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Fix America First

The world faces major challenges in the XXI Century: food, water and population crises and ongoing conflicts, heightened by radical Islamic movements and the still uncertain impacts of global warming raise the potential of a world in turmoil. The United States is the only nation capable of providing the leadership needed to fix the world, but cannot do this if its own situation is precarious. The nation is obviously constrained by the current economic recession, but there is a general expectation that the financial crisis will pass, economic growth will return and prosperity will resume. This is not going to happen without extraordinary efforts because the economic crisis is more fundamental than generally recognized. The nation faces a new challenge, not how to re-ignite growth, but how to maintain prosperity without growth in a globalized world. This will require a number of basic realignments.

The table1 below shows a general outline of the overall US labor situation.

 

Not in work force
Under 20 77,000,000 5,600,000 are in work force
Age 20-65 40,000,000 Not actively seeking work
Over 65 32,800,000 6,000,000 are in work force
Prison population 2,300,000  
Work Force
Unemployed 15,400,000 November 2009
                   Sectors:  
Agriculture 2,200,000
Mining 800,000
Construction 11,000,000
Manufacturing 15,900,000
Trade 20,600,000
Transportation 6,500,000
Utilities 1,200,000
Info services 3,500,000
Financial services 10,200,000
Professional svcs 15,500,000
Education 13,200,000
Health Services 18,200,000
Leisure/hospitality 12,800,000
Other Services 7,000,000
Gov't civilians 6,800,000
Armed Forces 1,400,000
US population 305,000,000
Undocumented aliens 11,000,000 Estimate

 

The table clearly shows that the actual production portion of the US economy is relatively small, employing about 30 million people out of a population of over 300 million. This production portion is the underlying driver of the total economy. Nevertheless, it is no longer possible to clearly delineate productive and nonproductive sectors. Some amount of trade, transportation and professional management services is unquestionably critical for production. Information technology, as another example, includes both software development critical for the efficient operation of industrial plants and software development for computer games. But international sales of such games can support imports of agricultural or industrial products. Overall the economy is clearly service oriented, but it is unclear to what proportion of services is essential, what proportion is clearly nonessential, and what lies in between. It is also unclear what proportion of services can be more competitively performed abroad. Indeed, shifts of service jobs overseas is one reason for the current high unemployment and many of these jobs will simply not come back.

 

The prison population is not just nonproductive, but antiproductive as criminal elements require significant resources from prisons and guards to judges and lawyers. Prisons often serve as universities of crime and, more recently, as forces for radicalization of vulnerable inmates. The prison population interacts with a larger disaffected population, including gangs, parolees, and recently released inmates, not to mention millions of family members and associates. The very day that the New York Times ran an editorial praising a New Jersey effort to help former prisoners stay out of jail, the Los Angeles Times was running an Op-Ed decrying dozens of criminal RNs working in hospitals. One reader promptly objected that these are not "criminal nurses," but rather nurses who happen to have a criminal past and are trying to move beyond it. Dozens of similar exchanges show how difficult this challenge is. Sex offenders pose a particularly difficult problem, with some 716,000 registered nationwide. Addressing the challenge of criminal elements will require both thoughtful leadership and significant resources.

 

All of the US economic sectors are facing significant changes, including:

  • The agricultural sector has already changed dramatically. Since 1980, agricultural workers have dropped from 3.5% of the overall work force to about 1.5% as as larger (and more efficient) farms have replaced family farms and as food imports have climbed significantly. Restrictions on water supply and competing demands from growing populations will force significant reductions in irrigated land, while changing climate patterns will force major shifts in agricultural regions. Energy will also have a large impact, raising production costs and making long-haul transport of agricultural products decidedly less attractive. One result may be the development of vertical farms in city skyscrapers. Another result may be a major increase in crops for biofuel production. Overall, it is clear that there will be significant shifts in the agricultural sector which will require large investments and realignments of many agricultural jobs.
  • The construction industry is already facing a severe challenge from the current recession, which was partially caused by inflated housing values. The real estate market has been heavily impacted. New construction, both housing and offices, has declined, but with an expectation that it will eventually resume. However, the combination of tight employment for the foreseeable future, more realistic and demanding mortgage criteria, and projections for diminishing population growth make this unlikely. Energy costs are also reducing the attractiveness of outlying suburban development and spurring the renewal of inner city areas. Overall, the construction industry will face a shift from new construction to reconstruction, refurbishing and expansion of existing buildings and upgrading infrastructure. Global warming may also have a major impact on the construction industry. Rising sea levels and more severe coastal storms could force relocation or abandonment of thousands, even millions, of buildings currently at risk. Coastal flooding could also result in large demands for protective structures. Whatever the eventual outcome, the construction industry is also facing significant realignments and major investments.
  • Just since 2000, the manufacturing industry has lost some four million jobs. Much of this loss is the result of economic globalization and shows no signs of decreasing. Industry is also facing growing pressures to support sustainability with waste minimization and more efficient production. The same factors affecting the construction industry will also reduce the demand for many consumer goods. Reduction in new construction also means a reduction in all the items used in new buildings such as furniture, household goods, and appliances. Any further reductions in industrial output also means more workers looking for jobs.
  • Higher fuel costs have already been restraining the transportation sector and this can only be expected to worsen. Any reductions in construction or manufacturing will also result in reductions in transportation. Reductions in transportation can, in fact, be an important element in improving national energy efficiency and reducing pollution, especially in urban areas, further impacting this sector.
  • Financial services have been particularly heavily affected by the current recession. Indeed, financial services were largely responsible for the recession. A direct result is that many financial service professionals have found themselves out of work. A return of this sector to previous employment and compensation levels seems unlikely.
  • Professional services is one of the largest employment sectors and covers a wide range of jobs. Many of them have suffered in the recession as companies have trimmed the payrolls. As with financial services, a significant number of formerly well paid white collar workers have found themselves unemployed in a very tight job market, particularly tight at compensation levels these workers were accustomed to.
  • Education provides its own daunting challenges. US international competitiveness, and hence US prosperity, depends on our education system. There is no end to current articles describing the challenges facing the US education system and how it is falling behind. As summarized by Thomas Friedman, in the 1950s and 1960s, the United States dominated the world in K-12 education. Today, we have fallen behind in both per capita high school graduates and their quality. For instance, in an International Student Assessment that measured the applied learning and problem-solving skills of 15-year-olds in 30 industrialized countries, the United States ranked 25th out of the 30 in math and 24th in science. That put our average youth on par with those from Portugal and the Slovak Republic, rather than with students in countries that are more relevant competitors for service-sector and high-value jobs, like Canada, the Netherlands, Korea, and Australia. The challenge is greatly complicated by the fact that education is primarily the responsibility of 50 individual states, all of which face increasingly tight budgets with the recession. For higher education, there are hundreds of private institutions in addition to the state systems. Just what needs to be done is not clear, but what is clear is that it will require a sustained and expensive national effort. Failing in this, the United States will quietly become a has been economic power and national prosperity will shrivel.
  • Health care has been prominent in the news lately. While there is wide agreement that significant changes are needed, the bitter congressional debates on insurance and the steady aging of the population insure that there will also be increases in the numbers of health professionals and major financial requirements.
  • The leisure and hospitality sector enriches our lives but unmistakably depends on patronage from people employed elsewhere. The current recession has underlined the fragility of this sector. Tight budgets and continued unemployment problems make any real growth unlikely.
  • The armed forces and homeland security protect the nation, but also absorb a significant portion of federal resources for personnel, equipment, and support. It is indisputable that military and security expenditures are basically nonproductive, that every dollar spent here detracts from resources available for orher programs. The several billion dollar monthly expenditure on the wars in Iraq and Afghanistan is not sustainable, but what will evolve from this is only beginning to take shape. The armed forces are facing challenges that are more varied and much harder to quantify, exacerbated by global warming which can destabilize entire regions. The future of US military power is being lively debated. Only this last week, Secretary Gates acknowledged the non-military aspects of the challenge by proposing $2 billion in funds to aid unstable countries. The nation has to insure that the cost of defending itself does not relegate it to economic decline.

Even this cursory overview of the US economy shows that it faces major challenges with the work force. Several aspects are particularly bothersome:

  • Only about 50% of the total population is in the work force and this percent will decrease in the years ahead with the aging population.
  • The number of middle class workers now exceeds the number of middle class jobs. It is unclear how this balance will be restored. Retraining for jobs in sectors needing expansion (such as education and health) can help to address this challenge, but will certainly require significant funding.
  • The economy includes many unskilled, low paying jobs. Traditionally, these have been filled by immigrants, who then worked up the ladder into the middle class and were replaced by still newer immigrants. With the stagnation of middle class jobs and a leveling of population growth, this cycle has ground to a halt and we are witnessing the nascent formation of a permanent underclass. This would breed frustration and disaffection and greatly complicate any efforts to address the challenges of subduing criminal elements and building national cohesion.

The leveling of the US population and a greatly diminished need for immigrants will mean that prosperity will no longer depend on growth; the challenge instead will be how to support prosperity without growth, how to develop an economy that is dynamic but not expansive. Under these conditions, essentially all jobs will have to provide a living wage with few exceptions -- perhaps some part-time employment or jobs (such as apprenticeships) which clearly feed into better positions. Many menial jobs will have to be realigned, mechanized or simply eliminated and unskilled workers will have to be able to continually improve their skills.

 

The number of low-end jobs raises the additional challenge of the equitable distribution of income and wealth. The United States never guaranteed equality of results, only equality of opportunity. But the Land of Opportunity was always more equal for some than others, with many inner city residents and chronically depressed areas such as Appalachia finding little opportunity. Now more than ever there is a vexatious gap between the wealthy and the poor. Exorbitant sums paid to some executives contrast grimly with unemployment statistics, exacerbated by a struggling middle class and by millions of unskilled workers who now see minimal prospects of achieving anything close to the American Dream. Poverty is becoming an increasingly common part of US life, with impacts ranging from increased crime to a widespread misuse of emergency services to provide routine and otherwise unaffordable care. The United States is a nation pulling apart to a degree unknown in the last 25 years with many communities falling far behind median national measures of economic health. Unless the nation can meet the challenge of constructing a more equitable society, prospects of long term social cohesion and prosperity will be bleak.

 

The most basic challenge is to promote good governance. This is the core of the global challenge for the XXI Century. If the United States cannot demonstrate good governance at home it is in no position to promote good governance abroad. Yet at this critical juncture, we have an increasingly dysfunctional national government, as amply demonstrated by the Congressional inability to work together on critical issues such as health care and climate change. The Executive Branch is responsible for regulation of financial systems, and the current recession is striking commentary on its failure. The George W. Bush administration was notorious for putting party loyalty ahead of competence, but the failure is hardly due to one man or one administration. Self preservation is a critical consideration for almost all Senators and Congressmen, so there is an outsize influence of large corporations, military industries, and lobbyists. At a time when critical needs mentioned above are starved for funds, billions are frittered away on earmarks and pet projects while defense spending consumes an inordinate share of national resources.

 

Overall, the United States is in danger of becoming a fractious, non-competitive nation unable to maintain its prosperity or uphold its ideals of democracy, freedom and equality, and unable to provide the global leadership imperative to avoiding looming turmoil that would devastate not only the United States but the entire global community.

 

A central problem is the lack of any comprehensive national strategy which could be the basis for evaluating the full range of threats and challenges facing the nation and for fashioning a balanced set of integrated responses. Instead, domestic issues are evaluated piecemeal. The major strategic challenge for the XXI Century is organizing a stable, interdependent world in which major conflicts are unlikely and which has the global capacity to address looming disputes over water, food and resources. If this challenge is not met, the United States will be unable to maintain its standard of living and will face growing hostility from competitors such as China. While the nation has to address both the domestic and the external challenges simultaneously, the domestic challenges have to take priority as global influence depends on our domestic situation. This is particularly true since promoting good governance requires championing traditional American values of democracy, freedom, and equality. The United States still enjoys a reservoir of global respect but also faces a growing skepticism on the universality of US values and their applicability to the present international situation. To promote good governance globally, the United States must demonstrate what good governance is and how it enriches the lives of its own citizens and of people worldwide.

 


NOTES

 

1. This table is based largely on the Statistical Abstract of the United States and shows rough totals. There are some overlaps among groups and numbers are not all for exactly the same time period. Those listed as not seeking work mostly do not want work, though a small percent are discouraged from the job market and no longer actively seeking employment. Unemployment figures change monthly, while sector figures are mostly available only on a yearly basis.

Comments (3)

Mr. McDermith:

This information needs to be read by all state and national government officials and acted upon immediately,lest we turn into a 3rd world country before we know it..
Debt,drugs, crime,collapsing family life and a failed education system are all destroying the U.S. Americans need to examine other successful countries,learn from them, and apply the lessons to the U.S.

Calvin Hobbes:

Agreed. With so many entry level professional people who have "stalled out" at the beginning of their careers and those who have been laid off for lack of seniority, there may be a gap coming up as to who can replace who as the Baby Boom generation continues to retire. At the very least it doesn't seem clear how the price of housing will increase or be sustained as the older population die off accelerates or gets carted off to nursing homes and fewer working age people 20 to 65 can afford them. At the end of 2020 this may be start to really show along with the debt they will have to carry. I disagree that copying other countries is a solution.

Ed Rodriguez:

Excellent article it is mind-boggling to see the millions of US families left in the dark by the US love affair with consumption of cheap imports. The once proud nation has forgotten the lessons of Henry Ford. "We shall pay our workers enough for them to buy our own goods". It is perhaps the time for the US to stop listening to extreme right whose insatiable greed has alienated their own people by offshoring all the production to the only real threat to America and the World CHINA!

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