“The purpose of studying economics is not to acquire a set of ready-made answers to economic questions, but to learn how to avoid being deceived by economists.”
This to me seems to be a wise policy. Based on the fairly frequent bubbles and panics occurring in our economic environment I’m fairly convinced that the people in charge don’t know what they’re doing. So, I’ll assume that’s what the problem is. The people running the economy just don’t know what they’re doing. And maybe, all things considered, they’re doing as good a job as is possible. After all, human society is a dynamic system with an enormous number of factors contributing to the output of goods and services and a big random universe throwing everything from hurricanes and droughts to wars and plagues at us in an almost completely random manner. Alright, I’ll grant that too. It’s a maelstrom of causes and effects. So then, what’s a leader of the United States to do?
I believe there is some guidance that can be used. All the way back to Aristotle and all the way up to our own nation it has been observed that the most successful, stable and the most pleasant nations to live in are the ones with the largest middle class. Not the one with the most billionaires and certainly not the one with the most poor people, but the one with the largest number of people who work for a living and live well enough to keep their families well-fed, well-clothed and with enough money to do something for fun every now and then. When the majority of the country can be described in that way you are living in as close as life on Earth can come to a paradise.
And up until about the 1970’s that was a reasonable description of post-WWII America. People thought they were well off and that their children would be even more prosperous in the future. But since the 1970’s the proportion of Americans who felt this way has been steadily shrinking until now only the elites feel this is true. The working class has slipped out of the middle class and the white-collar jobs that were the hallmark of the upper middle class are disappearing from the United States through automation and through off-shoring of the manufacturing industries that used to provide both blue-collar and white-collar jobs for the majority of the nation.
Well, all of this is old news. We all know all about it. Now we see Donald Trump trying to use tariffs to get American (and foreign) corporations to manufacture their products here and thereby provide Americans with relatively high value employment. I applaud Trump for doing this. He needs to do as much of this as possible. In fact, this will need to be the policy of the United States government for the foreseeable future.
But this is just a band-aid. Forcing these companies to bring some part of their manufacturing capacity back here is a small part of what’s needed. America needs a “Marshall Plan” to identify the industries and infrastructure that will produce a re-invigorated middle class. All the super-geniuses who have created artificial intelligence and advanced automated systems need to put their supposedly infallible business acumen to the problem of how to engineer an economic order where the maximum percentage of Americans are prosperous and usefully employed. Call it a Marshall Plan or a Manhattan Project or just a survival plan.
The free-traders or the globalists or whatever you want to call the people who deindustrialized America from the 1970’s on have demonstrated how to destroy the middle class. Now it’s the federal government’s job to undo that process using the levers of power they control; taxation, tariffs and the anti-trust laws. But as I said it’s not enough to just bring back the old industries. Innovation will always drive prosperity. Silicon Valley currently represents that innovation. What must be done though is to force the innovators to reckon with the dislocation that their innovation can cause to the lives of regular people and come up with a way to make change work for all of us.
A hopeful sign is that Donald Trump has enlisted Elon Musk into his administration. Granted, right now Musk is entirely a disruptor of the established order. But he is also capable of building up new constructs. The challenge is to see if Trump and Musk can produce a vision that includes the restoration of the American middle class. I hope he can. We all better hope he can.