Here is a new thing for you to think about. So far, most of the growth in the economy has been supported by reducing unemployment, but what now? That is what this blog is about.
I know that most Economists, like most people, have little understanding of real economics. It has to be clear that as our economy has grown it has been fed by unemployed workers taking up productive jobs. What happens when we run out of unemployed workers? That is where we find ourselves today. We have workers who are getting older and are retiring while we have new young workers coming into the work force. The net growth is very small, well short of the 1.5% to 3.0% needed to continue past economic growth rates. Countries like Japan actually have a negative population and worker growth rate, so how do they grow their economy? It has to come by way of "productivity". Got it? The next phase is going to have to focus on greater growth of "productivity" vs lower unemployment rates.
If productivity is our future, how do we do that? We know that the drivers of future economic growth is intellectual vs more bodies. Given that fact, what do we do to "raise the medium family income"? What we will have to do are two basic things.
(1) Raise the intellectual level of our "median" work force.
(2) Reduce the number of potential workers who are a drag on the economy.
If you look around the world at the worker profile of different countries, you will find big differences. For example, look at the literacy rates. The USA is far below the top level even though we spend the most on our primary schools. Japan and most European countries have much higher literacy rates than does the USA. In our hemisphere, both Chile and Argentina have higher literacy rates than we do. What is needed for the future is more than just literacy. We need to focus much more on the STEMS while many of our children opt for easy "fluff" type classes. As you can see, if we want to "raise the median family income" it will require some major changes in our society. One thing that is clear is that we can't keep allowing illegal immigration by the least qualified workers in the world.
Now for my second point. If you look at a couple of world wide statistics, you will see that we have more people in jails or prisons than any other country in the world. We also have more illegal immigration of low skilled people of any other country in the world. Look at Japan. They have a very restrictive immigration policy while their total population is going down. Their economy is paced by "value added labor" vs exploitation or natural resources. Look at Switzerland, which is similar to Japan. They have a much higher median family income than does the USA. Both Japan and Switzerland actively work to reduce the percentage of their population that "takes" rather than help to "produce". I know that this would require a major change in our thinking for us to put the USA "first" as do both Japan and Switzerland. Japan and Switzerland are not out to "save" the world like we are with things like the "green movement". What we need to do is to look around the world at countries who are doing the right things for their citizens in the area of economics and learn from them.
Are you starting to have a greater appreciation of the fact that the USA economy of the future has to figure out how to grow with fewer new workers? We have to start changing our thinking and as do our Economist and our colleges and universities. Economic growth in the future will have different drivers than it did in the past and we will have to all recognize that simple fact. If the USA continues with past policies, you can expect that our children will live in a "hell hole" like much of the world and I don't think that any of use want that!
PS--The USA was blessed with a lot of natural resources, but most of those have already been developed and "counted". What will we "count" next to grow our economy? It has to come from intellectual value added productivity gains. That is the challenge that we face.
PS--There is another economic element that needs to be considered and that is "mix". If a person who was making shoes and producing a small amount of economic value were to switch to some kind of high tech value added work, it would result in a growth of the economy. If the "mix" of jobs were to change toward higher tech or higher intellect it would grow the economy while full employment did not change!
PS--Here is another unrelated point that I want to make. I just had lunch with a farmer who farms several thousand acres of mostly corn and soy beans, I asked him about the "Round-Up" herbicide problem. He said that if farmers did not have "Round-Up" that up to 20% of the worlds population would starve to death. Now, is it worth it if 10 or 100 people die from exposure to "Round-Up" as a trade off for millions not to starve to death? In a world with few "perfect" solutions, we have to start recognizing and dealing with the best real world decisions that are not "perfect"!
PS--One thing that we have to stop doing is letting people with above intellect work at assembly line jobs at places like GMC that under utilize their "potential". We can no longer afford to waste intellect with labor union extortion. Rather than penalizing intellect, we need to start exploiting it with more "capitalism".
I know that most Economists, like most people, have little understanding of real economics. It has to be clear that as our economy has grown it has been fed by unemployed workers taking up productive jobs. What happens when we run out of unemployed workers? That is where we find ourselves today. We have workers who are getting older and are retiring while we have new young workers coming into the work force. The net growth is very small, well short of the 1.5% to 3.0% needed to continue past economic growth rates. Countries like Japan actually have a negative population and worker growth rate, so how do they grow their economy? It has to come by way of "productivity". Got it? The next phase is going to have to focus on greater growth of "productivity" vs lower unemployment rates.
If productivity is our future, how do we do that? We know that the drivers of future economic growth is intellectual vs more bodies. Given that fact, what do we do to "raise the medium family income"? What we will have to do are two basic things.
(1) Raise the intellectual level of our "median" work force.
(2) Reduce the number of potential workers who are a drag on the economy.
If you look around the world at the worker profile of different countries, you will find big differences. For example, look at the literacy rates. The USA is far below the top level even though we spend the most on our primary schools. Japan and most European countries have much higher literacy rates than does the USA. In our hemisphere, both Chile and Argentina have higher literacy rates than we do. What is needed for the future is more than just literacy. We need to focus much more on the STEMS while many of our children opt for easy "fluff" type classes. As you can see, if we want to "raise the median family income" it will require some major changes in our society. One thing that is clear is that we can't keep allowing illegal immigration by the least qualified workers in the world.
Now for my second point. If you look at a couple of world wide statistics, you will see that we have more people in jails or prisons than any other country in the world. We also have more illegal immigration of low skilled people of any other country in the world. Look at Japan. They have a very restrictive immigration policy while their total population is going down. Their economy is paced by "value added labor" vs exploitation or natural resources. Look at Switzerland, which is similar to Japan. They have a much higher median family income than does the USA. Both Japan and Switzerland actively work to reduce the percentage of their population that "takes" rather than help to "produce". I know that this would require a major change in our thinking for us to put the USA "first" as do both Japan and Switzerland. Japan and Switzerland are not out to "save" the world like we are with things like the "green movement". What we need to do is to look around the world at countries who are doing the right things for their citizens in the area of economics and learn from them.
Are you starting to have a greater appreciation of the fact that the USA economy of the future has to figure out how to grow with fewer new workers? We have to start changing our thinking and as do our Economist and our colleges and universities. Economic growth in the future will have different drivers than it did in the past and we will have to all recognize that simple fact. If the USA continues with past policies, you can expect that our children will live in a "hell hole" like much of the world and I don't think that any of use want that!
PS--The USA was blessed with a lot of natural resources, but most of those have already been developed and "counted". What will we "count" next to grow our economy? It has to come from intellectual value added productivity gains. That is the challenge that we face.
PS--There is another economic element that needs to be considered and that is "mix". If a person who was making shoes and producing a small amount of economic value were to switch to some kind of high tech value added work, it would result in a growth of the economy. If the "mix" of jobs were to change toward higher tech or higher intellect it would grow the economy while full employment did not change!
PS--Here is another unrelated point that I want to make. I just had lunch with a farmer who farms several thousand acres of mostly corn and soy beans, I asked him about the "Round-Up" herbicide problem. He said that if farmers did not have "Round-Up" that up to 20% of the worlds population would starve to death. Now, is it worth it if 10 or 100 people die from exposure to "Round-Up" as a trade off for millions not to starve to death? In a world with few "perfect" solutions, we have to start recognizing and dealing with the best real world decisions that are not "perfect"!
PS--One thing that we have to stop doing is letting people with above intellect work at assembly line jobs at places like GMC that under utilize their "potential". We can no longer afford to waste intellect with labor union extortion. Rather than penalizing intellect, we need to start exploiting it with more "capitalism".
