Well, as long as there’s “a mounting prosperity that will reach every corner of America” then I suppose we have nothing to worry about.

There is a reality to “Tinkerbell Economics”. The economy is buoyed or sunk by the collective belief of everyone with a stake in it. In other words, if you (a very plural “you”) believe you can fly, you will. Together we head towards the second star to the right and all is right with our checkbooks. Pixie dust notwithstanding, Wendy had reason to believe she could fly based on Tink and Peter’s flitting about the room without seeming swayed by gravity. Had Peter merely said, “Trust me, just jump out the window,” it would have been a very different story book.

The problem seems to be that while GW is convinced he’s Tinkerbell (if only I could share the mental visual of him in a tu-tu), no one has seen him fly. Therefore, there is no well founded reason to believe we will fly. His policies fly – but only in the face of all conventional economic wisdom. That’s not much help. There is no precedent for continued job loss in this country. We don’t have a reason to believe the slide will stop. There isn’t even any more than a serendipitous connection between tax cuts and prosperity. No one understands the mechanism. Nor does anyone understand any way in which the enormous deficit will magically begin to disappear. All we have is Tinkerbell’s word.

We’re missing a larger point here. The U.S., like any country, has a vast spectrum of people in it. We have some with bright creative minds. We have some with strong backs. We have some with neither. Any sufficiently large population will span the gamut. The result being that we either need a way to gainfully employ the whole spectrum, or a plan to support the portion we can’t.

The technological capability of the world is getting to the point where less and less work is geographically constrained. Over time, this gets worse. Transportation made offshore manufacturing viable. The internet allowed offshoring of technical jobs. Virtual reality and remote sensing will replace a lot of the service sector jobs. At it’s pinnacle, it won’t matter where most work gets done. So, it is reasoned, why not have it done where labor is the cheapest? It’s a hard point to argue, but the transition will be torturous.

The USA has enacted social and labor programs to ensure a reasonable standard of living for most everyone. It is these labor laws and social welfare programs which have elevated the USA to one of the greatest standards of living on the planet. It is these same programs which make it comparatively expensive to employ people here. Now, in an effort to boost bottom lines and keep products cheap, companies move jobs offshore. The jobs they move are the commoditized skills. These are not necessarily low skilled jobs, just jobs ordinary people have. Not the jobs of the geniuses, the entrepreneurs, the creatives, but the jobs of the everyman. As an aside, at the other extreme, we import illegal workers to do the jobs we can’t afford to pay American wages for. When I was a boy, 7% of agriculture workers were illegal immigrants. That number is now 55%. The net result is that we are driving the jobs of middle America to cheaper labor. And in both the illegal immigrant and offshore case, that cheap labor is not enjoying the benefits of workman’s compensation, medical insurance, pension plans, social security, welfare, unemployment insurance, Medicare/Medicaid, and is not protected by union and government watchdogs. By our standards, those workers are exploited.

The death spiral comes as we make larger and larger portions of our population unemployed. To keep up our social welfare programs, we must increase the burden on the remaining employed to support the society as a whole. Alternatively (and apparently the current plan), we can drive ourselves into crushing debt. Further, the unemployed have less and less income to spend on all the goods and services we are importing, regardless of how cheap they are. This decreases corporate profits which further erodes the remaining domestic salaries as well as the tax base. That flushing sound is your future.

Ultimately, we probably have to give up on some of the social and labor programs or crush our own economy. We can do this voluntarily now, or we can wait until the economy collapses. At that point we’ll be forced to abandon the programs, and we will likely thrust ourselves back into the late 19th century. We’ll have low-skilled workers operating in near slave like conditions as they will be starving and willing to do most anything for even a meager job. Meanwhile corporate barons and the intellectual/creative elite sit and reap the rewards. Perhaps at that point India and China will begin outsourcing jobs to the USA. But probably not. We are heading toward a normalization or leveling of the world economy. The 3rd world will rise. We will fall. We’ll meet somewhere in the middle. It may yo-yo a bit depending on how bad we tank things before we come to grips with this inevitable future. But the economy will seek it’s own level. Of course once it does, then we can grow as a world economy. The rising tide will again float all boats. Right now, the new water is filling the empty basins and draining the reservoirs.

The destination probably can’t, and shouldn’t be changed. But we can make the boat trip Twainian or Hitchcockian depending on how much we ride the currents and seek the calm water vs. how much we flail against nature, damn her forces, and deny that we are in motion. This isn’t Neverland. It’s time to grow up.

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