How we got here, and how to keep it going. The long view.

       Prior to the Baby Boom, America was much like any other civilized country.  We had multiple generations living under one roof, many industrialists making the lion's share of the money, and the working poor staying that way.  Something changed with the second world war though.

       The Deaths

       So in looking at the lovely chart compiled by our friends at Wikipedia, you will note some statistical oddities.  First, that Allied civilian deaths far outstrip military ones.  That says something for how the Axis fought.  Next, you will see that Axis military deaths far exceeded civilian ones.  That says something about how we fought.

       But this is all academic to the point.  Due to our remote location, (relative to Europe) and our late entry to the war, and frankly our technological advantage, we lost relatively few people.  The numbers to reference to see this are the deaths as a percentage of the country's 1939 population.  Of all the major powers in the world, we lost the lowest percentage of our population.

       This had an immediate impact on our country.  (On a  historic timeline).  The low number of American civilian deaths, compared to the rest of the world players, meant that when the post-war world needed goods manufactured, we were the only ones left who could do the job.  When the needs of the world outpaced our workforce, we effectively doubled it, by re-adding women.  (They got a taste of the working world during the war and apparently enjoyed it)

       Suddenly, (in historic terms), every generation was living separate from each other, there was the option for both partners to work, and a relatively high amount of wealth for working-class families, compared with the rest of the world.  So in historic terms, what our grandparents, parents, and ourselves experienced was a brief period of unusually high prosperity.

       WWII eliminated the competition, essentially.  While I would not advocate the same method of doing this today; this is what we need to do, as a country.  How do we put ourselves ahead?  Unlike the mid-east we do not have a monopoly on a scarce good.  Unlike China and India, we do not have so many laborers that it is cheaper to hand build, as opposed to automation.  (Also we mostly enforce our environmental laws...)  Our advantage is our inventiveness,  When you take in all the ideas of the world, and put them together in one place, it is a natural fit.  Yet, we are not the clear-cut technology leaders that we should be.

       So here is my suggestion.  The President (Obama as of the writing of this article) has recently suggested that community college be "Free".  Again, that word is misused, but I have been shouting that same idea at anyone who can hear (and writing it down for those who can't) for decades.  I would not limit this to community college, though.  But there is one single condition...

       The only taxpayer funded post secondary schooling you could get, would be things that benefit the country.  (I know, that sounds socialist, but hear me out).  No one is saying you can't get that degree in underwater basket-weaving, you just have to pay your own way.  If you want Joe and Jane taxpayer to foot the bill, you need to pick a field in which there is either an essential need, or one that would improve the competitiveness of America, in the international market.

       This would eliminate the need for protectionist policies, as it would draw business here.  It would also provide a benefit to taxpayers.  (unlike most government programs).  Even those who can't, or who choose not to, go to college would benefit, as the available jobs would be better, due to the influx of manufacturing, and technology.

     

The fix for the economy

       Alexander Hamilton, (Ten dollar bill dude) is credited as being the first American protectionism theorist. Let's look at some of his ideas.

1. "Protecting duties." (Tariffs.)
2. "Prohibition of rival articles or duties equivalent to prohibitions." (Outright import bans.)
3. "Prohibition of the exportation of the materials of manufactures." (Export bans on raw materials needed for industrialization here at home.)
4. "Pecuniary bounties." (Export subsidies, like those provided today by the Export-Import Bank and other programs.)
5. "Premiums." (Subsidies for key innovations. Today, we would call them research and development tax credits.)
6. "The exemption of the materials of manufactures from duty." (Import liberalization for industrial inputs, so some other country can be the raw materials exporter and we can industrialize.)
7. "Drawbacks of the duties which are imposed on the materials of manufactures." (Same idea, by means of tax rebates.)
8. "The encouragement of new inventions and discoveries at home, .and of the introduction into the United States of such as may have been made in other countries; particularly those, which relate to machinery." (Prizes for inventions and, more importantly, patents.)
9. "Judicious regulations for the inspection of manufactured commodities." (Regulation of product standards, as the USDA and FDA do today.)
10. "The facilitating of pecuniary remittances from place to place." (A sophisticated financial system.)
11. "The facilitating of the transportation of commodities." (Good infrastructure.)

(http://www.huffingtonpost.com/ian-fletcher/america-was-founded-as-a_b_713521.html)

       The basic idea here is to make sure American industry was given preference.  We forgot about that in the 80's.  In the 90's the factory workers, who now had no factories to work in, switched to construction jobs.  In the 00's those jobs began to dry up, as an economy that produces nothing cannot support itself.  So far, in the 10's we are seeing crippling unemployment, and the jobs that are being created don't pay as well as what was lost.  What do we do about it?

       Well, we begin by reinstating Hamilton's brilliant ideas.  That action alone will not immediately fix everything, but needs to be done.  Then we begin to assist the growth of companies that make pre-fabricated and modular homes.  Our workers mostly came from factories and switched to construction, and so are uniquely qualified for this.  The homes, or modules, are the same size as a standard shipping container.  This allows easy transport by road, rail, or ship.

       But to whom do we sell?  Our trade partners in Europe have regulations about historic areas, and their own protectionist policies.  But, much of India and Africa have a need.  We could provide them expertly built and wired homes, giving them no need to develop that particular set of skills domestically, and perpetuating the need to import homes from us.

       We would have a great export business for homes going in no time.  It would be a status symbol to have an "American Style" house.  This would set up further demand for American built goods.

       Once these trade partners are cemented, longing for the good stuff America can provide them, we leverage our true strength.  Food Production.  We do it better.  We do it cheaper.  We do it so well, we pay farmers to not grow food, just to keep the prices up.  Those prices are still a fraction of what the same food would cost in Europe.  

   

       I would point out, as well, that protecting American interests should not ever be a partisan issue.  Many say protectionism is something that the right disdains, as it hurts trade; and the left embraces, because it helps unions.  If it helps unions, that is only because they are covered under the broader category of "American".  If it hurts trade, the trade being hurt was not to our advantage anyway, so let it be hurt.  American dollars for sub-standard foreign goods is never a good trade.  

       Of course this idea is expressed facetiously.  Well halfway facetiously.  We do need to protect our interests better.  

Austerity Measures coming for the U.S.A.

       Before we examine what that might entail we need to realize a few things.  First, Spain and Greece are not alone in owing more than their GDP annually.  Second, At least they had the good sense not to borrow the bulk of their cash from their primary trade partner.
       See here in the U.S.A. we have borrowed heavily from Chinese banks.  While a bad move for many reasons it is especially stupid when you consider we are borrowing now, to pay the interest on past loans.  Mostly also from China.  We now owe more than we can pay.  So how can we fix this?
       The solution we have been using is to keep borrowing, which undermines American manufacturing so it outsources to China.  Then buying goods that used to be domestic, but are now imported.  But then we all knew that.  Essentially it's like having your home mortgaged through Wal-Mart bank, where you also buy your food, clothes etc.  Then realizing you can't pay for your groceries, so you borrow more from them.
       What I'm driving at here is that we joke about the collapse of the Spanish, and the Greek economy.  We laugh about the Austerity measures they must now endure just to pay back a loan they should never have taken out.  We make fun of the people there for allowing their own government to run the country into the dirt so bad they had to borrow more than their entire countries production, in the first place.
       What makes us different?  By all means, keep on laughing.  It isn't going to be funny in a few more years when China wants its money back, and we can't pay.  We will be at the same point sooner than you could imagine.  Or maybe not.  See, I learned a trick or two in my negotiations class.  Sometimes the weak position is stronger than the strong position.  Like here.  And please, any aspiring presidential candidates take note, this will work.
       Explain to our good friends the Chinese that we have no ability to pay them back as long as we keep buying their goods.  We need to either have our debt absolved, and we in turn would forgive the debts owed us by other sovereign nations; or we will need to heavily tariff or outright embargo all goods originating in their country, in order to generate the revenue to pay them back.  We are very sorry.  You have been very kind to us, but you had to have seen this coming as much as we did.  
       Then step back and let them make the decision.  It's their money, after all.  Or solution no one wants to hear.  We form a trade federation.  A super-national organization like the E.U.  This one though would be just us and China, maybe Brazil, if they care to play nice for a change.  Put aside our differences and realize exactly how much of the planet's GDP is represented by just those three countries.  Add in Japan and Germany and we would then have a world government.
       Option three is simple enough: learn Mandarin or Cantonese.  You'll need it if we keep doing what we've been doing.

Chicago's Inspector General

       The inspector General made some recommendations to the Mayor to achieve financial stability for the city.  I was not aware that such things fell within the auspices of his job.  No matter.  I am optimistic.  Not because some grandstanding appointee, politician makes idiotic statements.  Not because some of these ideas were clearly contrived simply to make the others appear sane by comparison.  (Yes, I mean the toll on Lake shore drive)  Not because of this flagrant wagging of the dog.
       I am optimistic because within minutes, both the media and the people were saying that this was clearly done for the reasons listed above.  The people of Chicago, despite a history of being assumed to be stupid, are becoming quite a bit harder to put one over on.  I will stop short of saying that the people are wising up; but at least they have become so jaded and suspicious of government that they see past the more obvious smoke screens. Making the few of us still working pay higher taxes and fees, only makes class warfare the norm. 
       What no one seems to realize though, is that there is only one way out of this financial mess.  You see the welfare economy we have put in place after WWII relied on constant exponential growth in order to function.  We allow our jobs to be outsourced, and the people who used to work in factories all transitioned to construction.  This is something we all should have seen coming.  The solution, you see, is to bring back manufacturing.  Also, unlike what the President and his cabinet say; building roads, schools and bridges are not real jobs.  The true wealth of America is not our schools roads and bridges.  Those are symbols of our (now former) wealth. 
       The true wealth of America has always been that each American was allowed to work as hard as they want, to achieve what they want.  Our wealth was that we built what the rest of the world needed and wanted.  The only road back to that level of prosperity is protectionism.  Our jobs are more important than Chinese jobs.  That is the way every other country works: by treating their interests as more important than anything else.  Why are we not doing the same?  It does no good for me to yell for everyone to "BUY AMERICAN!", because we would only be able to buy food then.  And we would need to check sources first. 
       We need to set ridiculously high tariffs on imported goods.  Completed or not.  We need to set in place a 51% ownership rule like every other country.  (All companies, or subsidiaries operating in the country must be at least 51% owned by citizens thereof.)  We need laws that protect the American worker.  Corporations only outsource because the law allows it.  Change that and we will fix our entire economy.  Then, and only then, can we help the rest of the world.