Restoring America – The Interrgnum
A reader of this blog recently replied to a post of mine from July 6 in which I had quoted from an Op-Ed by Andy Grove, the former CEO of Intel, who stated that the US needs to rebuild and renew its manufacturing base, rather than relying on BRIC counties, in order to provide this country with the strategic and economic security that will enable the country to remain strong and economically viable in coming decades.
My reader does not dispute, per se, Grove’s arguments, but in reading his comment, he only skimmed the surface of the economic realities that face this nation today.
A larger conversation – and understanding of history – needs to occur within the broad, general public to understand the divergent economic public policies being set forth. Indeed, both sets of policies need to be anchored in the realities of today as well as an understanding of political and economic history…and, needless to say, how those proposed policies will affect the American population at large, given what we know about broad, general historic movements.
So, here is my response to Jack’s comment. I largely agree with him – and I suspect Grove would too.
However, to the larger points Grove makes in his Op-Ed, should the US be reliant so completely on foreign made goods for both national and economic security reasons; and should the US to continue down the path of outsourcing for cheap labor, and thus higher profit margins, if doing so leads the US into a similar feudal system wherein a few make superior economic gains while the majority barely earn enough to survive and federally guaranteed income support becomes a necessity? In other words, do the current business practice models make America stronger, more productive, and more economically sustainable for the vast majority over the next century?
As someone with an amateur’s interest in history, particularly the history of social evolution (why people and communities changed or moved), it is apparent that revolutions and grand social reform movements occurred from the bottom up when the masses, who had endured the largest share of taxation as well as the lowest income and opportunities, believed their opportunities had been squeezed to the margins: that is, they no longer believed they had any hope or chance to improve their fortunes under current conditions. These conditions led to both the French and Russian Revolutions…as well as the many revolutions seen throughout the Middle East today.
As a result, it is apparent that the US, as TR understood in the early 1900s, must change its economic (and taxation model) to preserve – and, yes, rebuild – the middle class and, thereby, the economic and political stability of the country. As TR’s advisers stated, his policies were not to destroy capitalism but to save it, especially from those who sought their own self-serving benefit at the expense of the nation’s stability…and even the nation’s capitalist economic model.
Beyond the economic stability of the US, lawmakers, and the populace at large, should be concerned about the nation’s economic and national security. If the US continues to outsource all or most manufacturing to BRIC countries, can national security be maintained? Will those vital areas of national security be compromised even more than we’ve already seen via competing governmental required design and manufacturing requirements that give their own companies not just a competitive advantage but a national security advantage?
Additionally, the economic security of a nation’s populace matters if the nation is to survive as a world leader. If the populace at large is at risk economically, the government can no longer be strong to ward off threats. Even Elizabeth I understood this concept back in the 1500s whereas both China and India, for example, ignored this economic principle and, thus, enabled, as a result of simplistic self concern by the few politically and economically well off (otherwise known as “social darwinism”), foreign nations to assault them.
Although I don’t know how far Grove’s thinking went into these issues given what he wrote, I do suspect he at least understood them at least unconsciously. I suspect he understood that without a large domestic manufacturing sector and a vibrant middle class as result of those manufacturing jobs, this great experiment in national democracy itself would be at risk to the forces that either destroyed or interrupted broad democracy within their own realms.
If history speak to us at all, it speaks to the liberalization of economics and politics throughout history wherein the broad populace – not only regained but became – the dominant force in national security and strength as well as in terms of GDP. In other words, without a vibrant, thriving middle class that sees its’ potential for a brighter economic future, a nation stagnates and declines.
That stagnating force is what happened in Britain in the late 1800s when Parliament adopted supply side or “trickle down economics”, an economic concept that had never been tried before. The result was another mass immigration to the US as people from throughout the British Isles moved to the US for greater economic opportunity…and a less state enforced, economics policy driven poverty model to enhance the already wealthy.
As a result within the British Isles, supply side taxation that reduced taxes on the most wealthy as well as a failure to secure income support models for everyone else hindered entrepreneurship and startups. In addition, it adamantly refused any income security support to the most needy so they could climb out of poverty. In other words, Great Britain’s “supply side” economics helped drive late 19th Century to early 20th Century immigration.
So, however you view Grove’s views on renewing American manufacturing, either from an economic stability viewpoint or from a national security viewpoint, it does make sense to rebuild American manufacturing.
Even more, it makes sense for economic leaders, whether in Congress or on Wall St. and in State capitals, to decide that rebuilding and renewing the middle class – and pulling those out of the poverty into sustainable living jobs and wages – makes good economic sense over the long term economic health of the nation. Obviously, the more people able to meet own their income needs via their salaries, rather than rely on governmental support to insure their ability to meet necessary needs, the better for the economy of the nation as a whole.
Doing so – that is creating sustainable wages – means less need for state and federal income and health support security payments and, thus, fewer dollars going to support those in need of basic income and health benefits…which ultimately means lower taxes for everyone.
So, here’s where I agree with Andy Grove – and my commenter. By changing current tax law that encourages domestic production over foreign investments, the nation can renew its domestic industries…both as a national security issue and also as a domestic economic security issue. The stronger the middle class economically and numerical is – and the fewer who live in poverty and require income and heath support – the stronger our national security and viability as nation.
Eisenhower, and his fellow politicians of both parties of his generation before him, understood this economic model: they had lived through the worst of the worst of times when the US was in danger of losing its’ capitalist model as well as the middle class as a result of a financial meltdown and/or because of a capitalistic model that created an entire class of Wall St. and Corporate Robber Barons.
[In full disclosure, my extended family benefited greatly – in the billions in today’s dollars – from late 19th Century to 20th Century tax and corporate governmental benefit policies.]
Nevertheless, we now have an entire class of politicians and voters who fail not only to understand the history of the US but of the entire world’s history as a whole with regards to economics, the growth and development of civilizations, and the rise of stable economic countries.
We can either listen to these economic pip-squeaks or we can learn from history as well as what the future foretells. For myself, I care less about political labels and partisan policies than about our nation and her ability to grow and sustain herself over the coming centuries.