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What’s Wrong with America, Part III – Jobs and Infrastructure

December 30th, 2010 · No Comments · Lobbying, Media, Politics

It isn’t rocket science, although this country is pretty good at that, but it is quite easily achievable. We can restore the great American Middle Class. What is wrong with America can be made right.

Some things are missing that can be restored. First, jobs, and they will come from stimulating the economy and at the same time closing loopholes in our trade and tariff policies. Over a million jobs were created last year by American corporations…overseas.

There is no economic reason for that, other than windfall profits and even higher wages for CEOs. Or–perhaps the lower wages the corporations can force on the American worker, using Asian wage-slaves as a negotiating tool. We are the only country in the world that puts excessive profits and exorbitant CEO salaries above the needs of its own workers.

It is not an accident or necessity that the vast number of American workers have been literally cast aside. Consider the Neocons. They prohibited Medicare from negotiating lower prescription prices for seniors on Medicare. But they paid the pharmaceutical corporations hundreds of billions of dollars in additional costs from higher prices…and gave not just seniors but all American citizens the bill…part of our huge deficit.

The Neocons would not vote for unemployment insurance for the long-term unemployed until President Obama agreed to tax cuts for the top 1% of Americans…multi-millionaires and billionaires. These are the same people who received tax cuts from Bush for ten years that averaged at a minimum over $1,000,000 per person during that period. These are people who cannot even spend the money that they get back in tax rebates, while 15 million Americans are unemployed, nearly 3 million now over 99 weeks, with no income and not even the remote prospect of a job. There are no jobs. The Neocons are resisting the creation of jobs…on purpose.

These are the Neocons, the rich bankers and Wall Street investors whom we bailed out who will not invest in new jobs with any of the money the Neocons just blackmailed the government to give them. And while getting the richest Americans more tax breaks, the Neocons negotiated even more from the Democrats, even more concessions merely in order to get them to stop filibustering health care for those who are dying of those dying from the effects of toxins incurred cleaning up ground center of the 9/11 terrorist attack.

The Nazis once did it…split their country in two…the rich, the military and heavy industry assembled to beat down, categorize, abuse and imprison their fellow citizens…anyone who would not agree to their idiotic theories of racial superiority.

That led to war and mass exterminations. But it began with the same kinds of things that the Neocons are doing today. Hate speech on the radio. Ridicule and isolation of minorities. Assemblies of people carrying signs with abusive slogans. Others wearing arm bands and carrying flags with swastikas. An entire propaganda industry all on the Neocon payroll, working for the super-rich and the international corporations, dedicated to tearing down the Middle Class.

They know we can change society. These rank-and-file demonstrators are betting that we will lose and anyone connected with “the Party” will benefit. Totalitarian societies thrive on fear, chaos, elimination of rules and regulations, and power concentrated in the hands of a few. But we can overcome their cynical, fascist attitude and get on with restoring America.

After jobs, the creation of which comes first, the second step is to rebuild our infrastructure, starting with our health care system. With 50 million people on the edge of bankruptcy (half of all bankruptcies are people who were overwhelmed with medical bills) we need to start throwing tomatoes at people who are so dumb they want to “repeal” health care reform. Instead, we must add a public option.

We need to do exactly the opposite of what the Republicans want and increase emphasis on fixing our secondary educational system. Educated people are important to economic growth. Therefore education is a key aspect of our infrastructure. A good educational system is the key support infrastructure for personal growth, and it is simply the sum of the efforts of all our people that will make us a great society again. We need to make sure that every child graduates from high school with graduation-level math and english skills at a minimum.

Finally, we need to develop the physical infrastructure of the country…roads, bridges, inner cities, transportation and the ability to use modern electronic technology to make all our transactions faster and easier.

In order to return to a solid base of workers, to balanced budgets, to domestic manufacturing and better education, we need to make some changes. We need to add some tariffs, raise some taxes, cut some areas of government, change our military industrial posture and change the way business works. We need either more manufacturing here in the United States or tariffs on imports sufficient to compensate for the lack of domestic manufacturing jobs.

CEOs cannot continue to take as much as 40% of profits from major corporations so that they can earn 400 or 500 times as much as the average worker. Major corporations cannot locate outside the United States, in order to pay no taxes and still be allowed to compete with manufacturers with domestic workforces who do pay taxes.

Speaking of taxes, we should demand a top rate of at least 50% on those who make more than $300,000 a year or $500,000 for households for at least ten years. We gave them much more than that in tax breaks for 30 years. It is time they returned the favor.

With those tax increases, plus increases in tariffs, corporate loopholes closed and a minimum 10% tax on any corporation doing business in the United States, we can restore a solid social safety network and job training for workers whose industries change. At the same time, we will reduce the deficit and accumulate surpluses. No one in government commissions concerning the long-term national debt is mentioning tax increases. If you want to restore a great society, that is what you must do. It is not complicated and the top rate need not go back to 90%. But you need to raise taxes substantially, over 50% for the top rate. You just have to do it.

The most important thing is to restore a jobs market, industry and technology here in the U.S. Alternative energy alone will create about a third or more, perhaps even half the shortfall we have right now, if we can use natural gas and build a new electrical grid. Those currently petroleum-based energy will not experience any change at all. But we need to act, and if energy corporations continue to block progress, we need to go around them with government programs.

We must bring jobs home and insure that corporations who outsource abroad pay a penalty for not using American workers but favoring Indian, Chinese or other foreign workers. We must not bring American workers down to the economic level of Asians but bring Asians up to the level of American workers. And we must help Mexico with as much of the industry as possible going to the Far East but we must end the NAFTA treaty and shut the borders down tight. Those things are non incompatible.

In 1960, life in the United States was pretty good…some good things…some scary things…but, on the whole, not a bad place to be, if you were Caucasian. We had about 180 million people, about 5% of whom were college educated. If you were an African-American (Negro) in the South, life could be scary, even dangerous, but at least things were just beginning to change.

We were in a Cold War with the Soviet Union and with many countries that had adopted the Soviet version of Communism, which under Stalin, and subsequent leaders, was simply a totalitarian form of government. In other words, Communism turned out to be merely the flip side of Fascism, with a small band of leaders who did not rise through merit, but through political intrigue.

In the 1960s, we had a very strong economy. We had trimmed government from its wartime size and successfully converted those jobs into private industrial jobs. We saw the rise of the auto industry, the appliance industry, the steel and aluminum industries, airlines and the nascent computer industry. Cities were still growing, as were airports and the trend towards chains of hotels, restaurants and retailers.

We were growing and expanding at an exciting pace. We had 180 million people and our gross national product was $525 billion. Our national debt from WWII, still remained. But it had been reduced to $290 billion and was being paid down. That’s about 50%, as opposed to about 75% of GDP now, thanks to George Bush and Dick Cheney.

Of course people actually paid taxes in those days. Because we still had a President who had been a general and won a war, we did not go out looking for wars unless someone attacked us. We would eventually make the mistake of looking for wars to fight and then repeat the mistake until our military complex became larger than anything else in government, larger than anything we do, even larger than the total of military spending of every country in the world.

Probably the most pronounced difference between 1960 and 2010 is the difference in our domestic economy. In 1960, about one out of every three workers in the United States was employed in manufacturing, as opposed to approximately one out of every 12 at present, and probably much worse by the end of this recession. American firms are profitable. And they are hiring. But they are not hiring people in the United States.

In 1960, JFK, who would take over in January of 1961, was extremely concerned by an unemployment number of 5.7%. He need not have been. By 1965 the economy grew in one year by $9 billion, and unemployment was down to 1.4%. In 1966, the economy grew by an amazing 9% and unemployment for the years 1965-1966 averaged only 2.7%! In the decade of the 60s, real income went up from $8,500 per year to over $12,000 per year. A large part of this was due to the union movement in which about 3 of every 10 workers participated. In 1960, there were 15 million union workers. By 2004 despite the fact that the population of the country had almost doubled, there were still only 15 million union workers. The percentage had fallen from almost one in three to around one in ten. Strike breaking and union-busting has become a substantial industry since Reagan.

In those days, we worried about inflation. In 1960, inflation, but not the kind of runaway inflation experienced under late Nixon, Ford and Carter, was a problem. So LBJ ordered up a 10% tax surcharge and cut government spending by $6 billion. By the end of LBJ’s term, the economy was humming along at 4%, and unemployment was staying low…in today’s context for sure…at 3.3%

It was an era when union membership was high, keeping wages high, and money in people’s pockets. Here in the U.S. Union pensions and gradually rising home values and modest state university tuitions meant that more and more children of the Middle Class could move up. And they did, with over 27% of Americans having a college education today.

So what happened? Inflation and growing unemployment happened. By the end of the 1970s, we experienced something called “stag-flation.” In other words, we had stagnant economic growth with rapidly accelerating prices. Economic policies seemed not to work. But it turned out that the only thing not working was the political system.

Economists began to question the economic policies of the pre-and post-war Keynesians, and the dramatic and unstoppable inflation. It turned out that all we needed to do was restrict the money supply…but that would result in a burst of the balloon economy. No one wanted to touch it.

In 1979, President Carter appointed Paul Volcker to be head of the Federal Reserve. Volcker swiftly began a program of reducing inflation by reigning in the money supply. This gradually reduced inflation but it dramatically increased interest to as high as 13%. For a time, we had consumer interest rates at 17% and inflation at 13%, before it began to go down. But when it went down, so did the economy and unemployment rose.

After Reagan was elected, Volcker continued as Federal Reserve Chairman and, by raising the Federal Funds Rate to as high as 20%…just kept cutting the money supply. He took inflation from over 13% down to 3.2% within a couple of very painful, recessionary years.

It was costly. Over Reagan’s entire 8 year term, unemployment actually averaged about 7.8%, pretty high. But that was partially because, in 1982, it reached an exceptionally high 10.8% and averaged 10.1% for ten straight months. During that same period, Reagan was able to enact his initial tax proposals, cutting the top rate from 74% to 50% and reducing government revenues by about $200 billion a year, which—when combined with a huge military buildup—saw the beginnings of serious, long-term government deficits. By 1986, Reagan would cut taxes again, with the top rate dropping to 28% and the bottom rate increasing from 11% to 15%, although on a higher base income level.

The Reagan recession came from ending inflation. Reagan was elected in large part because of the intractable inflation that was stifling the economy. This situation allowed an entry for the Right Wing Conservatives, who were always considered the “looney Right Wing fringe” who espoused “voodoo economics” to win the election of 1980. As it turned out they were. Thirty years later, we can look back on their complete and utter devastation of the economy, jobs and a peaceful and dynamic economy for almost all citizens.

Reagan’s popularity enabled these Conservatives to increase their hold on the Republican Party, which won a number of seats in the 1984 Reagan landslide. The result was more “voodoo economics” which really were not voodoo at all. They were merely policies that concealed the real goals, which were to shift wealth to the top 1% and corporations.

Once corporations discovered that the People could be fooled, the Conservative—now the Neoconservative–Republican Party was supported completely by large corporations and the Super-rich, creating so-called “think tanks,” organizations of people researching and lobbying for and trying to justify the corporate viewpoint. Thus was born the alliance among the Corporations, the Super-rich and the Republican Party against the Middle Class.

The Reagan era is important because it began a gigantic media effort, a propaganda effort that has expanded from a small message that concealed the real intent and outcome of deficit-producing tax policies, to a propaganda system that now encompasses 90% of all radio programming and approximately 60% of all television broadcasting that involves news.

This has allowed the top income levels in the country plus the corporations to manipulate the electorate and the political system. For 30 years we have been borrowing money under the phony idea that our government could continue to cut taxes and increase government income. We now know…and have known for a minimum of 10 years…that it will be necessary to raise taxes on the wealthy to where they had been before Reagan…or some equivalent method of generating that level of revenue. In fact, we may need even more to begin to write down some of the huge debt that is hampering our ability to move society forward. We probably need to continue that higher tax level for at least ten years.

We know that a raise in income taxes under Clinton, opposed by every single Republican Senator (just as they have done in the most recent Senate session, voting in a bloc) of only 4%, with some budget adjustments, and some strong business incentives, created an economy that produced enough revenues to balance the budget. And in his term, Clinton’s economy created over 22 million new jobs.

As soon as Bush took over, he cut those taxes by the same amount and increased spending, resulting in huge budget deficits that doubled the national debt in 8 years and then got worse! He created only a net 1 million jobs and left an economy in tatters.

Bush left a huge Recession with 15 million out of work and 50 million without health care, set up economically with almost no way to avoid even worse deficits. Trade treaties had gutted the labor force, costing millions of jobs. Imports were twice the volume of exports. We are importing 60% of our current needs for oil for energy and transportation.
And we import much of it from people who support terrorists to attack us.

The ability to make things here and market them both domestically and abroad is our greatest infrastructure asset. Taxation is not an economic policy that works, either way, in the long run. We need a vibrant economy that has a much higher domestic manufacturing base. We can compete with Asia and India. Many companies do it right now.

What we cannot compete with is corporate greed. We have companies closing U.S. plants simply to create more income for their CEOs, who now often take 40% of profits…which means that they must make higher profits to create at least some for stockholders.

Andy Grove, the brilliant innovator and founder of Intel has said it. There is a collective memory among manufacturing workers. If a generation goes without the discipline of working in the manufacturing process, the skills become stunted or lost. We are in danger of that right now.

Other Neocon programs have made substantial changes, detrimental to our society. Free trade, we were told, would give us more opportunities to sell our goods abroad. So we would create more trade agreements. Countries could sell their products here with lower duties. We could sell our products abroad with lower duties. And how has that worked out for us?

Free trade has brought cheaper products into the United States, which has lowered prices on domestic products and lowered wages of U.S. workers. NAFTA alone, the free trade agreement basically with Mexico, has cost U.S. workers well over a million jobs. Those are jobs that have been replaced by Mexican jobs, literally. So those jobs will not come back so long as these trade agreements are in effect.

Manufacturing, which used to employ one out of three, now employs one out of twelve. Incomes that were based on $20 an hour are now based on $12 an hour and health care costs, if available at all, are at least $500 a month of that. Can anyone explain how a great society can be created by continually lowering wages?

Can we become richer as individuals, competing for lower and lower wages against workers in third world countries? It is insanity. We need to manufacture here, and from those products that we cannot manufacture here, but import, we must exact a duty in order to offer some revenue from which we can create other jobs for those displaced.

It doesn’t compute. The European countries understand that and they don’t try to compete. They make things that can land on the moon and come back intact and make them for their own citizens and for export. If you want to sell something to them, or if their manufacturers want to make something abroad…they pay taxes to compensate society for wages lost to the native country of that manufacturer.

And how can they do this? They have the other things that we lack…the infrastructure.

European schools provide the best possible educations up to and now including some of the finest universities in the world. The United States, on the other hand, still has about 30 of the top 100 universities in the world including the majority of the top 25, but not prior to the university level.

Although the U.S. was at one time the number one country for all levels of education, we have now fallen to 17th in the world. A country without a good educational system, where young people who fall out of the high school system (about 30%) have an unemployment rate at least double those with a college education, will have a difficult time competing in world markets.

We can replace a great deal of our infrastructure outside of health and education with 21st century technology. We need to create a renewable energy system. Energy could account for at least a third of all the jobs that have been lost to outsourcing and the general turning away from manufacturing. But we need to act.

This is pretty simple stuff. If your gas prices go to $4.00 a gallon in a car made for gas prices at a maximum of $1.50 a gallon, anyone who uses a vehicle is going to deeply feel the economic crunch. Even as prices are climbing, an even more serious problem exists. Oil is running out. We have passed “peak oil,” that point at which we will begin to find ever diminishing supplies of oil

This will be good for oil companies and not only because they have an oligarchic control, a cartel of only half a dozen or fewer oil companies, which is the case now. But, because oil prices go up as commodities—prices rise as shortages occur—oil companies and energy workers will not suffer.

The new energy sources—wind, solar and thermal—are the cutting edge of a whole new era in manufacturing, clean air and water, sustainable energy and a restoration of a solid infrastructure base. European counties and some Asian countries are far ahead of us, with their corporations making products for them to sell to us in this country right now.

A somewhat ancillary issue to energy is transportation. Most other countries in the world have already developed public transportation systems—high-speed rail for example. To offer high speed rail between cities, we need track right-of-ways, modern track beds and high speed rail equipment and vehicles.

Everything you read and hear about the economy is wrong. The reason that you read and hear it is that there are very few sources of information that are not controlled either by giant corporations each of which is organized to help other corporations or giant corporations designed to deliberately deliver propaganda.

In other words, over major media you will hear, for the most part, lies about the federal and local government, about the popularity of different pieces of legislation, about corporate responsibilities and liabilities, about the real goals and objectives of the Neoconservative Party and about the overall attitudes of society…which are overwhelmingly Liberal…but which you will never hear spoken.

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