview conducted with Lech Walesa the Polish union leader and former President of Poland who was the founder of Solidarity and who successfully faced down the old Soviet Union.  He lectured (or, more accurately, lamented) the current course on which the United States was traveling.  He was saddened, he said, that the United States was making the very mistaken moves that Poland had abandoned.  And then, more recently, we heard Siv Jensen, the leader of Norway’s second largest political party, the Progress Party, bemoan America’s drift toward a larger, higher spending, intrusive government. Norwegians, of all people, lecturing America about the pitfalls of an over-reaching government.  We watch Ireland, Italy Spain, Greece, Portugal, France and Great Britain, among others, seriously addressing government spending and government sprawl while our elected officials blithely march to the very drummer those nations know they can no longer follow.

It is hard to divine the thinking of those who sit in Washington and formulate policies by which all America must live.  Did the Democratic Congress really believe the president when he declared that he would not sign a health care bill that added one dime to the deficit? Does anyone really believe that?  Does anyone in Washington really believe that the initial 4,000 pages of regulation necessitated by the new health care law will not result in enormous cost to business, especially small business, all of which will, of course, be passed on to the consumer?  Are we to believe that Congress, when it passed the AMT in 1969 didn’t intentionally write that non-indexed-for-inflation bill primarily to squeeze more taxes from millions of tax-paying families under the guise of catching 155 super-wealthy individuals who were paying no taxes at all?

We find ourselves with a government now spending trillions more than it takes in, plunging the nation into debt now equivalent to nearly $45,000 for every citizen. We have a Congress so utterly paralyzed by partisanship and election-year selfishness that it adjourns without addressing a looming and divisive tax issue that has burdened the private sector with great uncertainty at the very time the economy needs clarity, and we are graduating a work force with horrifyingly decreasing skills in virtually all areas essential to competing in a global, knowledge-based economy.

We seem committed to redistributive policies that presume to improve the quality of life for the greatest number of our citizens by transferring wealth rather than by pursuing policies that truly stimulate economic growth.  An Executive Branch governs us, along with a Congress, that doesn’t grasp the reality that excessive transferring of wealth within the economy doesn’t add to the wealth of the economy, but rather transfers it away from the most productive Americans.  Government transfer payments constitute, in almost all respects, a zero-sum game.  Ironically, much of Europe, which we seem to be emulating, finally seems to understand that.  Sadly, we don’t.

It is hard to say precisely where the American Era stands today.  Irrespective of the current economic cycle, America is on the move, sadly, it appears, in the wrong direction.  Then again, that’s why we have elections.

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3 responses to “The American Era: Pausing…Dying…or Committing Suicide”

  1. irwin yablans says:

    There you go again.

  2. Bill_H says:

    These redistributive policies have also been engineering into our international trade relations and it is here that most of the damage is being done.

  3. Fred says:

    It is later than the American people and the politicians realize .
    We are falling behind the Chinse, Brazil and the other developing countries in industry, education and eventually our standard of living.
    The greatest gift given the American people was the G.I.Bill which educated our G.I.s and brought progress which we enjoy to this date.
    While I am for universal health care we can not afford it and unfortunately it does not conrtribute anything to the wealth of the nation.

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