Vail Valley Voices: Now vs. the future
Vail, CO, Colorado
I had a Valley Voices column on Dec. 12, 2011, posing the open question as to whether today’s Great Recession is not as bad, worse or about equal to the Great Depression of the 1929 to 1941 period.
The question considered factors in a now-vs.-then format.
Today, I would like to take us from the now to the future using two focus items: babbling ideologues and working our way to a solution.
Preamble: The Great Depression was brought on by the excesses of the roaring 1920s, brought on by the Prohibition experiment that started in 1920, brought on by success of babbling social ideologues muttering their one-liners as we went off the cliff from rational society to an irrational one.
This social experiment was repealed early in Franklin D. Roosevelt’s administration in 1933. The recent PBS Ken Burns series “Prohibition” (with the subtitle “How could a nation that does things right go so wrong?”) captured the essence of this history.
The Great Depression’s structural (vs. cyclic) downturn brought peak unemployment of more than 20 percent, coming down to low teens before it was eventually solved by the start of World War II on Dec. 7, 1941. Here we mobilized to manufacture war machinery, funding it with debt by selling war bonds to citizens to be paid back later.
Today, we have a quadruple whammy of structural issues:
1. Housing bubble – a 12- to 14-year buildup permeating our whole society.
2. Injustices – wealth inequality with 1 percent having more than 20 percent of the national wealth, the same as 1929, having dropped to 9 percent in 1970s.
3. Debt – from a surplus in 2000 to more than 100 percent of our gross national product.
4. Service economy – exports dwarfed by massive imports as many things are now made overseas.
Call it the Housing-Injustices-Debt-Service whammy – or HIDS.
Babbling ideologues: Today, we have a bumper crop of emotional ideologues – politicians and media types – with their one-liners. They come in three varieties: social-issue types criticizing China’s “brutal” one-child policy; how-to-run the government types, “how dare they use taxpayer funds for disaster relief, without other offsets?”; and historical cheerleaders, “We’re forever endowed to be special.”
These folks do not understand implications from their simplicities. Unfortunately, today’s babbling ideologues are peaking at the time we need thoughtful dialogue leading to real-world solutions for our unprecedented quadruple whammy.
Working our way to a solution: In the short term, we cannot “service” ourselves out of structural problems based on some event – political or otherwise.
The key is to bring back manufacturing – especially life-blood export. This will take time, and even then, the newer productivities will dampen job creation.
Well-established and emerging nations have national industrial policies targeting specific areas where they want to go.
Note that Germany and Japan – which have high wages – are still successful with exports because they work at it through education and targeted policies.
A specific national example for targeting exports is the unsuccessful Department of Energy funding of a solar manufacturer called Solyndra Corp.
It went bankrupt, not because of a bad product or business plan but because it was outraced by Chinese government-supported competition.
Unfortunately, our babbling ideologues have picked up on this as their rallying cry. We have nearly lost leadership in the new 21st century solar industry, and there will be failures in any new policy. A great nation must make things and export leading-edge things it makes.
The future: Will a future Ken Burns-type documentary have the same Prohibition subtitle (“How could a nation that does things right go so wrong?”) depicting our current plight?
Yes, if we continue on our present glide path.
No, if we start now to change things. Here’s a starter list:
1. Recognize our quadruple whammy, coupled with priorities for a long-term plan, starting with the presidential race and possibly enhanced by a third party that forces a better debate.
2. Start with key aspects, such as tax and education policies to compete in export and infrastructure (highway, rail, power grid, etc.), as we are laggards in the modern world.
3. Encourage business leaders to be more involved and state-local development of public-private partnerships to take over some federal government roles and shortcomings.
4. Demand civility. President Reagan could disagree and yet work with Democratic House Speaker Tip O’Neill.
Finally, let’s update a real-world definition of American exceptionalism and then walk the talk, something I believe we can do.
But if all else fails, put hope in a younger generation. The “Occupy” gatherings could yet be the future to bring about awakening of our sometimes wayward, sleeping giant of a nation!
Paul Rondeau is a Vail resident.
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