The dismal science, as they call economics, is dismal mainly because
it is not really a science. Science has to do with predictability based
on observation. In economics, the actors are mostly invisible to single
observers, and they are predictable only in the statistical sense.
Rogue elephants abound.
Economics is also dismal because, if economists agree on anything,
it is that cyclical fluctuations are inevitable. An economic forecaster
who predicts that the good times will roll forever quickly becomes
a professional laughingstock.
A quarter of a century ago, I asked an economist friend if we might
sink into another great depression. No way, he replied. We learned
our lesson from the last one, and there are too many safeguards in
place, he assured me. Despite his assurances, I remained skeptical
because, at the time, the hollowing out of our economy had already
A few years earlier, I had seen a graph of manufacturing and public
sector employment with the lines intersecting at around 19 million
jobs apiece, with manufacturing employment declining and public jobs
on the upswing. The graph had filled me with foreboding for our economic
In 1974, 26 percent of the job force was in manufacturing. By 2003,
that percentage had fallen to 12.5 percent. Today, it is around 11
percent. The downturn we are now in will no doubt shrink this further.
A modern economy has three fundamental elements: entrepreneurs, workers,
and bankers. If any of these elements upsets the system’s harmony
through laziness, incompetence, greed, or injustice, the resulting
imbalance will punish all three because all are interdependent.
Workers earn and save; bankers hold their savings and make them available
for investment; entrepreneurs borrow capital and create new lines of
production. When workers do not sell their labor too cheaply and are
able to accumulate savings, when bankers provide commercial liquidity
at a reasonable interest rate, and when entrepreneurs make wise investments,
the almost predictable result is a vibrant economy like the one Americans
created and enjoyed for most of the 20th century.
What happened to that economy? Why are we in the mess we are in?
Many blame the lack of regulatory oversight in the mortgage industry.
Others cite the obscene greed of the financial sector in the derivatives
and credit-swap markets. Still others point to CEOs making 500 times
what they pay their line workers.
There are grains of truth in all these claims. All those were destructive
of the harmony needed for an efficient, reality-grounded economy. But
the main cause of our troubles has been overlooked.
We are in an economic mess because the American worker has been asked
to do the impossible — namely, to provide for the needs of his family
in direct competition with overseas workers who are not paid even subsistence
wages. This is a gross injustice against American workers. One result
is that most American families can no longer afford their mortgages
if the wife does not also work outside the home. Another is that the
national savings rate has plunged to zero. Outsourcing and offshoring
have become mainstays of the national economy, with the steady replacement
of well paying manufacturing jobs by jobs in the service and public
No recent administration has been bothered by these disasters. To
our political leaders, from Reagan through Bush II, these developments
were the normal accompaniment of free trade and the much-to-be-desired
transition to a global economy. Dislocations could be managed with
more generous unemployment compensation and job retraining. The American
economy was headed to a more advanced evolutionary state of new manufacturing
in the information era, supported by extensive employment in the service
and public sectors.
Now we get support for our computers and phones from “Rachel,” speaking
with a heavy Indian accent — turns out service jobs can also be offshored.
Now public sector jobs are also on the downturn because the housing
market bust has reduced tax revenues across the land. Now Silicon Valley
is hanging on by the skin of its teeth. Now India graduates more engineers
than we do, and an Indian institute of technology is ranked third in
the world after MIT and UCLA-Berkeley.
All of this, I think, is the direct or indirect consequence of our
systematic disrespect of the American worker, who, on a level playing
field, can successfully compete with any worker in the world.
To avoid slipping into another great depression, our first priority
must be to rebuild our manufacturing base with enlightened trade policies
and the rapid creation — through the rulemaking powers of the governments
of the industrialized economies — of global wage parity. Along the
way to that goal, we must also avoid rewarding, through bailouts, rescues,
and stimulus packages, those who disrupted the economic harmony we
used to enjoy.
In all things, we need balance and moderation. This is especially
true in the care and maintenance of our livelihoods.
The Unrepentant Traditionalist is copyright (c) 2009 by Frank
Creel and the Fitzgerald Griffin Foundation.
All rights reserved.
Frank Creel, Ph.D., has been a columnist for the Potomac
Virginia. His op-ed articles have been published in the Northern
Virginia Journal, the Washington Examiner,
Times, and the New York City Tribune. In 1992, his A
Trilogy of Sonnets was published pseudonymously by Christendom
See a complete biographical sketch.
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