Thanks for this excellent post. "Today, the bottom 50 percent of workers owns less than 1 percent of the nation’s weath." That says a lot about our country today.

We do have to care about each other. The people on top need to care. Thanks for suggesting some good ideas on how to change things.

Great account of the plight of the middle class, really, society as a whole Steve. I'll post a longer comment this evening but it strikes me that the proposed remedy is a second-best solution. As a disciple if "the art of the possible", I'm not inveterately opposed to them. But it leads to featherbedding and make work schemes. I was working in Venezuela in the mid-80s when they tried something similar. While it's not wholly without benefits (it does get people used to going into the office, puts bread on their tables etc.), it's no permanent solution.

Abrawang, By all means, there is room for a variety of approaches, of which this is just be one. What's your first-best solution? I already raised mine in a number of posts, a massive infrastructure investment in renewable energy, but its window of opportunity has long been closed. Other measures? I proposed a CCC-style or VISTA-style program for young people to maintain and rehab foreclosed homes to offer as rentals paid for by the banks. I think it is incumbent on progressives to continue to offer and fight for concrete solutions. Our problem as a nation in not getting out of this mess is that in every respect we have thought too small.

Brilliant, Steve.

Maybe us Boomers are a little too old to get really angry, but those young people out there? Oh yeah, they're going to get good and pissed. Young, angry and unemployed. Bad, bad combination.

Albeit said, why is there a baby boom going on?...nothing else to do???

"And it isn’t. Until it is. When the whole system begins to rot from the inside like it did in the 1930s it is a boardroom problem. Even petty despots like Henry Ford understood this. Unless his workers—his many, many, workers—could afford to buy the cars he had to sell, he had a problem on his hands." This should be true, but it isn't anymore. Now, American companies are NOT really American - not in outlook and not, necessarily, in customer base. All they have to do is turn to the huge markets of China, India and anywhere else that people have a high enough standard of living to buy things. They just don't need the American consumer ...

And I should have said: excellent post. The invisible melting of the middle class is exactly what's going on; we'll wake up and it'll be gone. And infrastructure still seems to be the way to gom to me.

One of those ‘bold & innovative’ ways of thinking always seems to escape those who look seriously at the economic woes we face today. Look at the facts:
1- Of shoring millions of jobs increases unemployment here
2- Automation is just beginning to do the same
3- Artificial job creation, as you say, is not a solution, long term.

Do you not see what is in front of your eyes?

WE, AS A PEOPLE, CAN NO LONGER DEPEND UPON EMPLOYMENT AS OUR PRIMARY SOURCE OF INCOME.

Is that not clear?

From a humane point of view this present situation is a disaster; a long term one. There is no instant cure for this.

From a business point of view also, this is a disaster; people with no income cannot be purchasers of goods and services.

We need a whole new ethic. One that separates “production” from “income” for the average person. Our present system, which has the two welded together, is toast. Everything you said in this clear-eyed blog shows that to be true.

We all know that an economic system that has allowed the concentration of wealth that ours has allowed, indeed encouraged, cannot be sustained. No amount of “tweaking” it will allow it to continue to operate. The old days are done. Over with. Get used to it. There is no way - none - that we can turn back the hands on the clock. Our form of capitalism is dying and cannot be revived here again.

We need a new form of capitalism. One that redistributes wealth very quickly - no “trickle-down” bullshit. Especially since ’trickle-down’ never did work to any appreciable degree. Money “trickles up” not “down”. Always has - always will.

So we need a system that shovels wealth off the roof and into the waiting hands of the consumers who will spend it to meet their living expenses and their desires, thus keeping their suppliers of goods and services affluent.

Direct line inheritance has to go. Wealth has to be returned to the society from which it is derived upon the death of those who amass it.

It is produced by and from the society that allowed some to gather large portions of it. Once those persons are dead, it needs to come back to the society - NOT stay locked up in the hands of heirs who have done nothing to earn it.

Imagine how prosperous our society would be when the 50% of its wealth, now hoarded by heirs who didn’t earn it, is back in circulation.

.

SkypixieO, "Money “trickles up” not “down.” Now that should go down as a quote for the ages. Brilliantly put.

Lots of great comments here, and Sky's call for a new ethic, beyond full employment in the private sector almost always conjures a system more like Canada's--look at their support for indie artists, filmakers and musicians--or France, with it's huge investment in health care, boutique agriculture and education...but, oh yeah, we hate that here.

Blue, yes, many American companies have long decamped for foreign shores in terms of markets and only hang their shingles here for tax, security and prestige reasons. But we are still 300 million plus with lots of money in our pockets if you look to the majority I spoke of above.

Incredibly good discourse, Steve. Although, your state's Congressperson Bachman would decididly disagree with you. I fear that we are devolving toward "third world" and that seems to be all right for some (those at the very top of the pyramid) just so long as they've got "theirs" and get to keep it.
Remember about 20 years ago when call centers in small cities in the Upper Midwest were considered "economic development"--and companies extolled the virtues of the employees of those centers for their work ethic and clearly understood Midwestern accents? And then those jobs went to Asia where's it's far cheaper. Of course it's far more aggravating and arguably less efficient--but what the hell.
I'm just kind of fed up with it all and hope that economically and financially I can tread water until I die. Quite a goal for my senior years isn't it.

Walter, Good points. On NPR I hear this campaign, 'Offshore to the North Shore,' from some northern Minnesota economic development consortium that has decided I guess that people north of Duluth are finally willing to work for $3.65 an hour...or maybe it's "piecework." Remember that?

Great Post Steve - I like your analogy of Henry Ford & all the rest. Do Obama's advisors know what you know - or do they don't want to know? Why is it that Americans want BIG ideas - but aren't willing to wait for them to come into fruition? R

you're getting repaid for the eighties, when the working classes were brutalized and the middle classes did nothing. now there's noone left who is able, or willing, to help you. and by the time you realize that you ARE working people, and always have been, it will be too late. so stop pretending you're in some kind of bougie avante garde--you're toast, and your thinking is decades behind. see ya on the barricades, clueless motherfuckers.

Another in a series of well researched, properly perspected articles, Steve. I was saying something similar the other day to someone on FB. You can't produce an economy without spending money. If folks don't have money to spend -- or have money, but don't, won't, can't spend it (because they have so much more than they'll ever use, even in frivolous bouts of stupidity shopping sprees) then the economy cannot grow or expand.

It's also true that demand drives job growth, not supply. This trickle down, supply side concept, aptly coined by the First George Bush when he ran against Reagan for the GOP nomination, is nothing more than Voodoo Economics. It's that magical thinking you were referring to in your piece.

I disagree though, that we have lost our window on infrastructure. Maybe energy reinvestment for power and fuel, possibly. But roads, bridges, rails, water lines, sewer lines, subways, elevated rails, and other aspects of infrastructure designed to connect us to vital services and each other still require a lot of work. We actually do need to think about a complete revamping of the nation's water and sewage systems. Our bridges (other than brand new ones) are in desperate need of either replacement or refurbishment. Our highways are a mess and the methods used to contract for them is a complete travesty of mismanagement and purposeful lowballing in order to charge for cost overruns, extensions to complete and budgetary shortfalls we didn't foresee.

I'd mention another aspect of industry that could use a rewrite, but I know it won't gain traction amongst those who'd make the decision. The military industrial complex.

Personally, I have no issue with someone making a profit for a product. The way military equipment -- at all levels and for all that is purchased -- is procured, produced and maintained is nothing short of someone making a ton of money on selling the lowest quality, poorest design integrity and most expensive 'cheapest' bid items ever known to mankind. And this isn't anything more than a percption issue of what's okay to do to make a profit.

With energy production, I would propose that we nationalize all our petroleum, natural gas and coal industries. They should be treated more like a Public Utility or Resource than a simple for profit enterprise. Fuel is no longer a luxury. Power is no longer an economic tool, to be bought and sold like hammers, nails and wood. Our society and culture, inclusive of our economic model needs to reflect that.

Thanks again for hitting a solid run with this article and also for the debate, thoughtfulness and reflection on these issues it is sure to generate for those who take the time to read it.

-r-

Dunniteowl, While I would particularly boost energy infrastructure I agree that transportation and systems infrastructure are essential. And, again, no one is thinking big enough in terms of the scale we need. Infrastructure investment for the future can be justified in terms of having children and grandchildren paying it off as well. They are the ones who will benefit, just as boomers benefit from the investment their parents' generation made in a national highway system. As for bridges, yes. I know someone whose car plunged into the Mississippi when the bridge on 35W failed in Minneapolis. And water treatment upgrades, right with you there, too.

You make some good suggestions here. Unfortunately, it was decided some while back that the middle class is superfluous, perhaps even a hindrance, to maximizing coroporate profits, and given the ever-increasing corporate control over the levers of power in DC and state capitols, we're unlikely to see any serious attempt to resucitate it.

I don't know why, but I just can't work up such a high degree of pessimism.

Europe has all sorts of policies to prevent loss of jobs, yet their unemployment rates don't seem materially better than that in the US. Here is a list by country --- http://www.tradingeconomics.com/unemployment-rates-list-by-country.

Personally, I see our unfavorable balance of trade as a fundamental issue, although it could be considered a symptom just as easily. Nevertheless, it is unsustainable.

People want to lend us money. At low rates. Foreigners.

A big chunk of the balance of trade imbalance can be traced to imported oil. A big chunk of the rest is heavily impacted by currency manipulation by China and other Asian countries. In 2008, Korea seriously devalued, and shortly thereafter, Hyundai started kicking ass in the US -- maybe largely at the expense of the Japanese, but a big part of their value proposition is tied to price which is directly impacted by devaluation of their currency.

Call me old fashioned. It was a very severe recession. To get out, we need a lot of deficit spending. To rebuild demand that was destroyed in 2008 and 2009.

We can still borrow whatever we want or need in US dollars. Failure to take this option seems insane to anyone that lives in a country that cannot borrow (like Greece).

By the way, good post. It's up to your usual high standards.

For a reasonable analysis of what is going on see:
http://www.counterpunch.org/2011/08/25/the-dumbest-rally-of-all-time/

The controlling government elements have been bought by the wealthy sector to ensure that their hold on finance remains secure no matter the destruction of the general economy. There is no way but extra-political dynamics to unseat them and that, it seems indicates violence. When the angry steam builds up there will be an explosion and there is no way to determine what that will end up in.

Liberal thinking today believes that government can solve all problems, including global warming, the poor, the undeservedly rich, expensive healthcare, stinky feet, etc. Their cry of “MORE!” echoes down the halls of public buildings, and of OS, often these days in reference to taxes, regulations, and spending.

Hundreds of years of proof that government intervention is generally the genesis of the problems they seek to remedy do not dissuade them from their anointed philosophy. The failure of the socialist utopia, ‘worker’s paradise’, in the USSR does not deter them. The death on arrival of Cuba’s collectivist economy does not imply to them that collectivism won’t work 90 miles away in America. Not even the pending insolvencies of Medicare and Social Security sway them from their course.

They claim that all such problems could have been, and can be, solved by “small tweaks”. They see no reason why we cannot tax, regulate, and spend ourselves into Nirvana.

Thus, it can be no surprise that the latest suggestion to be blessed with an EP is one that proposes that government manipulate the economy to supply jobs. The motivations are obvious.

Included among the many reasons justifying such actions are children living in poverty, perceived capitalist excesses (such as bonuses), and “ . . . the top 10 percent of all American workers earn 50 percent of all American wages.” Yes, we must all either envy that “ . . . top 10% . . .” or we must all be equally miserable, it is difficult to know which one of these, if not both, underpins such complaints.

Steve, you are crazy.

It’s the private sector that’s going to provide jobs. This has always been the case. The best news in the unemployment reports these days is the loss of public sector jobs and the gains in private sector jobs.

You are correct when you claim that “Hiring is driven by demand.” What you ignore is your own “Period.”

Lowering the bar (whatever that means) so that companies are rewarded by the government for risking investment in their own workforces in an era of endemic weak demand is the kind of thinking that pervades Treasury and the Fed. For example, one doesn’t have to travel far back in time to encounter the Geithner and Bernanke belief that if government makes tons of money available for practically no cost, then companies will simply rush to borrow it in order to manufacture goods and expand their capacity. This is utter bullshit, and has been so proven in our very recent past.

Companies, and companies alone, decide when to expand and to contract based upon their perception of demand and their knowledge of what they can supply. No “laser light focus” of new tax policy designed to punish the existence of jobs overseas or the absence of them in America, or reward their presence here and their absence there, is going to work.

You're entitled to your socialist fantasy, Steve. However, I am going to advocate for smaller, less intrusive, government as the mechanism by which the path to our economic recovery will be cleared.

hmmmmmmmmmmmm. . part of my comment was cut off. . .

If you want to tax the proceeds of foreign jobs, then you had better think about priming the pump first, probably by lowering taxes in general. If Americans aren’t consuming, then there aren’t going to be imports to tax. Further, if you want to tax the proceeds of foreign jobs, then you had better go lobby to stop the ‘NAFTA’ type thinking that now pervades much of what passes for logic inside the Beltway.

@UncleChri

No doubt you are absolutely correct that demand is what inspires increased production and job creation. But with the general population without the income to create that demand how do you propose that impetus for job creation should come about?

I hope
"Infrastructure---what's needed for functioning of a society--- investment for the future "
doesn't mean more prisons.

@James M. Emmerling

With state and federal governments cutting essential services to the bone and beyond, even to cutting schools to a four day week, who is to pay for that infrastructure? Taxes on those that can pay is a no no.

@ Jan

Thanks for a cogent response. I will reply because I believe it advances the discussion inspired by Steve’s blog.

Your question seems to imply a lack of faith in the aspirations, ingenuity, and work capacity of man. Steve’s blog implies an absolute faith in government.

The degree of American consumerism to which you and I are accustomed is a recent, 125-year old, phenomenon and is probably unsustainable. It is likely that you and I are living at the end of this age.

In this context, let me answer your question by examples:

In an environment in which the standard of living declines, more Americans might choose to live “off the grid”. This might generate a large demand for solar electric panels and wind-driven electric turbines. Thus, the futures of two industries are secured.

Even if solar panels and turbines are largely assembled by robots, the future of another industry is secured; and if a rare metal, whether or not mined in America, is needed to manufacture solar panels, then the future of a fourth industry is secured. Also, if the mining operations of this rare metal require specialized extraction, processing, and refining equipment, other industries are secured. And so on. . . .

Your question about whether potential “off-grid” consumers could fund purchases of this equipment likely has an answer in whether its ROI is attractive enough for financing, whether the demand is large enough to bring prices within range of affordability, and whether government interferes in such commerce.

Consequently, the question I return to you, Jan, is whether government should be taxing and regulating the hell out of the industries and consumers in these examples, whether it should leave them alone, or whether it should subsidize them.

==============

Despite the foregoing, I am uncertain that we are headed to a state as driven by consumers as we have been. I am unsure that we will ever see 5% unemployment again. I am uncertain that the standard of living to which we have so recently become accustomed in America can be maintained.

I am convinced that expanding government is not the answer to a restoration of our economy. In fact, the federal debt now accumulated will be a drag on America’s economy long after you and I are gone. The answers to restoring our economy lie in reducing government, balancing our budget, and paying down our debt, all rather sooner than later, in my view.

A more sustainable economy would do us all good, in my humble opinion. This forms in part my motivation to answer you as I did by the examples above.

I am disgusted by this materialistic argument about the ‘loss’ of the middle class, the envy of the rich, and government’s responsibility to make us economically equal by making us all equally miserable.

You may not realize this, but jobs are being created in the private sector as we write. Jobs are being lost in the public sector as we write. This is good news.

Jobs in the private sector aren’t being created fast enough, true. However, unlike Steve’s outlook, I am convinced that it is not government responsibility to create jobs, especially in the public sector, to force our economic recovery.

Our economic recovery will arrive in spite of government, and not because of government. Our economic recovery will arrive in the private sector and not the public sector.

The fact is the creeping economic shrinkage will get to those who haven't felt the effect, so it isn't their problem until, as you say, it is. It will be, as few can escape the systemic slide into 3rd world standards.
The problem is tax cuts will do little for the remaining middle class, as they're already leveraged to the hilt and beyond. Tax cuts to "keep jobs here" are probably pointless, as the problem is trade policy. It would have to be a negative tax -- funding jobs beyond what little savings you get from tax cuts as opposed to cheap overseas labor.
There is no incentive for the "private sector" to "create jobs," so there will not be enough jobs created. Created for whom, anyway? Surely not the over-leveraged, underemployed and rapidly disappearing consumer base.

I'll skip, for now, my usual ridicule of Chris' usual comments.
I can't avoid the laughter, though.
Sic 'em, Captain Platitude!

@UncleChri

I appreciate your attempt but it does not solve the problem. The distaste for bad government seems to be totally unbalanced by a neglect for distaste for bad business. I have no doubt that the neglect for good in both business and government is a major problem. But government, theoretically at least, is the overseeing of the economy for the benefit of the nation as a whole.

At the present time many powerful businesses are doing rather well by investing in financial operations that have nothing to do with production for the market. They are making money out of money, not paying wages that will encourage the growth of demand. Technological production through information technology and the use of automated machinery has reduced labor costs tremendously for the producers but machinery does not buy the efforts of production. At the moment there are approximately five applicants for each job opening and the point of industry for a nation is not to increase the monetary wealth of the producers but to see to it that the citizens can provide for themselves. The present economy is inexorably failing to do that since the relentless motivations to decrease labor costs may seem to benefit the manufacturers but it inevitably destroys the market's capability to provide demand. This is so openly obvious I wonder why it seems not to be understood. Current business practices have been so successful in defeating labor in its attempt to acquire a sustainable income that it is destroying the whole system. Innovation, obviously from the observed consequences of the destruction of labor's ability to strive for a decent income, is no answer.

Jan, re: "Current business practices have been so successful in defeating labor in its attempt to acquire a sustainable income that it is destroying the whole system. "

Pardon me for saying, how simple, and even profound, not meaning to embarrass you. In the first instance, we need to acknowledge reality, and then go from there. A pendulum has swung into a new La-La Land, a lookingglass through we perceive ourselves to be powerless. That is an illusion, although there are many who would argue this point.

Paul, I appreciate your comment and understand what you mean. Certainly there is no direct help in my proposal for the remaining middle class. Other measures, an Elizabeth Warren approach to the too-big-to-acknowledge-reality banks and their impossible strategy of losing every scrap of paper submitted for mortgage relief. Civil penalties and reformed practices; these, too, wouldn't save the middle class but they would serve the most basic interests of justice in the interim.

Thanks for trying, but I suspect you proposals -- and those of others -- are too little too late. I've come to the conclusion we have gone to far down the rabbit hole of Voodoo Economics -- a travesty and tragedy some are still pushing.

If you want to see America's future, look at Mexico. That goes double for the greedy bastards who think money can protect them from the evil of a two-tiered society of those who have too much and those who have nothing. One day soon they will discover they have become targets, not role models. And when that day comes they will learn that they -- and their children -- will pay a dear price for destroying this once civilized society.

Steve, I fully agree about a national infrastructure project, or series of them. From the basics like roads, bridges and sewage systems, to electrical grids, to investments in green technologies; there is no end of them. I disagreed with schemes to get companies to hire more.

Basically, I'd stick with a capitalist system but one that is better regulated in terms of environmental protections and whatever is necessary to better control the high-wire/public safety net that the financial sector enjoys. And a much more highly progressive tax system.

We're currently in a state where the private sector isn't creating many new jobs. The positive stats that one of your commenters sites is a gross figure. It doesn't take account of the number of long term unemployed folks who literally drop off the charts. I don't see this as indicative of some permanent shift; rather, an unproductive stasis from which the economy will eventually emerge. But until it does, by all means an ambitious infrastructure program.

@ Jan

Trust me, what you desire cannot be corrected by government. . . .

Let me leave you with two thoughts, although I doubt you will find them much comfort, since you apparently insist on government regulating the “bad” practices of business.

1. Pretend that workers in China reach a point where they insist on driving BMW’s, earning $65 per hour wages and benefits, and consuming most of the world’s resources. At that point, their labor market becomes far less attractive to American businesses than America’s (currently) high priced labor force.

2. Pretend that illegal immigrants from Mexico cannot fare better in America than they can in their home country. This might be because unemployment remains high here, or because our excess labor force displaces them in jobs, or because wages drop here while prices rise here. At that point, their labor market in Mexico becomes attractive to them and fewer come here, while some of those here illegally return.

Pretend no more. The economic universe is on its way to both destinations.

@UncleChri

You do not seem to comprehend we live in a limited world. There are neither the resources nor the ecologies for the rest of the world to attain the standards of the middle class in the USA in the post WWII world. And it will be decades for wages throughout the world to even approach an American sustainable income. Those good times are gone under the current capitalist system. The curse is the improper use of wealth and no "natural forces" will redistribute that properly. When 10% of the population owns more than 50% of the wealth the only thing that might redistribute the wealth properly is violence and violence is no guarantee of any decent life for anybody as its outcome is totally unpredictable. The world is turning irretrievable vicious (not to advocate that it has not been terribly vicious anyway) but the huge current overpopulation and the monstrous gaps between the haves and the have nots indicates decades if not centuries of horrible miseries and nobody is doing anything decent to stop or even modify it.

my full sympathies, but the middle class would rather drink beers, watch tv and play video games than to learn about or do something about their plight. maybe they deserve to be robbed blind.

Interesting ideas. My family is of the downwardly mobile. My husband has two master's degrees and a PhD and found himself and his coworkers kicked out of a large pharma. At the same time ALL the support staff was fired so they could contract that out privately.

After completely retraining to be an energy auditor, while I teach driving, together we earn a third of our previous income, supporting four children and digging into our retirement.

When Congress is willing to fully participate in the plan and work for the same hourly rate they might build support for the concept. But then, of course, at that rate, nobody can afford to buy what they produce so how does that help the demand side?

Comments like yours, Megwc, keep it real. But I suppose we could find Libertarian apologists who could explain away your experience as well. Who ya gonna believe, ersatz economic theory or your lyin' eyes?

Frank, that must be it!

I think you have a really good idea here. Now how do you get this to Obama ?

I had so many comments about this post that -after six pages - decided to post my comments on my blog instead of posting it here. If you disapprove, Steve, please remove this comment.

Giving employers a break on matching funds for employee contributions to SSI, Unemployment and Medicare penalizes the employee because their accounts would be light by that much, and because the rest of us have to pick up the tab....this shifts the burden from the employers to the working class: bad idea.

My studies of tax rates and employment indicate that tax hikes are marginally more effective at producing job growth, although my summary conclusion has been that tax policy is more of an effect than a cause of employment growth or shrinkage.

That said, a major increase in the maximum effective tax rate is not just mandatory, it is timely. There's a historical pattern of tax cuts and tax hikes and, on the basis of the historical record, we're due for a tax increase.

People who talk about class warfare have probably never been there. I have, literally, and it (a) sucks and (b) is ineffective. What does work, as the Tea Party has amply demonstrated is to vote tax cutters out of office and vote tax raisers in.

WE NEED TO TARGET OUR ENEMIES, MOVE "LIBERAL" VOTERS INTO THEIR DISTRICTS AND VOTE OUR ENEMIES OUT OF OFFICE. I MEAN THAT LITERALLY. AT THE SAME TIME, WE HAVE TO IDENTIFY OUR WEAKER ALLIES AND MOVE VOTERS INTO THEIR DISTRICTS TO HELP THEM WIN RE-ELECTION. THIS IS A SERIOUS PROPOSAL. I LIVE IN A SAFE DISTRICT. I WOULD MOVE TEMPORARILY TO ANY DISTRICT WHERE MY VOTE WAS NEEDED. ALL IT TAKES IS MONEY AND THAT'S MONEY BETTER SPENT THAT MONEY SPENT ON ADVERTISING CAMPAIGNS. IF YOU LIVE IN A DISTRICT WHERE YOU NEED VOTES TO SHIFT THE BALANCE OF POWER, FIND PEOPLE WHO WOULD BE WILLING TO “MOVE IN” WITH YOU, GET THEM REGISTERED AND MAKE SURE THEY GET AN ABSENTEE BALLOT. IT DOESN’T MATTER WHERE YOU VOTE, AS LONG AS YOU ONLY VOTE ONCE.

These are all short term solutions. The long term solution is a complete reorganization of this industrial civilization, involving decentralization, diversification, and re-distribution of both the means of production and the patterns of consumption.

If it isn't made in America, don't buy it. If you have to buy foreign goods, buy foreign goods made by foreign corporations rather than foreign goods made by American corporations overseas. Punish them for their perfidy.

Stop paying your credit card bills. Stop paying your mortgage stipends. Stop paying for everything you don't absolutely need. Move from the credit economy to the cash economy. Bankrupt the banks. They will get the message.

Oh, hell. Stop paying your taxes. Increase your withholdings to the max and then refuse to pay. If we all do it, the government will get the message. I believe I just committed a felony. Sue me. If we all do it, what can they do about it?

Okay, it’s crazy to refuse to pay taxes at the same time you are asking for major increases in the tax rate. Crazy like a fox. The rich use loopholes, but there aren’t as many of them as there are of the poor….the rest of us. If we all resist this unfair tax system, a redress of our grievance becomes eventually inevitable. Some of us will go to jail. Three meals a day. A bed at night. Free medical care. Doesn’t sound that bad any more.

I could go on and on....as you well know...but if you want to read the rest go to my post and make fun of me there.

http://open.salon.com/blog/alan_milner/2011/08/26/re_sterve_klingamans_great_post

A crisis of character, yes, but not just for the boardroom. What does it say that the middle class is complacent that it accepts its demise? What does it say of the middle class that it is so uneducated that it prides itself on electing officials who continue this paralysis? What does it say other than we are lazy and lacking the determination to fight for our own betterment? The middle class has to take hold of its own destiny, rather than relying on CEOs to finally look upon them with empathy and give them jobs.

What other countries have that we don't have is a manufacturing strategy. While our politicians recite the mantra of free trade and the free market, the Japanese and Chinese and others have have taken over entire industries that used to be done here.

While other countries protected their home markets from imports, we did nothing. Antitrust measures here in the U.S. forced AT&T to sell off the rights to transistors and other technologies. For $25,000 Sony bought the rights to technology that AT&T (through Bell Labs) spent hundreds of millions of dollars developing. The Japs forced other U.S. companies to share their technologies in order to be able to sell in Japanese markets. While U.S. companies were taken to the cleaners, the U.S. government did nothing.

Some of the technologies and industries that we lost were actually helped into existence by the U.S. government. Today's conservatives extoll the virtues of private business. For example, in a comment on this post UncleChri writes "It’s the private sector that’s going to provide jobs. This has always been the case." That may be correct in a trivial sense, but it utterly ignores the critical role that government has played.

After the war the GI Bill made high education possible for millions of veterans, who then went to work in companies all over America. The government made low interest mortgage loans available to veterans, thus stimulating the construction industry. The government built the interstate highway system, again stimulating construction. The government provided billions of dollars for research and development, in military, aerospace, and many other areas. A recent book by economist Clyde Prestowitz notes that during the 50s and into the 60s over half of IBM's research and development was paid for by the government. Sales of IBM equipment then assisted the rise of Intel and Microsoft and many other companies.

But today we're stuck with people such as UncleChri, who wants a "smaller, less-intrusive government," not understanding the role that government has played in stimulating the creation and growth of the private businesses whose virtues he extolls.

And now today we are in a situation in which not just companies, but entire industries have disappeared and are disappearing. A recent article in Forbes Magagine, "Why Amazon Cant Make A Kindle in the U.S.A.," shows just how far we have fallen:

------------------------
"The U.S. has lost or is on the verge of losing its ability to develop and manufacture a slew of high-tech products. Amazon’s Kindle 2 couldn’t be made in the U.S., even if Amazon wanted to:

• The flex circuit connectors are made in China because the US supplier base migrated to Asia.

• The electrophoretic display is made in Taiwan because the expertise developed from producting flat-panel LCDs migrated to Asia with semiconductor manufacturing.

• The highly polished injection-molded case is made in China because the U.S. supplier base eroded as the manufacture of toys, consumer electronics and computers migrated to China.

• The wireless card is made in South Korea because that country became a center for making mobile phone components and handsets.

• The controller board is made in China because U.S. companies long ago transferred manufacture of printed circuit boards to Asia.

• The Lithium polymer battery is made in China because battery development and manufacturing migrated to China along with the development and manufacture of consumer electronics and notebook computers."
-------------------------

The long term solution, if there even is one at this point, is not "smaller government" nor is it government make-work jobs. It is government, working in concert with the private sector, to come up with a comprehensive manufacturing strategy that will support our own industries and economy, thus leading to the creating of the jobs that everyone wants. The "tea party" would probably denounce this as "socialism." But if we don't do this, then I think there really is no hope.

Mishima is making more sense to me than almost anyone here. I remember very well what happened in the late seventies/early eighties when US industry tried to compete with a combination of Japanese industry and Japanese government. We lost, among other things, our television set industry, not to being outcompeted but essentially to being mugged without our government even understanding that it should react. A coordinated combination of dumping and Japanese internal protectionism eliminated American margins and prevented the sort of retaliation that could have saved those companies.

Steve,
There's one part of your proposal that troubles me. We all know that companies hit with this are going to look for a loophole. Here's the one I see: If an American company spins off a division as an independent, now foreign company, that new company can not by definition be classified as an American company exporting jobs so what we've accomplished is not only to export labor but to export its management and some of its profits. I'd want a way to address this before I'd support this as a solution, even though I absolutely think you're on the right track.

What I really don't understand about what's currently happening is that it looks to me like the American business community is essentially committing slow suicide. Nothing about this makes sense. Their profits are dependent on people with disposable incomes, primarily Americans, and they're systematically dismantling their customer base. Some will say: "Foreign consumers will take up the slack." No, they won't, because their jobs are partially dependent on exports to us. Why exactly does anyone think the Chinese are so willing to lend us money? To keep the doors of their own factories open, of course. Yes, they have consumers who are growing wealthier, but don't discount the extent to which their incomes are dependent on exports to us.

As Mishima says, government has its uses. Its primary use isn't in hiring people per se, it's in creating and maintaining a good physical environment for businesses to operate in and to structure incentives to maximize our long-term financial health. That means raising taxes on the wealthiest to narrow our deficits, penalizing companies financially for exporting jobs so it becomes cheaper to keep them here, supporting industries that are likely to provide a lot of higher paying jobs (and not industries that have influence because of the money they now have and the jobs they used to create) and industries that involve making us safer and less dependent on foreign and fossil fuel energy.

I am a believer in capitalism but highly regulated capitalism. The idea that laissez-faire capitalism is the most efficient system possible is a myth (a subject I've blogged about).

Bravo! I hope this stays on the cover for a month.

Lezlie

Anyone who thinks we are going to get manufacturing jobs back without lowering our wages to a level equal to or lower than the wages paid in third world countries—is living in a fantasy land. It ain’t gonna happen. If a commercial enterprise can get goods made cheaper by paying third world labor costs…they are going to do it.

Americans simply cannot live on those kinds of wages.

Therefore we will never get those jobs back.

The problem we ought be working on is not how do we get the jobs back—or how do we create other decent paying jobs…

…but rather, How do we function if WE CANNOT GET THE JOBS BACK AND CANNOT CREATE OTHER ONES?

How do we insure that everyone have sufficient for their needs (and some of their wants)—without the need for people to hold jobs to earn the money to get it?

Yup...way outside the box. But it is the reality.

The single largest source of new jobs, as I write in my new book, is in retail work -- and they're crappy, low-paid, no benefits jobs. I met a man yesterday, a reader who liked my work, who's part-time in a furniture store and wants more hours.

But part-time work, even at lousy wages -- $7-10/hr -- is now the norm and a FT job, even a lousy one, increasingly elusive. Walmart workers need food stamps (!) to live, even on FT wages there, while their company has spent millions fighting an OSHA fine of $7,000 -- after a worker was trampled to death by crazed shoppers. Nice values. I wouldn't buy from them if it was my last dime in this world.

There are too many problems at once:

1) skills -- too few Americans, of any age, with the requisite technical skills to even fill decently-paid available jobs; 2) endless insistence by Wall Street on profits, so corporations sit on bags of cash and record profits but refuse to hire, which they are fully funded to do, but don't feel like it -- and there is no incentive, anywhere, to push them into so doing; 3) a nation mesmerized by the impossible fantasy that if they just keep showing up, docile and polite, they'll be fine.

I can't imagine the day any Americans get angry enough with this BS to protest as they have in Greece or elsewhere. They're too scared or too invested in the hopeless hope they, too, will get rich(er) if they just keep playing nice with the plutocracy now running the place.

Caitlin,

Force them to hire people to do what? Nothing?

I hired a driver and part-time bookkeeper a few months ago. So
you would force me to hire another driver to do what? To drive what? To haul what? Just like the businesses sitting on cash neither one of us need work done so we are not hiring.

Next, how do you think you are going to make some company hire somebody? Tell me how you write that law? It's a great, unrealistic, talking point. It goes right with the question nobody here will answer like tell me the percentage equals the "fair
share" that the top 3% is.

I don't know that things are so bad. Yes, there is more dispersion in the income distribution, but maybe we had too great expectations too. There are no guarantees in life, and I wouldn't count out the unemployed, some of whom have better situations than others as to getting back in. That is where the future is,is letting people back in, and that is partly attitude, in the end, and it is in their interest.

you're pretty clear about what needs to be done, and may even be right. but even if you are right, you never talk about what needs to change in the engine room.

america is what it is because of the constitution, and the culture it has fostered. if you asked americans what they think about going to war in iraq, they might have said 'no!' but no one asked them. if asked, 'should we remove tariff barriers that make manufacturing in america possible?' they might say 'no!' but no one asked them.

to whom are you addressing your writing? do you think congress reads you, nods their collective head, and thinks 'i will be guided by steve in future?'

or will they be guided by the person who drops half a mil in their re-election fund.

the voters in america stand in relation to their representatives as the subjects of a monarchy to their local gentry: supplicants to an upper class, begging for 'more, please.' you should have figured out by now, that you and the other 230 million voters have about as much input to the management of the nation as cattle do, to the management of a ranch.

there is a joke, perhaps known to many, about the drunk who searched for his fallen car keys under the street light, even though he knew they fell out of his pocket in the adjoining dark alley. "because the light was better."

americans never talk about the fundamental cause of their troubles, because they suspect it is beyond their ability to change. quite right, leave it to your betters.

The quality of the comments seems to be improving. Everybody is getting nicely pissed off and the analysis of the USA committing economic suicide is getting sharper. Lots of angry energy being generated. Frank Apiser is flailing around admitting total failure more or less admitting a total lack of ideas which at least makes a nice opening for all that angry energy to do some real work. It's a good beginning.

Frank writes: "Anyone who thinks we are going to get manufacturing jobs back without lowering our wages to a level equal to or lower than the wages paid in third world countries—is living in a fantasy land."

Labor cost is only one of many costs, and for a company to focus only that one cost may be both short-sighted and narrow-minded. There is a business cost to losing an entire industry overseas, including higher shipping costs, and longer lead time requiring higher inventories here. More importantly, if a war or natural disaster interrupts the flow of parts from overseas, entire production lines can be shut down, and critical materials of all kinds can become unavailable. How much does it cost when you have to shut down an entire factory because the critical widget you outsourced is under fifteen feet of flood water in Indonesia?

In the July 2011 article "How America Could Collapse," Matt Stoller describes the risk to the supply chain:

"What has happened as a result [of overseas outsourcing] is that much of the production for critical products and services that make our economy run is constructed by a patchwork global network of suppliers all over the world in unstable regions, over which we have very little control. An accident or political problem in any number of countries may deny us not just iPhones but food, medicine or critical machinery. . . .

"[Barry] Lynn has continued to study industrial supply shocks and says, “What I have found most interesting recently is the apparent role supply chain shocks played in triggering a synchronized slowdown of industrial economies in April—production down (in USA, China, Europe, Southeast Asia), jobs down, demand down, GDP numbers down—due almost entirely to the loss of a single factory that makes microcontroller chips for cars.”

"Today, the problem manifests as shortages of videotape or auto parts, but the global supply chain is so tangled and fragile that next time it could be electronics, weaponry, or even food or medicine. As Lynn noted in an interview with Dylan Ratigan, China controls 100 percent of the national supply of ascorbic acid, which is a basic food preservative. Leading oncologists are already warning that we are experiencing severe shortages of generic yet pivotal cancer drugs, because there’s no incentive for corporations to make them."

With all respect to the blog author and those who have commented on this post, I can only hope that we can get beyond this whole thing of labor costs and who pays what taxes and the size of government. While these are important issues in themselves, the loss of the manufacturing base will not be fixed by taxes, lower labor costs, or smaller government. We need to address the larger issue of trade policies, tariffs, foreign manipulation of currency values, and the development of a national manufacturing strategy.

One of the factors which seems not to be particularly noted is that corporations are no longer national entities. They are artificial creatures designed for only one central purpose and that is to enrich their owners and increase the power of their controllers. Where that is congruent to general beneficence to humanity that is fine but there is nothing in their central design that demands that and practice has fully demonstrated that corporations have become independent of their national bases and if they can get away with it, will seek profits, legal or illegal, and with no concern for the consequences to humanity or the environment in general. It is not a matter of being evil, it is a matter that they were not designed for human responsibilities and the people who comprise the working elements of corporations, or any functioning business, have their priorities twisted to the nature of the organization and they can no longer be considered responsible to human concerns. It is evident that the monetary wealth of these artificial creatures has penetrated all phases of governments and the governments that were conceived as responsible to the needs of the people are now concerned with corporate wealth. People like Mr. Apiser who decry government control are merely shills for the corporations who want free access to all real wealth with no concern for the consequences. It seems unlikely these Frankenstein monsters can be stopped or even deterred and their mindless end is to destroy the world.

Frightening and maddening. You done pushed some buttons here. Thank you.

Thanks for a well presented argument. Perhaps I missed the step where lawmakers cease to be bought by Wall Street bankers making it impossible to get laws enacted that protect the middle class. Short of action in the streets, I can't see how this will happen.

A really good post, I really liked your proposals to keep jobs in the US and attract jobs back to the US. It is a constant surprise to me that more mainstream pundits don't propose ways to keep jobs in the US by using economic coercion. It seems that the pundits and general populace believe that if you use progressive measures to keep jobs in the US somehow that would be class warfare. I lived in Europe for almost 6 years and in Mexico for probably 20 and so I've seen how socialism works and I've seen how we society based in inequity works. Many Americans still believe that it can't happen here, what is happening in the Third World but it is happening now ,the race to the bottom. It will not stop until enough people listen to proposals such as yours.

I stay away from posts like this for a reason- they are usually bull****, but this is wonderful, and it is amazing how well you know economic activity and trends. Then I read your bio...so glad you did this. Beautifully written, and it's worth a read for everyone.

Jan Sand wrote:

People like Mr. Apiser who decry government control are merely shills for the corporations who want free access to all real wealth with no concern for the consequences. It seems unlikely these Frankenstein monsters can be stopped or even deterred and their mindless end is to destroy the world.

People like Jan Sand, who have to resort to that “Mr. Apiser” childishness…and who apparently are unable to comprehend English…contribute mightily to the problem.

Anyone who thinks I am against government controls really ought to take a course in understanding the language. If anything, I am one of the most vocal people arguing for more and more governmental control of this idiotic unfettered capitalism which is killing our country. I want to see capitalism brought under some kind of control so that it cannot continue to elect profit for the corporation at the expense of labor.

What the fuck are you thinking, Sand? How could you possibly think I am someone “decrying” governmental controls? Or are you thinking at all?

And really…don’t you think that name distortion bullshit should be left in the playground where the other little kids who use that childish tactic normally stop to play?

Mr. Apisa, that name distortion was an honest mistake and a thoroughly apologize as it probably was my unconscious in an underhanded effort. I cannot claim independence from my unconscious but I was not aware of the misspelling. I am truly sorry.
And I am also delighted to also have discovered we do not differ on government regulation of the outrageous behavior of the financial and corporate sectors of the US economy. For that I deserve your castigation for my misunderstanding.
I leaped to those misinterpretations from your constant proposal that Obama is acting to the best of his ability to counteract the insanities of the current deterioration of policies concerning economics, military actions, civil liberties, and a few other areas. My impression is that he is intelligent enough to know better and has now and has previously other better options but chose to act the way he does from motives that concern me deeply and I find unjustifiable.
If I am wrong here I will be delighted to hear you say so.

Jan…I apologize to you for blowing up the way I did. I have it on good authority that you are a decent guy…fun to meet…and I’m sorry I missed your New York visit. We’ve got a hurricane bearing down on us—and I will use anxiety about that as an excuse for my out-of-control behavior.

To make my position on the capitalism issue clear:

I tend to feel that capitalism (particularly the free enterprise element) is the best economic engine for sustained growth. But capitalism definitely has to be contained; when allowed to go unfettered, it becomes something abusive and detrimental to a functioning society. Unfettered capitalism almost always ends up treating the labor element the way medieval European monarchies treated serfs. Add to that the impact of our geometrically progressing technological growth—and we are ending up with humans being treated as slaves.

We cannot tolerate that! No society can!

The government (which is really just an extension of us) HAS TO BE the instrument of control. The corporations are NEVER going to exercise control—the essence of their being is profit; the focus of their efforts will always be to reduce costs in order to maximize profits.

I’ve had lots of people disagree with me on this, but I still consider the labor element to be the easiest to abuse—the easiest for corporations to manipulate in the interests of increasing profits.

As for Obama…I honestly see no contradiction in any of that with my support for him…or to be even more exact, my calls to temper castigation of Obama in favor of being more understanding of the difficulties he faces because of the strong conservatives element obstructing all progressive initiatives in America…not just Obama’s.

Yeah, I am giving him more of the benefit of the doubt than some think justified, but that is the way I work. I always want to think the best of people. I think he is an intelligent, reasonable, pragmatic individual doing many things I wish were otherwise—but I am willing to give him the benefit of the doubt for why things have to be done that way right now.

I honestly cannot think of anyone I think could be getting appreciably more out of this toxic political environment polluting America right now than Obama is.

But on the question of government exerting controls over unbridled capitalism, Jan….we are of one mind. Be assured of that.

@Frank Apisa

I appreciate your accepting my apology. My misspelling and misunderstandings were rather gross and surely unacceptable from your point of view. I do not normally indulge in emotional antics as they are unproductive. You must be aware of my good relationship with Markinjapan and I concur with pretty much all of his points of view but I have no comprehension of the fierce negativity with which he relates to you. I see no point in that type of attack since it is apparent it accomplishes nothing.

And I agree that Obama must have a pretty good intellect and comprehension of the promises he made and failed to keep and I cannot accept he had no other alternatives. Perhaps I misread him totally but he ends up on the wrong side of all that seems positive for a man in his position that I see no way other than to feel that what he has done is what he wanted done and I find that, as powerless as many claim him to be, he is not all that totally absent of other possibilities. His consistency in back tracking on all he was elected for is appalling.
Thanks again for letting me off the hook.

Glad we are on the same page, Jan.

By the way...just a few minutes ago I saw a posting by WendyO...showing pix of you. You look great.

When she first wrote, I thought she was saying that the meet was in New York City...which was the reason for my remark about the New York visit. But the pix obviously are of somewhere in Europe (Helsinki, I'm guessing)...and now I am even more sorry I missed the meet. I'd love to see that beautiful city!

Hey Steve...thanks for being tolerant of this digression. I hope that the majority of the talk has been pertinent to the fine discussion you started.

Got three kids (parents) working from home. No need to get out on the highway. Bottom line is that we need more personal initiative and keep the government out of it. No what happens after storms? People hire contractors to re-build. No what happens when old folks need to personal care? They hire people to take care of them. Perhaps we all need to look in the mirror ...and re-build our self-image. Stop looking for the illusive job and create one. Think of yourself as an entrepreneur. Read Malcom Gladwell's book the outliers. This is the USA we do not have a caste system. Seek opportunity in different ways. I went from management to manufacturing. Didn't like the job, but preferred it to unemployment. Never think of myself as middle class. I think of myself as a writer. Not negating the plight. We need jobs. But let's not lean on DC to do it for us.

Most people want jobs because that is the only source they have to get money. No matter how much work needs to get done - and there is a hell of a lot of it not being done - if people do not have the money to pay for it getting done it does not get done. Whether you like it or not, the government has a good deal to do with money being obtained for people who need to pay people to do the work. The flow of money is, these days, into sectors that do not pay people to do work but buy and sell investments of one kind or another to make profits. A business does not hire people unless they can sell what they produce and if people do not have money they cannot buy anything. The problem is that money is not going into the pockets of those who will create jobs so the whole system is grinding to a stop. Nobody is going to work for nothing.

Moving manufacturing back to this country will require some combination of tariffs, a lowered value for the dollar or a differential taxation rate on corporations that manufacture overseas rather than in this country.
A weak dollar will make it more difficult for consumers to buy foreign goods, and for manufacturers to buy raw goods abroad. A rapid devaluation would probably mean a selling off of treasuries by foreign speculators. The good news is that printing more money is simpler to accomplish than getting tariffs instituted, allowing for all of the ways that foreign companies and governments can retaliate and deciding who has a tariff and who doesn't. Any company using foreign labor and services should have tariffs on the importation of its products.
The whole issue of corporate taxes is muddied by the fact that companies have their real headquarters here but are registered in Switzerland or some other country with a low corporate tax rate. Any company that is registered abroad should also be penalized in the importation process.
Thinking about the Wack AMole game of economics makes my head want to explode, but there are accomplished economists on the left/liberal/progressive side who must know how this can be accomplished, taking into account all of the holes the mole can pop back up in.

Very well thought out, and very well written. My own belief is that the tax code should be designed to generate the revenue necessary to run the government, not as a social engineering program. But I'm comfortably in the minority on that point, so I'm not shocked or disturbed in the least that we're pretty far apart on that issue.

I seem to detect a simmering anger at the Wall Street class, however. This brings to mind a statistic that I thought was missing from the piece. What percentage of American workers are employed at companies that are not publicly traded? I believe it's a high number, although I cannot verify that belief.

I'd be curious if somebody knows. It seems that before we amend the tax code to punish the Wall Streeters, we should have a clear vision of what percentage of the workforce they actually effect - aside from their 401Ks, of course.

It's ot a matter of punishing Wall Street, it's a matter of preventing Wall Street from punishing the rest of the country.

Typo problem again.

It's not a matter of punishing Wall Street, it's a matter of preventing Wall Street from punishing the rest of the country.

One point that has not been raised or even vaguely considered is the fantastic concept that the large corporate conglomerates are actively destroying not only the economic and financial basis of the USA but by their general action to move all dynamic sensible activity outside the country they are seriously if not fatally injuring the basic social amd political existence of the nation. Could this possible be classified under treason and treated as such? Since the Supreme Court has granted the rights of persons to corporations, then as persons they must be held accountable to their loyalty to the country rather than to their stockholders.

Wall Street and "Waiting for my ship to come in." Ships were the mutual funds of yore. People invested their money with a company who outfitted ships that traveled around the world to bring goods back to the US. Things we didn't have here. Sometimes the ship sank, sometimes it came back with less than expected. Some made profits, others didn't. The Chinese and the Japanese made pottery which was called export. Visit the Maritime Museum in Salem MA for more about this. I hope you can see where this is going. Rhetoric doesn't improve the economy...it is the risk takers and the "gamblers" who stake their fortunes on enterprise and ventures. It is the Mom and Pop who open a restaurant or neighborhood grocery store. It is those guys along with Bill Gates and Steve Jobs types who energize the economy. It is the dreamers who invent products like velcros and heart catheters and those who invest in those companies that make a difference. Trade is the engine which drives the economy. New jobs depend on new enterprise.

And new enterprise depends upon gaining capital to invest in new enterprise which those with money are not doing.

ande bliss - you are somewhat right about dreamers etc., but they do so based on reality of sort.......take the whole of hi-tech that has sprung the Gates, the Jobs, the Zuckenberg to name but a few.....i seem to recall that the internet and the microelectronics impulses to the fellows above were the results of large scale government programs in the defense and space programs....kudos to them to realize the potential of it all, but............you just don't wave a magic wand in a garage et voilà.....

saluti

Ah yes Roberto, I am friendly with the catheter inventor I spoke of and one of those garage types lived up the street. It takes constant work...no vacations and dedication to turn dreams in deals. It is your whole life's focus.... Lotsa time and lotsa money. And yes I know that government provides dollars for research and start ups. Been around this world for a while. But you must admit that there had to be some dreamers behind the oak doors who saw the potential in the space program. There are good programs which benefit and others that are so tax heavy and restrictive that they squelch. It is indeed a conundrum. Problem is, no one has an answer. We just talk and talk. This is a new world, and a new economy. We are totally dependent on each other. It is like a tsunami which starts because of an earth quake on the other side of the ocean. Pretty soon we are swallowed up in the resulting wave. Back to the middle class. If we depend on the government to take care of us, we will disappear. And that would be the worst possible scenario for America. Without a doubt we need the inspiration to create and not take. It will take time and it will hurt. But it is the only way out. Otherwise we will be nursing forever and sitting on Mom's lap for the rest of our lives.

Ande Bliss…

…an observation that may impact on your thesis here, if I may:

You wrote: Back to the middle class. If we depend on the government to take care of us, we will disappear.

Perceptions, Ande, are very important.

You see, in my opinion (I’m willing to defend this if you deem it necessary)…

…WE are the government.

Yeah, WE the people are not only the governed…WE are the governors—the government.

So allow me to write your short paragraph using that perspective:

Back to the middle class. If we depend on us to take care of us, we will disappear.

Does that make sense to you?

It certainly doesn’t to me.

The reason WE have a government—which is to say, the reason WE ELECT PEOPLE TO LEAD THE WAY TO WHAT WE WANT—is “to take care of us” in a fashion. WE recognize that living in large communities requires certain considerations and modifications that can only be effected by what WE refer to as “government.”

It is not the enemy, as some suggest. It is merely US working in concert toward the greater good of society. WE have to take care of ourselves. WE, acting as individuals….AND WE as the government acting collectively.

Why are you so convinced we are the government? If so, why do politicians need millions upon millions of dollars to be in position to serve us? Are you so positive they are serving us? Or are they serving the millions upon millions of dollars?

Oh Frank, We the people is wonderful. It is the most beautiful thought and the foundation of our Union. If only it were true and we the people did govern. However, I might not agree with your governing and I might like yours. That is why we elect representatives We the people vote for the candidate that promises to do their very best to represent our agenda. However, and we all know what happens once they get to DC ... Compromise, compromise compromise. To say that we are the government is a stretch. We the people elect governors. We the people, can write, e-mail and protest. But we do not govern. We can lobby, and we can demand, but we do not govern. I dislike pulling out the done that card, but been there. Walked down the marble halls knocking on doors for good causes. But my good cause, may not have been your good cause. Whoops, stalemate. We do have the best form of government and we do live in the land of opportunity but we do not govern. Unless that is, if we run for office. And win. And.........

Have to stop now. Pine trees in my yard are doing the Samba. And as I said in another post...man and mortar are not match for MOTHER. I usually write essays and poetry. This is exhausting.

Why are you so convinced we are the government? If so, why do politicians need millions upon millions of dollars to be in position to serve us? Are you so positive they are serving us? Or are they serving the millions upon millions of dollars?
I didn’t say they were “serving us”, Jan. I merely called attention to the fact that “the government” is merely us…picked, by whatever fashion, from US. If we choose to pick our government by choosing from the people able to amass millions upon millions of dollars…then that is what we do.

We could do otherwise. If we are not doing otherwise, it is because WE are not doing it.

Jan, we get our politicians…our leaders…from among our general population. Our general population is more concerned with self than with the greater good. Our general population is subject to the oft mentioned, “Power tends to corrupt.” We can all sit out here dreaming dreams of great and noble intentions…but given the power, would the most altruistic among us actually serve the greater good before the good of self? And even if some would answer that in the affirmative (which probably would not truly be the case)…would the most altruistic among us actually serve the greater good if it might harm personal good even a bit?

In my opinion, Jan, the government is not the problem. WE are the problem.

By the way, if you are wondering, I extend that to myself also. I AM my own worst enemy. Nobody can do as much damage to me as I can myself. I suspect that is the way it is with everyone…and I suspect that is the way it is collectively.

Why is it then that the people wh hold the levers of power are overwhelmingly from the wealthy sector? Are you then saying that the population in general (which is not wealthy) do not see themselves as fit to rule? Or are the people in general too stupid to rule and democracy is an idealist's farce? The alternatives, as Churchill noted, are even less attractive.
Because it is quite obvious the country is not being managed well.

But Jan…listen to what Ande just wrote:

Oh Frank, We the people is wonderful. It is the most beautiful thought and the foundation of our Union. If only it were true and we the people did govern. However, I might not agree with your governing and I might like yours. That is why we elect representatives We the people vote for the candidate that promises to do their very best to represent our agenda. However, and we all know what happens once they get to DC ... Compromise, compromise compromise.

We all do have different ideas of what we want done!

The finest, most effective legislator may do things that one person thinks is exactly what must be done…while others may think it is exactly the wrong thing. We all want OUR way to prevail.

WE ARE THE PROBLEM!

Ande laments “compromise, compromise, compromise.”

Well…that is exactly what I want my elected representatives to do…to compromise, compromise, compromise. I want them to listen to the other side and acknowledge that side also. Otherwise nothing gets done. That is how things get done in a democracy and a republic. (Democracy and Republics may not be the best form of government…and may well not even be a good form of government.)

We have got to get out of the habit of thinking we can have PERFECT governance…because the only way we will ever have that is to have a dictatorship. That way…anything the dictator wants…IS, by definition, THE PERFECT THING.

Rome, when it was at its most powerful did exactly that. The elected an individual who would be dictator. No bullshit; arguments…or anything else.

I’ve answered your direct question several times recently: I do not think WE are up to the job of running an efficient government. I am seriously beginning to question whether the experiment in democracy and freedom and republicanism…actually can work. MAYBE it just cannot! MAYBE it just leads to anarchy. That seems to be what is happening.

If you, Jan, could become president of the United States tomorrow…and if you kept faith with all the things you think are needed to make America a kinder, fairer, more decent place in which to live…and if you strove to enact all the legislation you felt would lead to those things…

…you do realize that about half the country would condemn you as a lunatic…a person out to destroy our nation, do you not?

That is the situation in which we find ourselves now. (Maybe, as it has been called to my attention often, not half---but a significant percentage. Enough to set up roadblocks to enactment of anything not significantly “compromised.”

We are a polarized nation unwilling to see past our own wants.

WE ARE THE PROBLEM…we as “the leaders”…we as “the government”…and WE AS THE PEOPLE.

We are the problem!

Lots of thoughtful, impassioned, and ultimately depressing commentary here. I don't know when or how or how much worse things have to get, but there will be a fork in the road ahead. The choice we as a nation will make will be to work as one or every man for himself, and not just in theory.

Rated.

Damned good article Steve and very well written. I did detect just a slight notion of blame for successful people and holding them responsible for those who have not worked hard to achieve the American dream. And I forgot what the negative term you called Henry Ford but he was one of the greatest men in the history of the United States right there with Thomas Edison and the people that built the Transcontinental Railroad and others who made the United States the dominant financial force on earth.

Ronald Reagan inherited an economy worse than Obama's and he used the opposite approach to provide over 20 years of unequaled prosperity. He thought as I do that government does not create jobs, just unproductive positions that feed on themselves. Rich people create jobs by investing and spending. Oil companies are not two or three rich people at the top; they are millions and millions of stockholders and represented in every retirement fund in America. In effect, taking down the oil companies is taking down the pension fund of teachers, policemen, firemen and yes you and me.

Loved the article and hope to read more from you.

Jim Walker Whitefish, Montana

the sad fact is we (the MC) have done this to ourselves. people can't be bothered to pay attention to the news unless it is coming from the entertainment industrial complex. they can't be bothered with what may be happening to Medicare or the right to unionize or the dismantling of public education or public safety. The GAME'S ON! i work with middle class folks who can go on and on about the Tigers pitching stats or the Lion's draft picks but can't tell you who their state or Federal reps or senators are and how they vote. because the thing that impacts their life the most is the success of their sports team not the reduction of cops and fire fighters or trashing of the school system. sometimes i think H L was right.
"Democracy is the theory that the common people know what they want, and deserve to get it good and hard."
H. L. Mencken

It seems the consensus of the latest comments is that the people of the USA are more or less uninterested in their general welfare and are basically so stupid they cannot act realistically to wrest power from those selfish interests who have totally corrupted the democratic processes so that a small very wealthy majority now owns and controls almost everything. Not only that, but it seems humanity, at least in the USA, is simply not capable of governing itself. This is in direct contrast to other countries (such as Finland where I live) where medical services are much less expensive, affordable and available to all, where labor has a much more powerful voice in government, where literacy is universal, where education up to and including university is free to all who qualify, and a few other basics of community, where the spread between the ultra wealthy and the general population is nowhere near the level of the USA, all of which are totally impossible in the USA which seems to have descended into some kind of lower genetic variation of humanity. This in no way indicates Finland is utopia as there are serious problems to be solved but this seems unattainable in the USA because the people are so confoundedly uncaring and stupid there. May I have doubts?

Geez, I step out for a breath of fresh air and all hell breaks loose. I don't know where to begin so (mostly) I won't. Except to thank you for your impassioned and ...well-reasoned comments. How's that? Seriously, this wasn't even about manufacturing policy, which only has a relatively small part to play in the future economy of the middle class no matter how you cut it. But. I am an impassioned fan of bringing hi-tech manufacturing back & have written a lot about it in other posts.

This has touched a nerve the way I have only touched nerves when writing about guns and Islam. What's that about? Now the plight of the middle class seem to be maybe moving to front and center, where it must be if we are to be honest about how bad its prospects are.

There are a a number of pessimists in the room. I don't consider myself to be one. When times are bad the future always resembles the present, but that doesn't mean that the times aren't bad. They are, deeply so, if you don't have a job.

Things could change for the better gang, they really...oh never mind. I don't want to be beaten to a pulp in my own comments section.

I was only trying to highlight one d0-able thing here and I think everyone more less gets that, even Mishima, who has read a good number of my posts on the economy and made helpful comments in the past, as he does here while nominally disagreeing with me.

If we want to talk about the big question, we do need to ask what slow economic suicide looks like and yes, I think it looks like an economy that doesn't value jobs.

And hey, I am all for using the tax code to "coercive purposes" if a corporate oligarchy can be proven to be leaving American jobs as roadkill on the way to the quarterly EBITA presentation. Personally, I like the image of Roosevelt giving hell to a corporate establishment that had lost touch with the nation that built it and fed it. I have previously argued that that is confrontation that we need to have. I argued it about health care reform in just one instance of, say, 20 blog posts.

The central problem? I think it is the capture of the governmental machine by corporate money in a thousand different ways. Governmental capture. Because of it, the system works best for our "corporate citizens" while our actual citizens are left to their own devices.

There are a couple of lines by Leonard Cohen, a trenchant critic of our little utopia south of Canada that come to mind:

"Everybody knows that the dice are loaded
Everybody rolls with their fingers crossed
Everybody knows that the war is over
Everybody knows the good guys lost
Everybody knows the fight was fixed
The poor stay poor, the rich get rich
That's how it goes
Everybody knows ."

But that doesn't stop me from trying. You still gotta give 'em hell.

What irritates me is the loss of a really neat dream not too long ago where the huge improvement in production in both manufacturing and agriculture would theoretically free the population from spending a huge portion of its life assembling gadgets in an uncomfortable environment or burrowing underground like ants or rats to acquire metals and other resources or sitting in offices trying to sell a superior toothbrush or a corrosive version of soda pop, none of which a sane animal descended from tree living monkeys would do. Whatever happened to the 35 or 20 or 10 hour week where automatic machinery would do all the burrowing or assembly so fast nobody would have to watch it? Who the fuck wants to sweat over dumb problems for most of the day. No doubt there is work that is fun and that's something else but lots of people it is wasted life where people should be skiing or surfing or playing with their kids or perhaps evolving a philosophy of a sane life. The potential is there. What sons-of-bitches want most people to be tortured into crappy lives and why should they succeed?

Jan

I wrote a long essay entitled "Why Are We All Working So Hard?"

The central point was that, by automating with computers, robots, and other machines, we have essentially incorporated billions upon billions of slaves into our work force. Yet humans are expected to work just as hard in order "to earn a living."

The first question is "WHY?"

The second question is, "What would make anyone think it makes sense to pay humans decent wages to do the kind of thing that can be done less expensively and more efficiently by machines?"

We created the machines to lessen the burden on humans. Now that we have succeeded beyond our wildest dreams...we are turning this heaven into a hell!

Steve,

No need to tie yourself in knots figuring out how to grow jobs. One obvious solution for spurring job growth is to scrap the minimum wage. The minimum wage is responsible for keeping many Americans on the sidelines largely because their labor has been priced out of the market. Of course a company seeking a greater profit margin is going to go offshore and pay far less for labor when the government at home mandates that unskilled laborers must be paid a minimum wage. Get rid of the minimum wage and companies will stop sending jobs offshore. I cite American Samoa as an example of the damage the minimum wage can do. Google it.

But before you go off on a "living wage" tangent, one should keep in mind that getting rid of the minimum wage depends on adhering to free market principles across the board, thus reducing the overall cost of living, allowing those who make far less than the current minimum wage much greater purchasing power than they currently enjoy.

And really, in terms of job numbers - perception plays a role. There are jobs out there to be had, but there is a general unwillingness among the 'entitled class' to do certain jobs that many feel are beneath them - thus the flood of illegals who come into the U.S. who continue to be successful at finding work due to their willingness to do things many Americans simply refuse to do.

As far as new taxes go, Steve; your idea brings with it the additional costs associated with oversight and enforcement. Instead of adding another layer of red tape onto an already overloaded tax code, the better solution would be to simplify matters by removing the legislative and regulatory barriers that have caused businesses to retreat for greener pastures.

Of course scrap the minimum wage. As soon as the wage in the USA is the same as that in China industry will flock back to the USA. And at 80 cents an hour the workers will be overcome with all the wealth they have and buy new cars and mountains of luxury goods besides the basic essentials to keep the economy going at a furious rate. Especially if the laws limiting collective bargaining are strengthened to keep the wages from rising.

Jan, Truth is, "sitting in offices trying to sell a superior toothbrush or a corrosive version of soda pop" would be considered by most to be a very good job, especially (ironically) after the vast success of "Mad Men!"

CanLib, (if I may) if you read me often you will know I have a soft spot for Canada. And here you are, a Libertarian, the incarnation of all my pet peeves, and so elegant and restrained in discourse.

Wrong, of course, but elegant. But you and I, a firm adherent of the need for firmly regulated capitalism, will never convince each other of anything.

The course of action you recommend would set off a race to the bottom in the way only unregulated markets can do.

I believe, when things are stuck, in a bit of trial and error. I might support a test of a minimum wage rollback for workers under the age of 18 to allow teens to win back a little market share from workers over 65. Everyone deserves a shot at an entry level job. But beyond that, "thus reducing the overall cost of living" as you say would really be "thus reducing the overall standard of living."

As for your views on entitlement, tell that to your children. "Children, either you will excel in school or you will have to work as field hands." It's just not practical as a scare tactic anymore.

Remember, most undocumented workers do not have perfect fake ID's and employment histories. The decision to hire them in decent paying jobs that Americans would be happy to do--jobs like home building for example--is a business decision made by unregulated businesses that are all part of the race to the bottom.

As to the jobs Americans won't do--migratory farm workers for example--well, unregulated capitalism treats those workers in a disgraceful manner...oh, wait, that IS an area of our economy where the minimum wage is largely a moot point.

Good piece, Steve, people are blind or deaf if they cannot see how this is affecting our society. Look in every direction, it is there. Underemployment is also a huge issue.

Haven't yet had time to read all the (much appreciated, everyone!) ongoing comments but if anyone here wants to join the fray simultaneously at NYT, take a look at the comments on the nomination of Obama's appointment of Krueger to head the Council of Economic Advisers. The traffic at the site is heavy right now and most of the comments (also "so far") are pretty predictable but a couple of the urls so far included might be of interest (to whoever has the stomach for more of all of this right now! And, no, I didn't mean "whomever". Sorry. [Not.])

;-)

Oops, sorry! Was proofing what I'd typed and saw I'd written "appointment" where I should have written "nomination". I think I need a professional proofreader assistant. What's the going minimum wage I'd need to pay??? :-( ;-)

Jan,

Thank you for replying. I think it's fine to make 80 cents an hour if your purchasing power increases to a greater degree than what's currently on offer; but I'm sure we can both agree that wages wouldn't likely fall quite that far, especially if free market principles took over allowing the unmitigated growth of competition and with it the need to retain valued labor.

And to be clear, I have no issue with collective bargaining so long as it does not extend beyond the private sector.

Steve,

I appreciate your reply given that you've written the article and have a multitude of people writing to you. And, CanLib - I like it. :)

Perhaps you're right, we may not convince one another of much - but I'm sure you, like me, enjoy the discussion all the same. Listening to what others are saying is trans-formative, even when I disagree I'm still enriched.

Jumping right in:

My take on a race to the bottom is that that action benefits those of us who find ourselves AT the bottom in today's collusive climate. In my mind, a lesser burden on business translates into lower prices for the consumer who likewise has a much easier time of finding gainful employment. To me, all of that would be indicative of a rise in the standard of living. As I'd alluded to in a previous reply, the wage I earn is less important than what I can buy with it - and in my opinion the price of everything only moves down when competition is allowed an unfettered rise.

Sure, so too would wages fall - but anyone capable of being a valued employee wouldn't make less than the going rate for such coveted labor, and any business unable or unwilling to pay a wage that allowed a valued employee a decent standard of living would find themselves without access to same, and rightly lose market share as their quality of service subsequently deteriorated.

Working as a field hand is not easy, and perhaps downright untenable to many - but I'm sure there are those who find it rewarding. The thing is productive jobs like those in agriculture or heavy industry must be filled, and while it's fine to expect "someone else" to fill that void, the buck has to stop somewhere. I don't advocate scare tactics when it comes to our children, but likewise I don't think it's sustainable to have entire generations rack up debt earning liberal arts degrees only to graduate with a degree that assures them a lifetime spent as a "sandwich artist". It would have been far more practical to send that unfortunate soul to a trade school - teach them how to handle a wrench, drive a forklift, or operate a combine. Scaring isn't what I had in mind, but leveling with our children a bit might be a better approach.

Illegals hired to build homes are brought on because it's easier than dealing with the bureaucratic red tape required in hiring someone who must be paid 'x' by letter of the law, not to mention the added paper work that comes with employing a "legal". It's hard to blame a business owner for wanting to keep costs low, my position is that we remove the red tape and allow everyone to compete for those 'good jobs'.

Migratory workers are mistreated because it's being allowed to happen in the current system of government/corporate collusion; people turn a blind eye. Removing government from the picture would remove policies/subsidies that favor these businesses that hire and abuse their employees.

Opening the agricultural sector to competition would allow laborers choice - the freedom to find work for a business that treats its employees with respect. Its a choice that in today's mixed economy doesn't exist.

For a more solid look at reality instead of theoretical fantasy one has only to turn to see the management labor relation in the USA in the early 20th century where the sweatshops and frequently lethal working conditions were pandemic. An unorganized laborer has negligible bargaining rights and most normally either accepts whatever is offered or suffers the consequences of no income.

Jan,

In a free market workers can come together to bargain collectively as part of a union; there's no reason to assume workers would remain staunch individualists in the face of oppressive working conditions. And any worker who feels mistreated can always move on to a different employer or another field altogether.

You're dreaming. With currently five applicants for every job and in places some of the minorities are 75% unemployed you're talking about a parallel universe. When people today look for work they are beggars, not choosers. And that's the situation the employers love and are doing their best to maintain.

Jan,

You're explaining the current situation as opposed to what I'm describing which is how we fix the current situation.

If employers are not hiring it's because they're making money as if they were expanding and growing their business all while not having to incur the expenses that come with doing so. This money comes from poor fiscal policy and central economic planning.

Right now companies are getting money from the government, replicating revenue yet not resulting in business expansion that includes more job creation. Rich company owners were rich before stimulus was introduced, yet now they get hand outs so they can continue feeling the wealth effect of increased revenues and share that with their families. Great for them, meanwhile Main Street doesn't get to share in the wealth since business owners are deciding to sit on their wallets instead of reinvesting their ill-gotten gains in their businesses by way of hiring more staff.

This entire charade goes away once you get government out of the economy. Once that happens the only way businesses CAN expand is if they put more people to work increasing the wealth potential for the many instead of just the few.

Employers may love it right now because big business and the bureaucrats are all part of the same elite club that works to extract profits at the little guy's expense. There are a lot of people making obscene amounts of money right now while the rest of us suffer. Get government out of the economy and force companies to exist on their own merits free of subsidy or favoritism and the problems go away. It takes a tremendous leap of faith, but in my view it's one worth making.

The basic inter-relationship of the populace to business is that the populace has to have the wherewithal to form a viable market to prompt business to hire and produce and sell. At the moment the market is so deeply in debt with no source of income that business finds no impetus to hire and produce with the productive capacity it already has in place, not to speak of investing in new capacity. If business doesn't pay salaries, people have no money to buy. The system is frozen and the only monetary chisel to crack the ice is in the government.

The basic inter-relationship of the populace to business is that the populace has to have the wherewithal to form a viable market to prompt business to hire and produce and sell. At the moment the market is so deeply in debt with no source of income that business finds no impetus to hire and produce with the productive capacity it already has in place, not to speak of investing in new capacity. If business doesn't pay salaries, people have no money to buy. The system is frozen and the only monetary chisel to crack the ice is in the government.

Jan,

There are many businesses that are still paying salaries, they're just doing it with a debased currency and so the purchasing power of their employees diminishes. The people who are unemployed received money from the government, also denominated in a debased currency, and funded by the people who still have jobs.

The debasement of the dollar through Federal Reserve stimuli has caused prices on necessities (like food and energy) to rise, making it harder for those in the lower and middle class to get out of debt, onerous taxation only exacerbates the problem.

Government manipulation in the market place has caused this mess. With the cost of living driven higher, even business owners have decided to pocket their share of stimulus money and keep it for themselves instead of parlaying that money into hiring or affecting wage increases. The cost of goods and materials purchased by businesses rises as purchasing power is lost as well - another drag, another side effect of government's involvement in the economy.

Government is not the solution, it is the problem. Government exists at a debt to the people, and adding more government to a government created problem is fundamentally wrong.

The more government you create, the more debt you pile on. The more government you cut the more money is freed up for the private sector to use as capital investment in business. The more capital you invest in business the more they can expand. The more businesses expand the more jobs are created. The more jobs are created the more wealth is spread among the people, and so on, and so on, and so on...

My statement still stands. Nothing will prompt business to hire unless the market will provide buyers for production. Business does not produce for a market that cannot buy. With a huge oversupply of labor there is no bargaining point for job seekers to obtain higher wages and the determined legal war on labor organizations beginning with the Taft Hartley law prevents labor from organizing to give force to a demand for higher wages and better working conditions. Yes, lousy government policy to attempt to subsidize business to hire instead of getting the money directly to a suffering public to spend is responsible for problems. But lousy government to lousy business practices does not prove that good government to good business is not worthwhile.

Perhaps my simple point is that bad government does not mean government has to be bad. The government theoretically should be acting for the benefit of the nation as a whole but it is obvious it is now solidly controlled by only one powerful faction of the nation. It funnels government money to business and finance which merely uses those funds to benefit only that sector. If it would divert those funds to the general public so that the funds would be spent and circulate throughout the economy to get business into service and production instead of into non-productive gambling then he nation would become much more viable. That would be good government and it is very badly needed.

CanadianLibertarian writes “Government is not the solution, it is the problem. Government exists at a debt to the people, and adding more government to a government created problem is fundamentally wrong.”

Isn’t strange that business leaders who understand this issue much better than you do have a different opinion?

GMs Healthcare Double Standard: Bad ideology trumps good business

"Yet just across the Detroit River in Ontario, the company's subsidiary-like the subsidiaries of Ford, DaimlerChrysler and other U.S. firms----strongly endorses Canada's national health system.

"The Canadian plan has been a significant advantage for investing in Canada," says GM Canada spokesman David Patterson, noting that in the United States, GM spends $1,400 per car on health benefits. Indeed, with the provinces sharing 75 percent of the cost of Canadian healthcare, it's no surprise that GM, Ford and Chrysler have all been shifting car production across the border at such a rate that the name "Motor City" should belong to Windsor, not Detroit.

Just two years ago, GM Canada's CEO Michael Grimaldi sent a letter co-signed by Canadian Autoworkers Union president Buzz Hargrave to a Crown Commission considering reforms of Canada's 35-year-old national health program that said, "The public healthcare system significantly reduces total labour costs for automobile manufacturing firms, compared to their cost of equivalent private insurance services purchased by U.S.-based automakers.""

Weird isn’t? The involvement of the government in your own turf actually lowers the cost of producing motor vehicles that you and other libertarians use on a daily basis. There goes your argument.

Nice try though.

BTW, I heard that Somalia is heaven on earth for libertarians. As you know (I’m not sure about that), they haven’t had a central government since 1991 and everyone is free to carry on their business as they wish without the interferences of the big bad government. As a bonus, they don’t have any minimum wages! You should check it out and see above about moving there. Perhaps you could open a Tim Horton and pay your staff a few cents per hour. Your move there would benefit the Canadian society, since the rest of the people would no longer need to pay for your medical visits.

That's weird too: UncleChri is suddenly silent. Maybe he's still busy working on the task I asked him to work on a few months ago. Maybe libertarians are slow workers.

Workers aren't making less because of a "debased currency." The fact is outsourcing has led to lower prices on discretionary purchases. Workers are making less because of the systemic replacement of growing wages/wealth with credit. Now the easy credit is gone and has no reason to return. The problem is an unworkable distributive template. We used to have a working distributive system, but that was wrecked by 30 years of right-libertarian "free market" economics.

Canadian,
So far it's all slogans, suppositions and wildly inaccurate economics. Addressing reality is more difficult than bending it to fit libertarianism, but reality has much more gravitas than clucking slogans. Being Canadian, perhaps you don't understand the American idea of liberty, which is not libertarian. Americans don't want libertarianism and, in the free market of political/economic systems, no other country does either. Libertarianism fails its own free market test. After 150 years, basically, it's languishing in the remainder bin. Perhaps this is because The World has not reached your state of enlightenment. Most likely, though, it's just a bad idea.

Jan,

The idea of the free market is we the people can decide for ourselves what we want to spend our money on, not a bureaucrat in an office miles away. Let the people circulate money through the economy; let the market dictate the best allocation.

Government isn't bad across the board, I don't advocate anarchy just that we keep government out of the economy. The greatest benefit of having a government work for us is when it is charged with protecting our liberty as sovereign individuals. Right now, Americans have a mixed economy that has stopped the market from working as it should in favor of the corrupt system that now dominates. The way you fix this is to get government out of the economy completely, it is not fixed by allowing the government to become even more involved.

The way to improve productive capacity is not through taxation or inflation, but by allowing people to use their hard-earned savings to invest in their own businesses or someone else's be that by consuming, direct investment or other means. Expecting the government to spur growth allows debt to accrue, and the more governments try to fight against accumulating debt the more they will desperately grab for more revenue through taxes or inflation - and the vicious cycle continues.

@CanadianLibertarian

I cannot imagine anyone being so completely ignorant of the historical relationships of government to business. Government and business have been and are hand in glove deeply involved in mutual relationships ever since civilization began and when things have turned out right both have benefited tremendously and when things have turned out badly both have suffered a great deal. There is no need for me to go into detail because the evidence in all aspects of life from production to research to military preparedness to foreign policy to monetary policy to land distribution to development of experimental areas to medicine and health etc., etc. You cannot be so completely blank on these relationships. Your statement is absolutely astounding.

Kanuk,

I think there are a lot of business leaders out there who don't understand the current problems, the powers-that-be at General Motors being prime examples, as history has shown.

The report you quote is simply wrong to suggest that health insurance purchased by car companies in the United States is being bought from a private company. That seems to be a popular argument, but nothing could be further from the truth.

The U.S. government spends more on health care per capita than its Canadian counterpart, and spends to the tune of over $300 billion per year on subsidies and tax exemptions for supposedly "private" health insurance providers which has the effect of removing market forces and allowing companies to charge higher premiums realizing they won't be punished by the market for doing so.

Your argument would work if a truly private health insurance system existed in the U.S. and that was who companies like G.M., Ford or Chrysler were purchasing their health insurance from - which, in such a case, would allow you to properly compare that with operating in a largely public health care system in this country, but that isn't the case.

Instead, you're comparing an expensive U.S. health care system with an expensive Canadian health care system - both of which are rife with government involvement. Regardless which nation businesses find it cheaper to operate in, neither of them offer the promise of better, more efficiently made goods for less money than would a country courageous enough to put its faith in an unfettered market place.

To your last point, Somalia is an anarchist state, not a libertarian one. I don't believe government is simply "bad" across the board - it has it's uses, I just don't believe regulating the economy is one of them. I believe government should exist, largely to protect individual liberty.

Paul,

Jobs have been outsourced because government made the cost of doing business too high in the minds of owners. It's fine to say that prices on discretionary purchases have come down, but what about everyday necessities like food and energy?

Jobs are lost through outsourcing, and the cost of putting food on the table and fuel for your car or the cost of heating your home have risen due to a loss in purchasing power.

People have grown to rely far too much on credit, on that it seems we agree; but you're placing blame where it doesn't belong.

Government is responsible for the artificially low interest rates and other guarantees that mitigated risk allowing widespread malinvestment and the inflating of a housing and credit bubble. When those bubbles burst they took a lot peoples' hard-earned savings with them, and thus private capital investment in business dried up as did the ability to pay for everyday purchases - that is, without resorting to adding on more debt to the balance sheet while trying to continue affording an ever-rising cost of living.

The free market is not responsible for this mess, it is because there has not been a free market that this mess exists at all. Had there been a free market, the bursting of massive bubbles that brought on a recession/depression would have allowed for a much more precipitous crash, and pain in the short term; but that pain would have been much more short-lived, the imbalances would have been addressed, the bad debts liquidated, and the recovery would have been well on its way in much less time.

Contrast that scenario with what's actually happened. A lack of free market principles has allowed the pain to persist, and the imbalances remain as the powers that be are more concerned with kicking the can down the road and getting re-elected than doing the right thing and allowing the bad debts to be liquidated and the market to rely on pure supply and demand.

You mention that libertarianism is "just a bad idea", but to make that call you should have a better grasp on what it is with regard to a free market approach to the economy. Blaming a free market that hasn't been existence for a problem created by government meddling demonstrates a lack of understanding. I invite you to read about Austrian economics and see what you think.

Jan,

You speak of this government-corporate relationship as if it has brought your society to a fantastic outcome. Have a look around and it's obvious how wrong it is to make such an assertion.

Now there's an interesting concept:"Protect individual liberty".

Liberty from what? Murderers and rapists, I assume, and packs of wild dogs. How about overcharging on monopolistic phone bills? Or scamming n mortgages and other loans. How about impossibly high prices for vitally necessary medicines? How about destroying the environment for immediate profit that destroys the ecology? How about enforcing contracts and equal pay for minorities and women? Should government intrude on adopting children and religious freedom that offends the majority? All sorts of stuff that government plays around with. Such a vague term, individual liberty.

Are you unhappy with the internet that the government initiated? With satellite communication and the government sponsorship of science that so enlarged out understanding of basic physics and the nature of the universe? How about the highway and railroad and air transport systems? A waste of private money? Just for starters.

Canadian,
You should have a grasp on economics before you talk economics. The idea that government made the cost of business too high and that's what caused outsourcing is absurd. Absurd, but an opinion made to fit a libertarian theory.
Your entire comment on why illegal immigrants get hired, etc, is economic gobbledegook. Again, gobbledegooked to fit a libertarian theory. I am convinced you've never hired anyone.
You spin-off slogans as proven facts, but offer no proof. You assume credit bubbles are a product of government, but ignore that they have existed for centuries within the private sector and, in America, coincide with government stepping aside to allow the "free market" to run rampant. You also might wish to ignore that they didn't exist between New Deal banking reforms and the beginning of deconstructing those reforms by deregulation.
After those banking regulations were eliminated, it took about 7 years to crash the economy. Why did it crash? Gee, it can't be because government stepped aside, that would be too obvious and it spits in the face of libertarian ideology. Let's invent a reason that aligns with ideology.
Your comment on business owners making money because the government is giving it to them, etc...is more flim-flammery and obtuse supposition.

Prices on food and energy rose because of commodity speculation in a free market, not debased currency. If production investment isn't possible due to our experiment with deregulation wiping out consumer wealth, wealth can be extracted by manipulating commodities.

It might not be fair to single out just one quote to display your absolute misunderstanding of economics, but this one is interesting:

"The more government you create, the more debt you pile on. The more government you cut the more money is freed up for the private sector to use as capital investment in business. The more capital you invest in business the more they can expand. The more businesses expand the more jobs are created. The more jobs are created the more wealth is spread among the people, and so on, and so on, and so on."

Total garbage. There was a time, before deregulation, when that would make more sense. However, it's just supply-side trash talk. Now that deregulation has allowed consumers to be stripped of purchasing power, no amount of "getting rid of government" will cause capital investment in production.

You have slogans delivered with the certainty of a true believer ideologue, but the facts dispute your regurgitated theories. Libertarianism is just an excuse for the elimination of self-government and replacing that with wealth rule. This is why most people reject it, and why a few oily oligarchs fund it.

Try supporting your plug-n'-play theories with real world examples based on more than mere pronouncements. I don't think you can do that because reality won't cooperate, but you should try because realism, not libertarianism, is the only ism that matters.

Canadian writes: "The U.S. government spends more on health care per capita than its Canadian counterpart, and spends to the tune of over $300 billion per year on subsidies and tax exemptions for supposedly "private" health insurance providers which has the effect of removing market forces and allowing companies to charge higher premiums realizing they won't be punished by the market for doing so."

Health insurance premiums are largely driven by the cost of health care. Here in the U.S. around 30 percent of health care costs are related to administrative overhead. And much of this overhead comes from the activity of billing supplies and services. Having worked for over 20 years as a data analyst in a hospital, I saw how this overhead functions.

Let's say that we decided to run restaurants the way we run hospitals. In our alternate restaurant world you would be seated at your table, and a "table usage" charge would be generated based on how long you were at the table. There would also be silverware and napkin charges. Every time you picked up the salt and pepper shakers there would be charges for that. Instead of being charged for a breakfast, there would be individual charges for eggs, toast, butter, coffee, cream sugar, and so on.

In our alternate restaurant world the restaurant would have to employ a large staff just to keep track of all the billing. And your breakfast would be $20 instead of $10.

Believe it or not, this is pretty much how hospitals and clinics operate. In the hospital where I worked there were over 100 people employed in the Patient Accounts department, and hundreds of others were involved in the billing process in some way. Other people maintained information on the hundreds of insurance companies. Yet others maintained information on the many different contracts between the hospital and insurance companies. Other people maintained information in the "charge description master" -- the file that recorded prices on all of the 80,000 different items for which the hospital could bill.

And that's only one side. On the other side are the many thousands of people who are employed by medical insurance companies around the country, their buildings, their expensive accounting systems, their advertising budgets, and so on.

All of this overhead activity is non-value-added. It doesn't dispense a single pill, give a single injection, or take a single blood pressure.

This is what we have instead of a public health system. There are versions of single payor that would eliminate a vast amount of this overhead, and make health care much less expensive, but this is not the system we have chosen to have. Instead we have private enterprise run amok, and a system that's so expensive that tens of millions of citizens have to go without health insurance.

Mishima, that's a brilliant, compelling metaphor. Thank you. You should repurpose it as a post or letter to an editor when the topic comes up again, as it most assuredly will.

CanLib, I just can't figure out what non-parallel universe you inhabit, because none of the observations you make are borne out in my experience on this planet. I mean, the things you describe don't actually happen at all. When you say the sky isn't blue, that our health care system is not private, honestly, what are we to do with that?

Jan,

Protecting liberty means protection from physical or fraudulent harm to you or your property from any outside threat whether that be by another individual or an entire nation.

All of the problems you name go away if you put your faith in the free market. In a free market people have the power, not corporations, and not bureaucrats.

Monopolistic phone bills occur when one company has a monopoly. Monopolies can only form in a market place skewed by regulation or legislation purposely imposed to favor one business or a group of businesses. This is typically what happens when the revolving door of CEOs and government bureaucrats come together to make each other wealthy at the expense of the little guy.

The way you end that is to adopt a free market approach where any company is open to competition from any startup that would no longer have the legal and financial burdens preventing their entry into the market. With those barriers knocked down, any new company can enter the market place and in the interest of winning over customers, charge less for a good or service while providing better quality.

The company that previously had the monopoly would then be forced with a choice of either lowering their prices further than the competition and improving their product or service or risk losing market share to the competition.

By scamming mortgages I'm assuming you mean the sub-prime fiasco?

Again, a lack of free market economics created that mess. The Federal Reserve at the behest of the Treasury lowered the interest rate below what the market would bear, punishing savers, and encouraging first time home buyers to leverage up on more debt than they'd otherwise be able to afford.

Likewise, financials and lenders took advantage of a system where government guarantees and legislation meant to protect people wound up creating a culture of mitigated risk, so there was a perceived safety net should risky or financially unsound decisions be made such as loaning money to people who had no hope of ever paying it back.

Lenders knew the government would have their back so they did the wrong thing and led many people down the path to financial ruin. It's downright criminal what's happened on Wall Street, and yet free market economics gets blamed by many people when really it's the lack thereof that created the problem.

In a free market lenders working without a safety net would not be willing to take on all of that bad debt - the risk for default would be too high. In a free market interest rates would not be "set" by anything other than market forces, and people would have a much easier time understanding what they could or could not afford, and a much easier time building their savings. Not to mention the costs for just about everything would come down drastically so the idea of taking on a 30, 35, or 40-year mortgage would be laughable.

High prices for medicine, another by-product of government involvement in the pharmaceutical industry. It's an over-regulated industry. Regulation is expensive, and those "savings" are passed on to the consumer. Big Pharma enjoys favoritism in Washington thanks to the full time lobbyists they pay to ensure as much.

It is extremely hard for a small startup to enter the pharmaceutical industry and people pay higher prices because the oligopoly is allowed to fester under the auspices of government control. Patent laws add to the problem as it's equally difficult for anyone outside the "old boys club" to develop competing drugs that many offer more benefits to consumers.

The way out of that mess is to get government out of the picture and force those huge companies to compete instead of enjoying the rewards of cronyism. These big companies pay government to ensure they don't have to face competition, and the people pay through the nose for their products as a result.

The environment is being ruined because government oversight is inefficient. The best way to fight polluting businesses is to have a government whose primary focus is on protecting liberty. Protecting liberty means protecting individuals and their property from physical or fraudulent harm.

That means if you have a chemical plant polluting the river that runs through your backyard, or pollutes the air around your home you would have true and proper recourse through the courts, not having to fear that you'd bankrupted trying to take on a behemoth corporation - a government charged with protecting liberty would have a responsibility to ensure the people would have just as much say through the courts as would any business, and the punishments doled out would be made to stick.

In a free market any company that harmed the public would risk bankruptcy, not the slaps on the wrist they currently enjoy in today's cronyist system.

It should absolutely be the government's responsibility along with the individual to enforce contracts. However, it is none of the government's business to tell a business owner what they can and cannot pay anyone whether that be minorities, women, or whomever. Once you allow government to try and legislate morality you walk a very slippery slope.

Likewise government should have no say in what religion you practice - the only stipulation being that you cannot infringe on another person's right to do as they please whether that be in the name of religion or for any other reason. People can decide for themselves what religions they find offensive, which they will avoid, and which they will choose to believe. Who cares about "offending the majority"? Be offended all you like - but don't ask the government to infringe on their right to believe as they wish.

The internet is a great invention, but are you suggesting the internet would not exist were it not for government? Indeed government did play a role in its development, but as a society we were already well on our way toward global computer networks with or without government's help. Companies like Corning for example, developed fibre-optic cable, and a lot of startup capital from private wealth went into research and development. And besides, the internet in its current iteration is not the kind government tried to push on us - today's internet is largely TCP/IP as opposed to the OSI (Open Systems Interconnect) which was an attempt to create one standard for all networks worldwide. But again, the assertion that without government we wouldn't have an internet stretches credulity.

With regard to satellite communication, or understanding nature, physics, the cosmos, etc; don't make the mistake of believing that just because government funding has allowed for all of these things, that that's the only way these discoveries would have been made. By the same token I think it's more than fair to assume that the private sector can and likely would have done all that and more had the government not been in the way of allowing the market to function as it should. I would much rather have a private company work toward a manned mission to Mars or build a large hadron collider than the government because at least that way the profit incentive and the need to be competitive would make those ideas become reality a lot faster than a bureaucracy who has no financial stake in doing things as cheaply and efficiently as possible.

The transportation grid is congested and thanks to too many regulations is not built cheaply or efficiently. Privatize roads and you reduce congestion and wind up with roads that adhere more to what the market place demands. Railways have been on the decline, which is unfortunate. Get government out of the economy and let the market dictate the most efficient means for the transporting of goods or people. Ditto for the airlines. Also, a free market would greatly decrease the costs associated with transport, such as the cost of raw materials for infrastructure expansion, fuel costs, etc.

Hopefully that clears up what you'd found vague about my mention of protecting individual liberty.

Paul,

I understand Austrian economics, i.e. real economics as opposed to the backward Keynesian methods that dominate today.

It is not absurd to suggest that outsourcing occurs because the cost of doing business in the U.S. has been made too high by government regulation. The minimum wage is just one example that has driven the cost of labor too high, and chased jobs away to places where that provision does not exist.

You ask me to offer proof, when the proof is self-evident - look around you, the economy is in shambles and logic tells you why should you care to look. Just listen to what business owners are saying are their reasons for cutting staff, or moving their operations offshore; there's nothing abstract about it - it's simple. Businesses move away when it's too expensive to operate in America. And that expense comes as a result of too much bureaucratic oversight that gets paid for through taxation that removes wealth from the private sector; wealth that would be better applied to businesses through capital investment funded by savings that in a free market would not stagnate as they do currently in an environment of artificially low interest rates, and devalued fiat currencies.

Yes, absolutely credit bubbles have existed for centuries - and they would result in recessions. Recessions are a good thing, they are necessary - it is the market signalling an imbalance that must be addressed. It causes bad debt to be liquidated - it's the equivalent of a forest fire where old growth forest has prevented new saplings from rising off the forest floor. The recession is the cleaning out of bad decisions, bankruptcies, mistakes, and bad debt. In a free market they would occur as frequently as human behavior would necessitate, but they would occur as sharp, swift downturns - not prolonged depressions - and once the old growth burned away the market would recover anew.

That is how the economy is supposed to function but instead we live in a culture where it is political suicide to tell anyone that they may have to personally sacrifice anything to get through what would be a temporary downturn before we can build back. Instead, we're led by gutless politicians bent on being the good guy and endlessly kicking the can down the road so as not to be the one who goes down in history telling everyone that the days of entitlement are over - that it's up to you to take care of yourself. Today most people want something for nothing, everyone has their hand out without realizing there are too many people all wishing to have a free lunch, believing it is the government's job to save them. We have a society built on the Not In My Backyard mentality, and it's kept everyone, including those in government frozen with fear to do the "wrong thing", when in fact their idea of what the wrong thing is is exactly what we should be doing to get out of this mess.

Yes, the market will crash if you get government out of the way. The market is trying to operate as it should, but instead it's like watching a car accident in slow motion - the government is twisting itself in knots trying to keep the crash from occurring and it's only prolonging the agony.

The crash is a necessary result of decades of poor economics, bad monetary and fiscal policy that has finally come to a head. Yes, it will be really bad if we get government out of the way, but the pain will be over much faster than the malaise we currently endure if we allow market forces to clear away the derivatives, toxic assets, bad investments, etc. It means a great deal of pain for many, many people, but it will over quickly and the recovery that ensues will be much more profound and widespread than the phony recoveries the government mouthpieces like to talk about where rich Wall Street bankers get a dose of stimulus money that does not trickle down to Main Street, and has the effect of reducing the purchasing power of all.

Libertarianism and/or free market economics is not about avoiding crashes or recessions, it's about understanding that when those things occur it's a healthy part of an economy at work.

Prices for food and energy go up when the currency being used to buy those goods becomes less valuable. If a currency is debased through inflation, it takes more of that currency to buy the same amount of goods.

Commodity speculation means investing in tangible assets like food, energy, or precious metals. The prices for commodities will rise or fall as they become more scarce or plentiful due in some part to day traders, but the fundamental moves upward that create a trend are the result of those looking for a hedge against inflation; a means of protecting their wealth in the long term should governments continue their efforts to inflate their currency. The CRB didn't just drastically rise because of some arbitrary reason that arrived from thin air, it's rising trend has been a direct result of inflation which is the antithesis of free market economics, and sound monetary policy.

You keep mentioning deregulation as if this is something that has occurred when that simply is not the case. It's been the exact opposite.

Consider the following:

"Like the alligators lurking in New York City sewers, Bush's massive regulatory rollback is mostly urban legend. Far from throwing out the rulebook, the administration has expanded it: Since Bush became president, the Federal Register -- the government's annual compendium of proposed and finalized regulations -- has run to more than 74,000 pages every year but one. During the Clinton years, by contrast, the Federal Register reached that length just once.

Similarly, the administration has broken every previous record for regulatory agency spending. According to researchers at Washington University and George Mason University, appropriations for federal regulatory functions have soared during the Bush years. Adjusting for inflation, the regulatory budget has grown from $25 billion in fiscal year 2000 to an estimated $43 billion in FY 2009 -- a 70 percent increase. "In constant dollars," writes James Freeman in the Wall Street Journal, "the Bush regulatory budget increases vastly exceed those of predecessors Clinton, Bush, Reagan, Carter, Nixon, and, yes, Lyndon Johnson." Staffing has skyrocketed, too. Regulatory agencies employed 175,000 people in 2000. They employ nearly 264,000 today."

And this:

"The core problem of the regulatory proposal is its view of the causes of the crisis. Everything is built on a belief that the market failed and that deregulation created a system of excessive risk and irresponsibility. Ironically, it was government action that created incentives for financial firms to be less risk adverse, not a lack of regulation."

"Given all the talk of deregulation, you would expect to find dozens of deregulating laws put in place over the past few years. Surprisingly, there have only been three major deregulatory actions in the past 30 years. Ultimately, the data points to bad regulation as complicit in the creation of the financial crisis, not deregulation."

"The modern era's first major Wall Street deregulation was the Depository Institutions Deregulation and Monetary Control Act of 1980. This law repealed so-called "Regulation Q ceilings" that limited the amount of interest consumers could earn from savings and checking accounts. The law also expanded the types of financial institutions that could get overnight loans from Fed discount windows.

Since letting banks pay interest to their customers encourages saving, this aspect of deregulation certainly can't be blamed. And though it could be argued that more financial institutions borrowing money partially allowed for the housing bubble, that money was being borrowed from the government—hardly deregulation. And that doesn't even begin to address the fact that there have been multiple recessions and bubbles since this law was passed."

"The second major deregulation was the Garn-St. Germain Depository Institutions Act of 1982. This authorized banks to compete with money market mutual funds. (Ironically, this bill was co-sponsored by then-Rep. Charles Schumer, a key lawmaker driving the current regulatory overhaul.) Garn-St. Germain has been linked to today's crisis because it loosened restrictions on issuing mortgages, allowing for the eventual development of subprime loans.

However, it wasn't Garn-St. Germain specifically that created a subprime mortgage riddled bubble—it was the surrounding body of poorly designed, bad regulations that created perverse incentives. Garn-St. Germain should have allowed banks more freedom to compete while also clarifying the role of the FDIC. But it failed, along with other regulations, to outline the role of the government in the case of financial institution failure. As a result, the implicit government guarantee for firms "too big to fail" skewed the risk assessment process that aids market efficiency. The promise of rescue was much more damaging than loosened lending standards.

It is worth noting that the impact of Garn-St. Germain has also been blamed for causing the Savings and Loan Crisis by allowing certain financial institutions, thrifts, to gamble with taxpayer insured investments. But in this case there was an implicit government rescue guarantee for massive failure that encouraged high-risk taking.

The third deregulation blamed for causing the financial crisis is the repeal of the famed Glass-Steagall Act in 1999. This law, passed in 1933, had kept deposit-bearing banks and investment banks from competing for over six decades. After this repeal, banks were able to maximize their resources and many grew large enough to be classified too big to fail. However, they really were too entwined to fail, and the problems came with fringe regulations related to the interconnectedness of financial institutions.

Had mark-to-market regulations been more flexible banks would have had more time to raise capital and sell assets. Had Wall Street firms not seen Washington as a lender of last resort that would bail out investments gone awry, they would have managed their risk better. Had capital reserve ratios been higher banks and investment institutions would have had more liquidity when prices dropped (though some firms, like AIG, simply became insolvent and wouldn't have been saved by higher reserves). Or, if qualified special purpose entities—an off-balance sheet accounting method—had required more transparency, banks would have had to keep more risky mortgages on their books, subject to reserve requirements."

"Similarly, Europe currently boasts some of the world's tightest financial sector regulations, and its banks have suffered just as much, if not more than American banks in this recession. European banks made the same bad bets, the same poor investments, and the same over-leveraged mistakes—despite more regulation and government oversight."

You say I believe libertarian ideals because I'm disconnected from reality, but the current reality is what's caused me to see that libertarian ideology makes sense. Expecting the government to take care of us is asking for trouble.

Mishima666,

You've described a monster that has been allowed to grow because of a lack of market forces that would force providers to cut out all that waste.

The only reason all of that overhead exists is because there's a lack of competition in the market that would force companies to trim down and operate more efficiently.

None of that overhead would exist if it were effecting the bottom lines of those in charge. If that onerous overhead were hitting the people in charge in their pocketbooks, rest assured that clutter would be cleared away.

But no, government's involvement in the health care system, and in the economy in general has removed market forces from the equation, and the risk of default or bankruptcy or punishment for bad behaviors, or non-competitive behavior has gone with it.

All of that bureaucracy does not exist for bureaucracies sake. Someone or some ones are profiting big time from that mess, and passing the expense and inconvenience along to the patient who suffers in triplicate.

The answer to the problem you've so eloquently laid out is not MORE government involvement in the sector, but much less. Make these providers open to competition by removing the barriers to entry into the market place. Do that and you'll see a lot of the waste go away because the profit incentive will cause the powers that be to do whatever they can to maximize their take while minimizing their losses.

Using your restaurant analogy - why do you suppose restaurants don't operate as you suggest? Likely because they face a lot more competition in sheer numbers than do the major health care providers.

If there were only a handful of mega-restaurants out there you'd see a huge increase in overhead - but since there's a restaurant around every corner we don't have to pay a table usage charge or a silverware charge. Fact is, we already do pay for those things - it's baked into the price of our meal, but it's dirt cheap because any restaurant worth their salt knows if they don't provide value to the consumer, that consumer will take their business elsewhere. Most Americans don't have that luxury when seeking medical treatment, and the providers know it - that's why they can get away with creating the mess you've described.

Steve,

You're right, in terms of free market economics, we're nowhere near employing any of that - so you're right to say you haven't experienced it; we live in mixed economies whose key feature is a blending of government and corporate power structures. It's the reason why the cost of living is as high as it is.

With regard to health care, consider the following:

"By 2020, the United States will devote roughly 20 percent of its total annual economic to health care, up from 17.6 percent in 2009. Why is health care spending chewing up ever-bigger portions of the economy?

One reason, as economist Arnold Kling has noted, is the dramatic increase in expensive medical technology and services. We’re not just using more medicine. And it’s not merely that the price of the same basic procedures and services has increased. It’s that health innovation has given us access to a wide array of fancy new drugs and devices and time-intensive medical specialties."

And:

"But expensive advances in care technology aren't the only culprit. The more fundamental problem is the system of tax-funded subsidies in form of both tax breaks and entitlements—and in particular, the essentially unlimited health-spending commitment offered by Medicare. As Cato’s Jagadeesh Gokhale writes in Politico, those subsidies have insulated patients from the price of care—and, by masking its true cost, funneled a growing share of our nation’s economy into health spending:

'The introduction of comprehensive health subsidies — Medicare for the elderly, Medicaid for low-income households and tax exclusions for employer health insurance provisions for the rest — has expanded the intensity of health care services use and has sucked resources from the private payer health sector.This has also stratified health care providers — with the more qualified, skilled and successful providers remaining in the lucrative private-payer sector.

So it is not surprising that, as public subsidies ballooned, the use-intensity and resource-siphoning effects led to bigger cost increases in the private-payer sector. It is a classic cart-before-the-horse argument to use the faster spending increase in the private-payer health sector as justification for expanding the government-payer sector — all the way to adopting the public option.

The payment structure of our public health care subsidies introduces a vicious cycle: Given supply-limiting health care regulations, those subsidies initially increase health care demand and prices and also spur innovations in costly medical technologies. Our open-ended health subsidy system then responds to higher prices of health care goods and services by diverting more resources from the rest of the economy toward the health sector.

The truth is that the only way to control health costs is to stop collaring funds from the rest of the economy and channeling them to this sector — as we have for the past 45 years.'

The raft of public subsidies, in other words, distort the market by pushing economic decision makers —individuals and employers and providers—to spend far more than they likely would have."

That sums up why I believe the sky isn't blue - or in this case why I believe a free market approach is better.

The intense disparagement and rejection of government participation in social control and the total rejection that government has any general benefit is a strong indication of a disbelief that structural supervision and rational social architecture for the benefit of all of the participants of society is possible and only the individual inter-reaction of participants can make a congenial social arrangement. But the extremely vague concept of the limits of governmental provision and enhancement of individual liberty leaves one bewildered as to how this ideal may be attained without encroaching on and limiting various freedoms of action which you seem to desire.

First off, CanadianLibertarian is a troll, nothing more. Notice how their postings keep getting longer and looooonger.

Now, here's the thing: there are one of two ways in which things will get better here in the United States - the hard way, or the easy way. But rest assured things will change. Don't believe me? Look at the history of France, Russia, Cuba, Vietnam, Cambodia, etc., etc. The further the plutocracy pushes things, the worse the correction will be, whether it comes from the left or the right. We as a people have to decide, but we'd better decide quickly. There are 40+ million people using food stamps to feed themselves and their families. My understanding is that the program is dangerously close to insolvency, and that problem will only grow worse. When people can longer feed themselves and/or their children, the end will be nigh.

Every revolution that has occurred did so because the ruling regime made a fundamental miscalculation about what the people would or could tolerate. With King Louis XVI it was his assumption that the French paesentry wouldn't mind going without bread, that the bourgoisie wouldn't mind paying for a government in which they had no say, and that neither group would feel sufficiently patriotic to be outraged when he asked his cousins to invade their country and restore him to the throne. Here in America the plutocracy is assuming that a jobless economy will be hunky-dory. But as Steve has pointed out, without jobs there is no hope; in fact, I think it's safe to say that a job is how we do hope here in America. Give a jobless person a job, and all of a sudden they start scheming about this or that thing they're going to do with the money. That's hope in action, and it drives our whole economy, our whole society. Take that away, and there is only one option - violent rebellion.