THE END OF THE AMERICAN DREAM
Jim Rodgers - we live in a pivotal and unique watershed time in history, and as an engineer, I like to study the numbers in order to try and understand what is really going on.
However, the numbers can be misleading, for example, we like to use the percentage increase in the overall Gross National Products (GNP), which is artificially high for countries like ours having a growing population, and when stated as GNP per person, our growth rate is less impressive.
The same is true for personal income, where we like to use average income, which includes the very high income of the rich, instead of medium income which is much lower and is more representative of a typical middleclass person.
Also, we say our unemployment rate is a little over 5%, but it doesn’t include the more than 15 million people that have given up hope or are underemployed.
The numbers do indicate many problems that could be turned into opportunities - if we just had the will and the leadership to commit to their solution.
1. Food shortages – the population of the US will increase from 303 million to 438 million and the world from 6.65 billion to 9 billion by 2050 – research reports indicate that we already are consuming resources at a rate that is about 25 percent beyond what the world can sustain over the long term, a billion people presently don’t have sufficient water, let alone food, with 10,000 to 30,000 or more kids dying every day, where because of birth control unavailability and lack of appropriate education, the rate of population increase is highest is among the poorest people, and even with reasonable technology improvements, future large-scale water, food, energy and mineral shortages will occur in the US and the world (many people cannot afford to buy food in over 40 countries now, and very poor people spend 70 to 80 percent of their income just on food).
2. Income is going down - income for typical or median American middleclass males has been nearly flat for 30 years or more and all family income gain has come from the increasing number of working women, however, because of the baby boomers retiring, who consume about $27,250 a year in government benefits such as Social Security, Medicare and Medicaid, or 35% of the federal budget, with nothing saved for the future except government IOUs, and assuming the economy continues upward at the same rate as in the past, which is highly optimistic, therefore, without putting our young children to work, and with a fewer percentage of people working (two (2) per retired person in the future), middleclass medium-net income will have to drop 30 percent or more over the next 15 to 20 years just to pay for retirees and higher medical, energy, mineral and food costs, perhaps creating great anguish, deprivation, increased crime and violence, and income may drop another 10% (40% total) because for our increasing inability to compete in the world economy (a large transfer of wealth that will occur from the baby boomers may help mitigate some of these difficulties, however, mostly for upper-income people)
3. Not all boats are rising - for nearly 40 years nearly all US increases in productivity and improved technology have gone to investors, management and the rich and privileged (who are mostly very good people that sometimes are inadvertently working to incentives that are in conflict with the overall long-term national good – such as making more money by sending high-technology jobs overseas, where the top 30 thousand (0.01%) people control 5.6% of total income, the top 3 million (1%) make 21% of total income and make more income per year than the lowest 100 million people (33%) combined, the top 15 million (5%) own 70 % of all financial assets such as stocks and bonds, and the top 60 million (20%) make as much income as the next fifty percent (50%) of people; where our winner take all system combined with special-interest driven government policy, rewards them disproportionably with incremental taxes on upper personal income and corporations being only a fraction of what they were many years ago (they still pay a very large amount of the total tax bill, however, they make money (which is okay) leveraged by employees educated in public schools and government provided infrastructure, use more resources, create more CO2, use more government benefits, have more political power, and have very few sons or daughter in the military – so they should pay more in income taxes) and total overall taxes percentages are often actually higher on the middleclass and poor – and almost none of the gain is going to the middleclass or the poor, and the number of poor in the US is 60 million (19.6% using European standards), and in the world 50 % live on less than $2 per day, which will cause more turmoil, terrorism, crime and war (Warren Buffet the billionaire has said he pays a lower percentage of taxes than his receptionist – Bill Gate’s father said his son would have not be able to do what he has done in a country without all of the public and other infrastructure of the US).
4. Bad incentives work – we have trade and tax policies that for investors and top management rewards them and literally drives or forces them to ship jobs and facilities overseas (a form of job-destruction machine that because of national policy pits them again the common good and the middleclass), where US exports are reduced because they carry the high cost of medical care, a kind of tax, and all of our other society overhead costs such as Social Security, Medicare, Income Tax, and Property Taxes, and unlike most other countries, imports are given a nearly a free ride coming here (other countries have all sorts of import, VAT, sales, duties and other taxes on imports – some over 30%) since they generally contribute little to these costs here other than perhaps a tiny import duty and a state sales tax – a built in incentive that drives many companies to ship industrial, and now high-technology factories and jobs overseas, while having a side effect of significantly reducing our income production and national defense capability (free trade is very good if it actually reflects opportunity and associated overhead costs and is a win-win for all countries involved – where we have sufficient exports to cover the purchase of imports over the long-term (unlike NAFTA in Mexico, where our highly subsidized and mechanized farmer drove over 1.5 million Mexicans out of farming, and guess where many of them ended up - as illegal’s coming across the border where their cost might exceed the original benefit to our farmers, and heaven forbid that we partnership with Mexico, our immediate neighbor, to manufacture high-technology products at low-cost that we might need for our survival and national defense in case of some war or crises – better to have it shipped 10 thousand miles by sea using oil based fuel from countries we may have difficulties with in the future).
5. Special interest direct our priorities – in energy, as well as every field you can imagine, we are doing things that on the surface may seem good, but in fact are not based on science or the public interest, and are the result of big-agriculture or big business governmental influence; where corn ethanol per gallon provides about 70% of the mileage that gasoline does (other alternatives such as sugarcane, flax weed or even waste material are much better) – but consumes nearly a gallon of oil, and other carbon based fuels such as coal, to farm, distill, and transport it, depleting soil, putting more pesticides in our water, and causing food prices, particularly those that are corn based as well as others such a wheat, to sharply rise, while not helping to solve the energy problem or reduce CO emissions (of all the problems, the energy problem has the most predicable solutions – everything from solar, wind, geothermal, clean coal and even a new kind of safe, small, distributed and networked nuclear factory-built power generating machine mounted in an underground bunker with a fuel drop system – half our electricity is lost in our large grid)
6. Medical cost are going to bury us – having the most expensive, inefficient and complex medical system on the planet, that is now rated at 37 internationally in overall performance, 14 in terms of quality of procedure output, provides limited preventive medicine, and is 50 % higher in GNP percentage cost than the next highest country, and on the average we live 3 years less than those in other advanced countries, includes nearly third world uncertain and inconsistent care for 9 million uninsured children or 46 million people total, and with 42% of working age people have limited or no insurance coverage, and presently medical costs consumes 1 out of every 6 dollars or nearly $7000 per person compared to about $2,500 in England that covers everyone, and price discrimination in medical care, medical testing and prescription is outrageous, where a poor patient without insurance can be billed for a hospital stay as much 3 to 10 times the cost an insurance company pays (this arbitrary price discrimination should be a felony) – that will increase in the future to 1 out of 5 or 20 percent of our total economy, and presently causes about 50 percent of all bankruptcies, 3/4 of which are people that are insured (we need health care that is actually managed, uses technology such as analytical diagnostic software and provides integrated patient management and care).
7. Our national finances are a disaster - not only we living on our credit cards and home equity, the government has borrowed 9.3 trillion dollars, 500 billion dollars from China alone, a developing country that has money to lend while our government and country is nearly bankrupt where the present value of government present and future mostly unfunded federal debt is now $500,000 per family – if continued the dollar will not only continue its downward spiral, we may learn what it means to have an oil shut off (a war or we can’t pay for it), currency run, hyper-inflation and/or an economic meltdown (the solution we are told is to give more tax cuts – even though Sweden and other countries with much higher taxes have a higher growth rate than we on a per person basis and most countries with little taxes are very poor – maybe a country actually needs infrastructure such as highways and schools etc.).
8. Our government is not functioning – we have a Federal Government that is in crises and is actually fighting against doing what needs to be done to solve major problems, and actually refuses to do what the people want it to do (what is democratic about how our government presently functions – remember the Vice President who recently said when told that most Americans want the war brought to a stop soon – he said “so”) – like stop the Iraq war in a planned and reasonable fashion, make sure our food is safe, fix the healthcare system so we can reduce overall direct and indirect costs by covering everyone using mostly private institutions, get us off of oil as fast as we can, reduce environmental damage and global warming (utility companies are actually asking for CO2 standards so they can plan ahead), dramatically improve and lower the cost of access to education so we can compete with China and other strong competitors, fix our trade system so we don’t continue to bleed in our balance of payment, actually prevent problems before they occur (because of the “Enron Exemption” and other effects of clueless government has resulted in the lack of regulation of mortgage securities and highly leveraged oil futures speculation that is driving up oil and commodity prices) and help turn some of these problems into opportunities, however, short-term gain is winning over long-term solutions - 85% of the people want the healthcare system to be fixed, but they cannot have it because of special interest control of our government, and we don’t want to overregulated, however, a highway system without some speed limits and road signs doesn’t seem to work very well either).
9. The United States is failing to make a major paradigm change – its role as a political and technology leader is being lost as we lose the battle to be a technological leader during a time that leadership in innovation, technology and science is the driving force in the world economy, and we are not even in the top twenty in terms in terms of math and science, the number of engineering and science graduates is a fraction of other nations like Chine, research and development is being given a low priority by our clueless government, our infrastructure is falling apart and the new growth industries are not manufacturing, but uncontrolled financial speculation, mortgage fraud, drug rehabilitation, law enforcement, terror prevention, crises management, drug enforcement (a national joke – more of a price maintenance effort), drug sales, healthcare, war, family problem counseling, debt management, bankruptcy, identify theft, fast food services, prisons, retail sales stores selling foreign goods, gambling, entertainment and other leading-edge industries (we are losing it like England, France and other countries have in the past – upward mobility is now primarily income based, not merit based, as it was the American dream, and is now higher in Canada and Europe than in the US).
10. Earth is a living system – we see environmental damage and global warming with jungles contracting, deserts growing, oceans rising, violent weather increasing, ice caps melting and food pricing, such as wheat, trebling since 2000 – without incredible changes starting now, the earth maybe close or has reached the critical point with 6.5 billion people, and without major changes, with 9 billion people in 2050, where the earth cannot repair itself or we cannot stop its decline, it may start to die, along with its inhabitances (it doesn’t matter if global warming or change is manmade or caused by sunspots - we can’t continue to put junk into the atmosphere in spite of what some Senators and Representative are passionately wanting us to continue to do for short-term profit).
Is it hopeless? – solving these problems could become a great positive force in our economy, however, since we are a country with many people consumed with working and day-to-day affairs, and have very high stress and frustration levels compared to other countries such as Denmark, often have little formal education in political science, economics, and history and have opinions based on around-the-clock special-interest and self-serving propaganda (as found in our many talk shows that are paid megabucks by special interests to get people to stab themselves in the back, and like it, and Senator and Representatives that seem to be bought and sold with campaign contributions), it seems that it is going to take some disaster, such as a currency run or massive oil shortage to wake us up to do something, however, don’t think that this all bad in the long run – in WW II, a crash program to develop synthetic rubber was undertaken because we were losing our sources of natural rubber, and it was very successful because we had to do it or perhaps lose the war.