by Art Isgur
Mar. 2010, VIEW Issue 24: Over these many months I have written various columns on our economic situation. The topics have been complicated and difficult to follow. This is the first part of a long series on how we can help America ‘come back’ and regain world economic leadership.
You, the reader, must know that I believe in free and fair trade. But before I am a free/fair trader I am a nationalist, (I love and believe in my country.) I am deeply concerned about the weakened U.S. economy. I am far more concerned about good jobs in Sweetwater, Texas than I am about jobs in Shanghai, China.
Our primary task is to put Americans back to work! Our foreign economic relations, while important and valuable, are of secondary importance to the establishment of a sound, strong, and enduring American economy. Hopefully the last two sentences will ring a bell with you; they restate President Franklin D. Roosevelt’s first Inaugural Address in March, 1933!
If we include the workers that have dropped out of the work force, (they are not actively seeking a job, but they would like to work), along with those that would like to work full time but cannot find a full time job, along with the official unemployment rate of 9.7 percent we find the real rate of unemployment is about 17 percent.
What does 17 percent unemployment mean? It means that some 30 million of our fellow citizens are hurting for lack of work. According to the U.S. Department of Labor the average full time worker is now working only 33 hours per week, a loss of about 16 percent in hours and wages.
There is a great deal of misinformation available to the public. Some of this misinformation comes from usually reliable sources, such the ‘The New York Times’. In early February, 2010, their lead story was quite explicit. The deficits are not sustainable and will do more harm than the good they might provide in the short term.
Let us return to Economics 101. There is nothing, neither good nor bad, about deficits, per se. It really depends on why one has a deficit. Let us look close at this statement. Suppose the government has a budget deficit because they gave the richest 1% in society, a tax cut. The government compounded this deficit by lowering corporate taxes to their lowest rate in two generations! All this was done in the HOPE of further investment in production and jobs in the USA. But there was no mandate to do so.
‘That will never happen,’ you say. But it did happen in 2001 and 2003 with a Republican President and a Republican Congress. Now suppose we take those same dollars that had been used for tax reductions and use the money for technologies and development for solar and wind. The only ‘strings’ attached to these dollars would be that the inventions and development be done in the USA, the patents be American and not licensed to foreign manufacturing facilities and 100 percent of the jobs be created in... The United States of America.
In the first example, tax reductions with no strings, these deficits could easily be foolish and unsustainable. The country could find itself poorer as other nations have surpassed us in scientific advancements and we must buy the new technologies from them. In our second example, with deficits of the exact same size as the first case, the deficits were an investment.
This investment would have created manufacturing jobs, scientific progress and might well have reduced our need to buy oil from nations that do not really like us. The nation winds up richer than before, with greater employment AND increased revenue from taxes, without changing the tax rate. So we now know that deficits are not always bad. See how easy economics can be!
– Art L. Isgur, Ojai
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