Column: Three options for adapting to new reality... and the first two don't count
Our economy is broken. It is not working. The number of people getting or needing financial help is significant. That's not because they're lazy or are getting a sweet deal. Much of it is because the jobs and wages and the pensions and insurance aren't keeping up. Actually, our economy is not broken; it just isn't working for wage-earners and the middle.
The overall national economy, or gross domestic product, adjusted for population growth, has been growing for decades. It is higher now than it was in 2000. It has mostly recovered from the crash (not that most people have felt the recovery). We are not broke. We are actually wealthier than we were one, or two or three decades ago. The "economy" is healthy, but most people aren't experiencing that.
Reasons include the global growth in workforce, which is unavoidable, and other things that were avoidable, such as tax policies that endlessly shift the burden down the ladder, or leave the government short - such as trade policies, which should strike a balance between protectionist and too-free, but have long been too free. Advances in technology have also cut jobs. Normally those advances should make us all better off, but wage-earners get none of that benefit when the other factors leave them with no leverage.
Between the unavoidable factors and the slow pace of changing other factors, even if we started now, the fact is most Americans will be facing a downward slope far into the future - not into a poor country, but certainly, for the vast majority of us, a less prosperous one.
That leaves us with three primary options for adapting.
A welfare state: We accept that jobs and wages and benefits are not going to cut it for many people and there needs to be a lot of public support: longer-term unemployment, more people on public medical insurance, etc. We would have to get the money for that where it can be found. Hey, it's a top-heavy economy. Most of us wouldn't have chosen it to be that way, but the bed is made and now we - top, bottom, and middle - have to lie in it.
A third-world economy: We don't want people relying on public help, and we don't want the top giving up more than they are, so to the people who don't get enough jobs and benefits and wages, we just say, "tough." We get closer to what used to be called a "third-world" economy. More homeless people, including employed homeless people, more extended families bunking together in single-family homes, more retirees cleaning homes to pick up a few extra bucks, more jobless young adults hanging out on the street missing the critical start of their careers, more people in low-wage service jobs because what money is in the economy will be wanting a lot of service employees.
A middle and jobs economy: We do everything in our power to boost the jobs and wages and benefits so we can avoid scenarios one and two as much as possible. You don't do that by "trickle-down," which has been a 30-year disastrous experiment. Rather, it would mean fixing our deficit not by radical cuts to productive services but by cuts to defense, and by getting our medical care more cost-effective as it is in other countries. It would mean closing loopholes and raising taxes, somewhat on the middle and more so on the top, because that's where our "economy" has shifted. It would mean making smart investments in the country, just like a business would, such as our infrastructure that is falling apart anyway. It would mean changing our trade policies to favor ourselves more, but short of starting trade wars. Other countries are doing better at this and we're getting the short end of the stick.
None of this is anti-free market or stops people from becoming wealthy. Some of the New Deal policies that lasted from the '30s right up through the '70s worked that way. Policies that left the free market as free as possible but steered it toward wage-earners and the middle-class to be self-sufficient. That, in turn, gave us decades of a healthy economy, plenty of people becoming quite wealthy, the vast majority of people who could work being employed and not needing any help, thank you very much, and decades with relatively little of the financial industry driving us all into a wall.
So. Which option do you want to vote for?
Tom Cantlon is a longtime local resident, business owner and writer. Contact him at TomCantlon@TomCantlon.com.