jobs—more than fifty million of them—are vulnerable to being sent offshore.
Even more troubling66 is the reason so many of these jobs are being sent overseas. It’s not just about cost control. “What used to be a tactical labor cost-saving exercise,” the Booz Allen Hamilton study says, “is now a strategic imperative of competing for talent globally.” In other words, America’s talent pool—especially when it comes to professions such as engineers and computer scientists—is drying up. At the same time the demand for these highly skilled workers is growing, the number of Americans earning master’s degrees and PhDs in engineering has fallen.
We are continuing to feel the sting of our lack of investment in our people—particularly when it comes to education, the other primary pillar (along with a good job) of a healthy middle class.
This is what happens when a country is willing to spend trillions of dollars fighting unnecessary wars while allowing college tuition to rise out of the reach of so many of its citizens. And it’s what happens when a country turns its economy over to the casino of Wall Street.
It’s not too late to change course. The financialization of our economy didn’t just happen. Decisions were made that made it possible—and decisions can be unmade. But first we need to decide, as a country, what kind of economy we want to have: one that’s good for middle-class families or one that’s built to enrich Wall Street.
“The financial sector,” wrote Martin Wolf67 of the Financial Times, “seems to be a machine to transfer income and wealth from outsiders to insiders, while increasing the fragility of the economy as a whole.” When the chief economics commentator at the Financial Times is sounding like the second coming of Karl Marx, you know things have gotten way out of hand.
THE ECONOMIC CORONARY AROUND THE CORNER
Another potentially catastrophic problem headed our way is our mounting debt. And no, I’m not joining forces with those who use the debt explosion as a backdoor way of cutting or killing Social Security or Medicare. But ceding this issue to such retro-thinkers makes it that much harder to seriously tackle the problem.
America is like a patient in danger of suffering a massive heart attack. We may be able to postpone things with a bit of outpatient surgery, but we won’t be able to avoid it without some serious lifestyle changes. The economic coronary isn’t quite here yet, but it’s on the way. Here are just a couple of the symptoms of big-time trouble ahead:
By 2020, interest alone68 on the total U.S. debt will reach $900 billion per year.
That same year, five segments69 of government spending—Medicare, Medicaid, Social Security, net interest, and defense spending—will account for an estimated 77 percent of all government expenditures. All other federal spending will have to come out of the remaining 23 percent.
A recent report70 by the Bank for International Settlements (BIS) shows that this is a worldwide phenomenon. Financial adviser John Mauldin distills the report’s bottom line: “Everyone and their brother intuitively knows that the current government fiscal deficits in the developed world are unsustainable.”
The numbers in the BIS study make this clear. For instance, in Greece71, the problem child of the moment that everyone is looking at with horror, government debt could reach 130 percent of gross domestic product in 2011. But Greece is far from alone. In the United Kingdom, it is expected to hit 94 percent, jumping more than 10 percentage points in one year. And in the United States, we could approach nearly 100 percent. As a Greek American, I’m enthusiastic about all the shared traits of my two countries, but I’d prefer not to add crippling debt to the list.
“While fiscal problems need72 to be tackled soon,” says the BIS report, “how to do that without seriously jeopardizing the incipient economic recovery is the current key challenge for fiscal authorities.”
Exactly. And those fiscal authorities need to remember that there is more to tackling the deficit crisis than just cutting spending. We need to think bigger—we need to re orient our economy so that it’s once more an engine for production and productivity, not a vehicle for gambling and speculation. As Mauldin says73 of the old—and still dominant—order on Wall Street: “Let’s be very clear. This was purely gambling. No money was invested in mortgages or any productive enterprise. This was one group betting against another, and a lot of these deals were done all over New York and London.”
Mauldin goes on to74 question why large institutional investors were even gambling on such things as synthetic collateralized debt obligations in the first place: “This is an investment that had no productive capital at work and no remotely socially redeeming value. It did not go to fund mortgages or buy capital equipment or build malls or office buildings.”
Commenting on our looming debt crisis, Prince ton economist Alan Blinder75 noted that “in 1980 [policymakers] knew about the year 2010 but that was really far away.” Well, it’s not anymore, and given that much of our deficit problem is about huge numbers of workers born decades ago now hitting retirement age, Blinder quipped, “The long run is now the short run and they’re combining.”
The needs of the past and the demands of the present exert a powerful pull on our attention, while the future doesn’t have many advocates—it’s always something we can get to later. There once was a time when we could get away with pushing our problems down the road, secure that our reserves would always bail us out. There was a strong safety net to catch those who fell through the cracks. Well, those reserves are gone now and the safety net is frayed and full of holes.
PERVERTED PRIORITIES
Another warning sign that we are on the way to becoming a Third World nation is the trillions of dollars we continue to spend fighting unnecessary wars and building ever more powerful weaponry while our people here at home do without.
You want Third World thinking? How about North Korea joining the nuclear club while its people starve? Since the fall of the Roman Empire, one of the hallmarks of nations in decline has been increased military spending at the expense of other essential priorities. Think of the Soviets trying to match America, nuclear warhead for nuclear warhead.
Historian Arnold Toynbee believed that76 civilizations almost always die from suicide, not by murder. That is, our future is dependent on the choices we make and the things we decide to value.
Partisanship pop quiz time77. See if you can identify the bleeding-heart liberal who said this: “Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and not clothed. This world in arms is not spending money alone. It is spending the sweat of its laborers, the genius of its scientists, the hopes of its children.”
Noam Chomsky? Michael Moore? Bernie Sanders?
