In which we discuss why we need to fix our economy, and a few ways to begin.

It’s time for the United States of America to change our fiscal policies to prepare for a coming storm. Over the last sixteen years we’ve allowed a collection of unwise decisions to put us in a position where we are ill prepared for a major impending shift in demographics which threatens to bankrupt the country and force a significant decrease in our effective standard of living. The United States needs to enact a sea change in the way we manage our money, and soon, before the baby boomer generation ages further.

The youngest members of that generation born in the years of relative prosperity between the Second World War and the Vietnam War are now entering their late fifties or early sixties. They represent the bulk of the US population currently, and as a group, reproduced less prodigiously than did the generation that came before them. Unfortunately, this is a good time for makers of dark suits and funeral homes. Because this generation is approaching their statistical vanishing point; within another ten to twelve years, more of the baby boomers will be dead than still living. Moreover, those who are still alive are approaching retirement, and beginning to show the unfortunate effects of age. The strains on our social health programs are already apparent.

At a time when the savings accounts of the average American are smaller than they’ve been in almost a century, we are within a few years of receiving the biggest bill we’ve ever seen to keep our parents, grandparents, and ourselves healthy and living with dignity as long as possible. The additional emotional gravity these responsibilities carry with them will complicate the problem for many people and make clear-headed decision making more difficult once we are in the midst of this problem. The time to address this problem is now, when a relatively gradual course correction will still have time to bear fruit. If we wait until the bulk of the boomers are no longer economically productive members of society, it will be too late to avoid substantial social upheaval.

The other pincer is closing as well. As our schools continue to fail to generate workers who can compete in a global economy, we are entering a time in which top and midrange jobs are migrating elsewhere. We cannot count on the current crop of high school and undergraduates to help to narrow, or even hold the line in our current financial cold-war with the developing second world.

In short, without significant change, there are likely to be dark days ahead for the US middle and lower classes. If you are between twenty and sixty, this problem is about to land squarely in your lap, and the choices you may be forced to make are likely to be difficult ones. Unless you relish the thought of having to decide between keeping your mother alive in comfort and providing an education for your children, you’d better quickly get onboard with the desire to find some policy solutions to our economic woes. Here are a few suggestions:

First, we need to end the foolish pork-barreling that is squandering billions of tax dollars every year. From bridges to Alaska, to more insidious propping up of the sugar industries, its well beyond time that as voters we began to seriously punish those members of congress who abuse our trust and practice such poor fiscal stewardship. Congress should be held every bit as accountable as the President (another matter entirely), for strengthening, not squandering, America’s financial power. Every senator and representative should be required to furnish transparent accounting of their fiscal voting record. This would help expose some corruption, by shining a light into the holes where some lobbyists live, but more importantly, it would help people understand the gross imbalances in some of ways congress is spending their tax money.

Second, we need to begin to push seriously to increase the real value of many of our critical exports. I’m not talking about the protectionist tariffs on exported goods favored by many Democrats. There is much valid concern that these would serve only to deeper our trade imbalance. Instead, we need to focus on making sure that we are being paid for those goods we develop which are being used in other countries. In particular, one area which is worthy of attention is the real enforcement of intellectual property laws. It is estimated that in China, more than ninety percent of all movies, software, and music sold are pirated. Rather than focusing on adding tariffs to the less than ten percent which are being purchased legitimately, which would serve only to provide increased incentives for piracy, we should focus on trying to ensure that a significant percentage of the content and technology created in the US is paid for. There has been much lip service paid to this notion by Beijing of late, but it has been only that. The recent case in which the Chinese government fined the Beijing Century Hai Hong Trading Company USD $20,100 for selling pirated movies is a fine example. The fine is a pittance, the company allowed to continue operating with little more than a slap on the wrist. Had Beijing been serious in any way, they could have levied serious fines, or imprisoned the financiers behind the operation. If the US were serious about protecting our economy, this is one place we should start. Without the Windows operating system, China’s economy shuts down. It’s that simple. The same is true of US exported media in the entertainment sector, and US brand goods in the mercantile sector. We have leverage here, because we produce products and brands people want. And they are willing to pay for them, but not unless we enforce the need for payment and legitimacy among our export brands.

Third, and most importantly, we cannot continue to throw away money chasing unachievable foreign policy goals or ideals. “Spreading Democracy in Iraq” is simply not worth the hundreds of billions of dollars it has already cost us, even if it were possible, which seems to be doubtful. The same is true for the so called War on Terror. We must become brutally realistic about the true effects of our blundering military actions around the world. The trillions of dollars we are hemorrhaging under the guise of fighting a nameless enemy, an unkillable tactic, “terror”, must be rerouted to improving domestic programs. Terrorists are not killing your father, disease is. It’s under-funded school systems, not Bin Laden who are making your children unable to compete against their pirated-movie-watching peers in Beijing.

If the goal of this war without end is to prop up a defense industry because we need a strong military industry in order to maintain our military hegemony, fine. Let us openly acknowledge this as the case, and add a degree of transparency to the way in which we spend this money. There is nothing wrong with keeping a strong war machine, or at least not from a pragmatic standpoint. But it is foolish to inflame public opinion by cynically manipulating events like the terrorist attacks of 9/11 to serve a doctrine of global aggression unless it be profitable to our citizenry. If perpetual war is the best course for our country, let us acknowledge it. We can accomplish this goal without then having to waste billions pretending to “spread democracy” or accomplish other soft goals in those parts of the world we use as testing grounds for our military.

There is a choice here to be made, between external military spend and internal spend on health care. There are pragmatist arguments for both positions, but it does not seem that we have yet had an honest national discourse about the choice.

Fourthly, let us investigate the true costs of our penchant for incarceration of our citizenry. The early nineties saw a pendulum swing too far in favor of using prisons as a solution to sweeping social ills under the proverbial rug. The War on Drugs, coupled with the appalling popularity of “mandatory minimum” sentencing, which strips from the judicial branch the ability to apply exactly that judgment and wisdom for which is was created, has resulted in a situation in which a huge portion of our society (as much as three percent at any given time) has been moved from the asset column to the liability column. It’s time we take a close look at the real costs of some of our knee-jerk beliefs on what constitutes a criminal offence. Because, again, despite the fear mongering that has worked so well to get politicians elected, it most likely isn’t a drug addict who is going to take your mother’s life. Its sickness. And the real threat to your children is the minimum wage job without health care that currently awaits them when they graduate.

The United States is on the cusp of a demographic shift and an education chasm which threaten to force us into very uncomfortable choices. We must re-evaluate some of our beliefs on how we spend our tax money before the hard decisions are forced upon us.

-tf