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Wednesday, June 6, 2012

Why America's Standard of Living Is Declining.

       Sometimes no matter how hard you work you never seem to get ahead.  There may be a reason for that. You are getting farther and farther behind.  It does not take rocket science to figure it out either. Back in the late 50' and early 60's when I entered the labor force the minimum wage was fifty cents an hour.  A bottle of pop or a candy bar out of a machine was a nickle.  Gas was an outrageous seventeen to eighteen cents a gallon.  Well today a pop or a candy bar is a dollar fifty out of a machine. The minimum wage in Indiana is $7.25 an hour.  Well if pop and candy bars have increased to thirty times their value and the minimum wage had kept pace the minimum wage would be $15 and hour.  The fact that it has not kept pace means your buying power has decreased so therefore your standard of living.  Just mention raising the minimum wage and the rich fat cats scream.  Manager's of small business scream there is no way they can afford to pay that kind of money.  Well I hate to say it but they have been ripped off just as much as the rest of us.
    On top of the above mentioned statistics the job market is in the tank and shows no sign of coming back anytime soon.  The cause of that problem has many sides.  Jobs being shipped overseas is only a small part of the problem.  The improvements in manufacturing and distribution with the invention of computers and robotics have decreased the demand for manual labor.  A robot in some instances can replace a hundred people. While only one or two people are needed to keep up a whole factory full of machines.  Those jobs are gone.  They are not coming back any time soon.
    Companies that benefited from the automation took all the increased profit from reduced labor cost and cut the labor force even more.  It did not matter to them that the laborers that produced the income for them to do that, were forced into unemployment.  The burden created by the layoffs and elimination of laborers was dumped on society. While the rich got richer.  Way back in 1998 the modernization was just taking off.  That is when capital gains taxes were drastically cut on those receiving excess profits.  One problem with cutting the capital gains tax was that it had been income to the government.  The second problem which we are seeing the effect of today is the rise in the national debt.  The two problems are related.  The politicians cut the tax, but they did not cut the government spending.  This whole thing can be traced back to a deal between Bill Clinton and Newt Gingrich.  Clinton wanted affordable housing for the poor. While it was an admirable goal there was one problem with it.  It did not limit cost of the housing to a level which was within the poor persons budget.  Most bought way more house than they could really afford. Gingrich wanted more money for his wealthy friends. He wanted them to be able to keep more of their profits. They both got what they wanted on the backs of the average American.  The cost of these give away programs was not fully thought out.  Today we are seeing the effects of lack of foresight on their parts.
   Shortly after the above mentioned fiasco.  George W. Bush decided to cut the taxes on the wealthy.  At the same time starting two wars and providing virtually no means of funding them.  When combined with the capital gains cut and the failure to cut spending the fact the debt was going to go up was and is inevitable. You can not spend your way out of debt.  It is a basic fact of life.  It does not work for individuals and it does not work for nations.
    Today the sad state of the economy is being felt by many Americans.  The housing market has tanked and the price of housing is in free fall to a point where it should have stayed.  The Obama administration has tried to come up with all kinds of programs to save peoples homes.  He has done virtually nothing to create jobs so the ones who own the homes can afford to pay for them.  The fixes he has been advocating are just going to shove the problem down the road.  As citizens who have lost there jobs, due to the sad state of the economy, fall off of unemployment it will only get worse.  They will no longer be able to keep their homes.  The lack of jobs is the major cause of the whole problem.  So while Obama tries to save houses, the Republicans are refusing to raise taxes.  They do not want to take any of the money, they should never have given away in the first place, from their rich and powerful friends.  The rich do not feel obligated to give up anything.  It is theirs.  They got it and they have no intention of giving it back.
    So what is the solution to the problem.  Business and the wealthy investors who create inventions that eliminate jobs need to pay up.  They need to acknowledge their debt to the laboring class that made them their wealth and contribute to the cost of retraining labor.  Helping create a labor force that remains productive and supports the American economy.  Basically the same failure of the rich to reinvest in America is what led to the Great Depression way back when.  Only World War II created the demand to end the Great Depression.  The expansion of technology and increased standard of living pushed the economy for many years after the war.  While productivity is still rising, the advent of new fields of employment has diminished.  The only solution at this time is to weather the storm by starting programs to bring America's infrastructure into the 21st century.  Old fashioned manual labor can fill the gap. Spending money to create jobs that can be taxed.  Not giving it away for doing nothing. Sometimes it may be better to forego the 500,000 dollar street sweeping machine and employ 16 people for a year with the money.  This would also generate taxes to run the government.  The mechanical street sweeper may seem cheaper, but is it.  Especially if it displaces workers and puts a burden on society.
    What is the solution if you are a working class American.  It certainly is not waiting on the Federal Government to help you.  First you have to make every cut you can.  Reduce your need for cash and then create a way to generate your own income. Find a niche and fill it.  Whether it is mowing yards, landscaping or babysitting.  These are jobs and generate income.  Maybe not at the level one needs but they do offer a chance to hold on till you can find a better and more profitable niche.  Have a friend who has found a niche like that.   Support them and encourage them.   If the opportunity affords itself join them.  When you do have money to spend, do it in a way that stimulates your local economy.  Give a car wash certificate,  a gift certificate to a locally owned food outlet or business.  Do not wait on the government you will loose all you have and starve.  That is what people did during the great depression.
      It is not my goal to generate fear and panic, but this is just the beginning of a very long down turn if the government and politicians continue on their present course.  The definition of insanity is. "Doing the same thing over, and over and expecting a different result."  Well that is the political status in America today.  The two parties in power are concerned about only two things.  Staying in power and milking the cow for all they can get.  They do not care about the American people. That can be proven by looking at the deep south.   Supposedly the Republicans are all about big business.  They may be, but why are all those Republican states home of the lowest standards of living in America.  Because they are doing nothing for the working class Americans.
      So if you want change.  The kind that helps you, not the Obama kind.  You need to get with like minded individuals and vote in a third party candidate that stands for what you believe in.  If you can not find one start your own party.  It takes time but at least you will know you did not throw your vote away on a party that could care less about you and your needs.
     It would really make me happy if I was wrong about all this gloom and doom, but as a history buff and especially in the area of the Great Depression.  I do not think I am.  In fact I am seeing more and more things that say our government is making the very same mistakes it made back then.  The first being that they are saying. "It's not really that bad, it will get better in time."  It did not then and it will not now.  It was about 34 months from the high point to the low point in the Great Depression.  We have just passed that point and things are not getting better.  The stock market can find no traction.  A month or so ago it hit a high from the crash.  Then the last two weeks it has given up all the increase it made for the year.  When you look at the whole world and not just the U.S. economy, the writing is on the wall.
     In the recession of the early 80's people were stealing cattle right out of the farmer's fields so they could eat. It will not be long and I imagine we will be seeing that kind of thing again.  People will do what they think they have to, to survive.  Back in the Great Depression people still had morals and values.  That is something that is dying fast in America.  People think they are entitled to take what they want nowadays. It could get scary if it gets as bad as back then.  All that being said.  Good luck in whatever you decide to do to survive.  However do something, don't wait till it is to late.

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