Clouds and Linings
The campaign for control of Congress is in full swing. Sadly, emotions and ideology are overwhelming logic and facts, and current economic distress obscures great future threats. Unscrupulous politicians and talking heads play on voters' concerns, vilifying opponents to influence votes. Almost no candidate assesses facts dispassionately and prescribes the hard measures needed. An election decided on personalities, innuendo and hate-filled distortions presented by sound bites ensures continued partisan gridlock and threatens national failure.
Let's start with some basic facts. For 45 years politicians of both Parties have encouraged increased personal and government borrowing to finance expenditures voters were unwilling to pay for up front. Easy credit stimulated unsustainable consumer demand, supplied by greatly increased (and also unsustainable) employment. The housing bubble is a good example. Meanwhile, in order to avoid raising taxes (actually, many were cut), investments in infrastructure, education, and basic research were held down, impairing America's future competitiveness. We voters allowed this to happen, even enjoyed it.
That consumption binge came to a screeching halt with the financial crisis of 2008, as addictions to material possessions encountered financial reality. One sad result is unemployment. How so?
When credit is tightened, mortgages foreclosed, paychecks don't grow, consumers turn conservative. For example, the US personal savings rate now approaches 5% of GDP, versus 1-2% in 2008. With smaller paychecks per capita, and more going into savings, less money remains to buy goods and services. Businesses react to lessened demand by layoffs. Thirty years ago our company improved productivity by holding employment growth to 3% less than the percent increase in items produced. With zero growth, cut employment 3%. And we learned to make beverage cans with less aluminum, cutting our costs but reducing demand for aluminum, and thus supplier payrolls. As today's companies do similar things, business profits are up, while employment is static or down. Don't blame companies; efficiencies hold down the cost of things we need, and protect American jobs from being lost to more efficient foreign competition.
What should Americans do? Our economy must shift from loose credit and materialistic consumption today toward savings and investment for tomorrow. With global population growing from 1.8 billion in 1910 to 6.8 billion today, 5.0 billion more in just 100 years, and everyone desiring more and more "things," we will lose our planet if we do not discourage unrestrained materialism. We must raise government revenues - including taxes – towards a balanced budget. We must cut expenses; entitlements, subsidies, wars and earmarks are fertile areas to examine. We must help the unemployed, of course, but stimulating consumer spending to re-establish yesterday's economy will only perpetuate today's problems. Instead, government should concentrate on the future – education, basic research, and infrastructure. Sadly, few politicians are advocating a platform of austerity this fall, believing, as Bertrand Russell said, that "mankind would rather commit suicide than learn arithmetic," and that proposing stiff economic medicine is sure to lose votes. Perhaps. But Purple is also fearful that self-righteous groups - Tea Parties, Unions, Farmers and Investment Bankers among them - will rally politicians around self-serving ideologies, splintering America.
As a community of many backgrounds, experiences and beliefs, Americans once listened to and debated each other's ideas, creating bipartisan policies to move America forward. That worked reasonably well when Purple served in the Reagan Administration. Today's voters must move our country away from gridlock. We must tell the national parties and candidates we will vote for whomever engages in civil, rational dialog, and against any who vilify their rivals. America needs to turn down the volume, open its ears and engage its reasoning powers. The alternative is to drown in a sea of hate, a sad end for a nation that grew to greatness with "government of the people, by the people, for the people." That alternative must not be the legacy we leave our children.