Understanding America Today
Tuesday, October 16, 2007
By John F. McManus
Immigrants have long come to America to live “the
American dream.” Now, that dream is becoming more
difficult to attain. To reinvigorate America, we must
understand the problem.
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America has long been known as a land of opportunity — not just for a powerful few but for all citizens. Here in America, an impoverished individual willing to work hard could pursue what became known as the American dream. And that dream, enjoyed by a large and growing middle class, included home ownership and a standard of living enjoyed only by a privileged few in other countries. It also included upward mobility, with each new generation enjoying a higher standard of living than their parents.
But in America today, that dream is being eroded. For the first time in our nation’s history, many young Americans realize that they will not be able to match or exceed the economic levels achieved by their parents. According to a report released
by the Pew Charitable Trust, “Men in their 30s today earn less than men in their fathers’ generation, and family income growth has slowed.”
Weighing in on this same development, CNN anchor Lou Dobbs lamented: “For the first time in our history, Americans
aren’t dreaming of a better life for their children; they are desperately hoping that their children won’t be forced into a
lower standard of living and a lower quality of life.”
Serious problems can be seen in several areas: jobs are disappearing; the value of money is shrinking; families need two incomes just to keep pace; government power continues to grow; and the nation’s praiseworthy cultural base has
been eroded. There is a need for Americans to reverse the course our nation is on. Can it be done? Yes. But only after
recognizing what made the American dream possible and taking corrective action to reclaim it.
America’s Basics
Our nation’s hard-fought independence was not firmly secured with the defeat of
the British in 1783. According to some competent historians, the War of 1812 was actually an attempt by the British to undo America’s remarkable breakaway. That unusual war resulted in another victory for “our side,” and, because it did, the path for U.S. citizens to reap the enormous benefits inherent in the remarkable new government system stayed open and even
became more easily traversed.
That system, the political portion of which can be found in the Constitution of the United States, established restraints on government rarely seen in history. Here, government was bound to the limited function of the protection of the life,
liberty, and property of the people. And the people, free from the stifling presence of excessive government, were expected
to limit their own actions with firm adherence to moral codes such as the Ten Commandments. It is this combination — limited government and personal morality — that has always characterized America.
Even before our nation celebrated its centennial, America had become the refuge of the world’s tired, hungry, and poor who left everything in the Old World to walk upon U.S. soil. Mostly penniless, they came here legally, found employment, happily worked toward assimilation, and pitched in to convert our mostly backward wilderness into a marvel of productivity.
Starting out as laborers and bottom-rung employees, they prospered sufficiently to see their sons benefit from America’s
upward mobility, where the next generation moved into the middle class, the backbone of every productive society. Then, more sons and grandsons became the professionals — doctors, lawyers, educators, entrepreneurs, and whitecollar executives — who carved out their own careers in the unique atmosphere of freedom found within our shores. While building for themselves, they helped to build the nation that became the envy of the world.
Ask a foreign observer to describe America today, and you will still be told that it is the wealthiest and the
freest nation in the world. After all, isn’t America a cornucopia overflowing with material goods unimaginable elsewhere?
But ask many Americans this same question and you will be told that the American dream is dying. This is particularly the case with young Americans who have not yet accumulated the assets their parents did and who wonder if they can become
financially comfortable in our deteriorating economy. And it is the case with anyone who understands that a nation, even a nation as powerful as the United States, will see its wealth shrink if it loses its ability to produce.
What Is Wealth?
Very simply, wealth is productivity. It is not a folder full of stock certificates and bank deposits which are only a reflection
of wealth. A nation is a wealthy nation when its people successfully take the raw materials of the Earth and fashion them into goods. As Henry Hazlitt wrote in his 1946 classic Economics in One Lesson: “Real wealth, of course, consists in what
is produced and consumed: the food we eat, the clothes we wear, the house we live in. It is railway and roads and motor cars;
ships and planes and factories; schools and churches and theaters; pianos, paintings and books.”
Blue times: In 2004, Levi Strauss closed its last two major U.S. plants, offshoring
all production. Just over two decades ago, the company had 63 U.S. plants. Now the
company only produces high-end, eco-friendly jeans in the United States.
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A certain way of measuring a nation’s wealth, therefore, is to assess its ability to make things, in other words its manufacturing capability. According to the U.S. Department of Labor, our nation suffered the loss of 4.6 million manufacturing jobs during the past 20 years. During the same period, a mere 200,000 manufacturing jobs were gained. Factories have closed; once thriving communities have become virtual ghost towns; and laid-off workers have been forced to take lower-skilled and lower-paying positions in hopes of keeping the wolf from the door.
Textile companies in the Southeast have ceased operations as the flood of importsfrom the Far East fills our stores. The auto
industry is reeling as some of its plants have closed and others, where certain jobs always could be found, have been transferred to Mexico and elsewhere. A Utah steel mill that formerly employed 8,000 workers closed its doors because of foreign competition. Companies that regularly produced the tools and hardware for America’s builders have likewise been forced out of business as Asian imports seize their markets. National appliance companies in Illinois, Michigan, and elsewhere have closed plants and transferred production to Mexico. Most of the popular Levi Strauss jeans are now being made outside the United States.
Some displaced workers find jobs in the service industry where they try to eke out a less-prosperous living as retail clerks or hotel employees. But those jobs pay less than manufacturing jobs.
When a single manufacturing job evaporates, the effect is felt by many others. Consider what happens to a restaurant owner in a community where the main employer closes its doors. The same drop in business will be felt at the local automobile dealership, insurance agency, dry cleaning establishment, or any one of the many retail outlets built to serve the manufacturing public. Each of these is a service provider and is dependent on those whose labor produces the goods. If the nearby factory that generates wealth ceases to operate and the jobs it supplied disappear, many others are also victimized.
Suicidal Policies
Building boom: China has been exporting so much in the way of finished
products and importing so much in raw material that its shipyards build
enough ships to make it the world’s third-largest shipbuilder.
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The situation we have described is not getting better; it grows worse each year. Former Federal Reserve board member Alan Blinder recently predicted the potential loss of as many as 40 million American jobs to outsourcing “within a decade or two.” By “outsourcing,” he
means jobs being transferred to another country. How can this be? What is causing such a dramatic trend? One need look no further than government action, especially the enormous drag of taxation and regulation that isn’t borne by America’s foreign competitors.
In 2006, the National Association of Manufacturers (NAM) issued a study entitled The Escalating Cost Crisis. Placing the regulatory burden facing domestic manufacturers at $162 billion per year, its authors noted that this cost to U.S. producers had risen 10 percent since 2000. About taxation alone, the report noted that “the corporate tax burden” was responsible in large measure for the “deterioration” in U.S. manufacturing. The NAM study concluded that while America’s tax rates remained high, “several other trading partners continued to lower their rates.”
The taxation figures reported by the NAM were then dwarfed by a parallel report issued by the Competitive Enterprise Institute. Its 2006 study entitled Ten Thousand Commandments claimed that the total tax and regulatory burden facing the American economy had reached $1.16 trillion annually. According to the CEI, when income and corporate taxes are added to the regulatory costs, “the federal government’s share of the economy is now 29 percent.” None of this enormous government
presence produces any goods. All of it inhibits the productivity of the American worker and producer.
Many foreign producers don’t face such taxation and regulatory burdens. In addition, the wage scales they provide their workers, especially in China, amount to a fraction of the wage scales paid in America. U.S. laws against dealing with firms and countries employing slave labor, China for instance, are regularly winked at.
Subsidizing Our Competitors
And then there are the U.S. handouts. Early in 2000, Representative Ron Paul (R-Texas) delivered a speech to Congress in which he pointed out that supplying aid to other nations was destructive to American productivity.
He stated: If our American companies and our American workers have to compete, the last thing they should ever be requiredto do is pay some of their tax money to send subsidies to their competitors, and that is what is happening. They are forced to subsidize their competitors with foreign aid. They support their competitors overseas via the World Bank. They subsidize their competitors via the Export/Import Bank and the Overseas Private Investment Corporation. We literally encourage the exportation of jobs by providing overseas protection in insurance that cannot be bought in the private sector.
Falling dollar: The euro soared to new highs against the U.S. dollar in 2007, largely as a result of U.S.
policies that encourage printing currency to pay debts — which causes inflationary effects including weakening the dollar.
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The Texas congressman pointed out that China “has now received $13 billion from the World Bank,” a United Nations creation.
A sizable portion of World Bank funds comes from U.S. taxpayers. Additional huge grants have been made to China by the UN’s International Monetary Fund and our own nation’s Export-Import Bank. And the congressman focused justifiable wrath on rulings from the UN-related World Trade Organization that not only negatively impact American producers but even chop away at our nation’s hard-won independence.
Government Fosters America’s Ills
As the cost of energy skyrockets, America’s productive arm takes another hit. Yet, if the government would get out of
the way and allow willing producers to produce, our nation would be dependent on no one else for energy. American Chemistry Council President Jack Gerard insists that the “natural gas crisis is self-inflicted, caused by 25-year-old policies that drive up demand while restricting access to American energy supplies.” A report from the Consumer Alliance for Energy Security points to the Outer Continental
Shelf surrounding our nation where there is “enough natural gas to heat 100 million homes for 60 years, and enough oil to drive 85 million cars for 35 years.” That estimate does not include Alaska’s vast energy resources that lie untapped because of government interference. Nor does it include the tremendous energy boost our country could receive by expanding our use of nuclear power.
No survey of our nation’s government-caused ills can ignore inflation. Persistent federal deficit spending covered by the government/Federal Reserve combination that creates huge additional quantities of money and credit has watered down the value of everyone’s holdings (cash, retirement funds, insurance policies, etc.). The American dollar, once the most respected currency on Earth, has seen its value shrink by approximately 90 percent over the past 50 years.
Now, instead of undoing the damaging policies, elitists in government and business are attempting to expand upon them, using the North American Free Trade Agreement to merge the countries of North America. The problems plaguing America are not insurmountable. In fact, there is realistic hope that America’s retreat from greatness can be reversed and that we can restore and retain freedom and prosperity for
tomorrow.
That hope is based on the fact that there is still plenty right with America: our priceless Constitution still stands; the vast majority of our fellow citizens remain God-fearing and patriotic; and the family is still overwhelmingly recognized as the bedrock of a healthy society.
But these problems will not be solved by wishful thinking. America must now be rebuilt by the kind of people who don’t take freedom and prosperity for granted. We hope you will want to join the growing number of rebuilders.
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