America's Broken Towns and Cities

For the first 300 years of its existence, the towns of America's colonies and then states were more or less self-sufficient. Yes, they brought in goods that were manufactured in other cities or states, but the fabric of the daily economy was all local.  Even as late as the 1950s, you bought all of the goods you needed in local stores owned by locals.  Yes, there were supermarket chains already then, like A&P, but even they were embedded in the town and felt local.  

There were no malls and suburbs were just starting to grow. The focus of everyone's life was the local downtown, whether it was a small town or a larger city.  Downtown was where the action was, whether it was making a needed purchase, socializing with friends, or seeking entertainment.  It was vibrant. 

Even the major shift from the United States being an agricultural economy to an industrial economy, with its migration of people from rural areas into urban ones, did not change this basic aspect of local life.  Even though things weren't quite what they once were, rural America was still functional  Towns were real towns with stores and services.   If you needed something not available locally, you ordered it from the Sears and Roebuck catalog. 

But with the advent of mass-produced suburbs and expressways courtesy of Eisenhower's interstate highway program, and the suburban malls that they spawned, the focus of the America's local economy and life changed.   In rural America, the nearest Walmart became the new village.  I don't know if because the malls were spanking new or because they consisted mostly of chain stores which were known through advertising, but Americans deserted their local stores in favor of these flavorless, characterless, shopping and eating venues. 

For example, within the course of two decades, by the 1980s, downtown Reading, where I grew up, the 3rd largest city in Pennsylvania, was a dead zone.   Soon to be recreated as an office center by tearing down many of the old buildings and replacing them with brick office buildings.   Many store fronts were empty.   Many filled with low-priced merchandise catering to the now-poor in-town population.   The movie theaters were all shuttered.   Even the fabled Crystal Restaurant was no more.   Pomeroy's Deparmtent store held on for a few more years, but it was hopeless.   The changed dynamic of the life of the city was clear. 

This is the pattern that has repeated itself across all of America.   Virtually no place was spared.   And in time, this pattern of modern development even took root in Europe, even in France.   I read an article in The New York Times a while ago that told how the old regional centers in France were now empty of local commercial life, which had been replaced by the suburban shopping mall.   I read an article about how local bakeries, once the epicenter of local German life, no longer existed.   Bread was now baked in large bakeries and sent around the country.   No more freshly baked rolls from the corner bakery for breakfast!

This change from local self-sufficiency to big box stores is the reason why our cities, not just our rural areas, are mostly dead zones, except for offices.   And this is why rural small-town America has turned into a lifeless space, where drug-addiction is a major problem.   Further, people may still be living in the country, but they have lost all connection to the land.   They are not inspired by the land or nurtured by it.  Not only don't they farm, but they typically don't even have a vegetable garden.  It's more convenient to go to the local Walmart or supermarket and buy groceries. 

If there is to be any hope in saving America, it does not lie in some "new idea."  It requires going back to the future.  It means rebuilding a local economy based on local business in a local downtown.   I have no idea how one goes about doing that.   Perhaps a smaller city that still retains the infrastructure of their downtown could through government grants encourage the rebirth of local storefronts and restaurants, and a rebirth of local life downtown.   This should be a focus of HUD in the Biden administration.

If we don't change the dynamics of local economies and life, if we don't rebuilt local communities, then we will continue down a path with less meaning, more ennui, more drugs, less social interaction, and eventually a total breakdown of all social norms in a technologically-addicted society. 

Capitalism Is Not the Answer; Capitalism Is the Problem - But What To Do?

A recent article in The New Yorker, “Rage Against the Machine,” commenting on several recent books about the future of robotic automation, shows clearly the disaster - massive unemployment - that will be created by this technology in the next 10-20 years due to the unending desire of corporations to increase profits by reducing labor costs through automation.  Capitalism is thus clearly not the answer to our economic future, as many hold.  Capitalism is the problem.*

To answer the question of how many jobs are at risk, the article cites a 2013 Oxford University study which concluded that “nearly half of all occupations in the United States are ‘potentially automatable,’ perhaps within ‘a decade or two.’”  Another said that if a job can be learned by repetition, then whether manual or cognitive the job can probably be done by a computer.  The various books cited arrive at more or less the same conclusion to the question, “How long before you, too, lose your job to a computer?”  The answer is, “Not long.”

The article makes clear that this process is already well underway.  Amazon uses 30,000 robots in its fulfillment centers.  A huge electronics factory in China succeeded in reducing its labor force from 110,000 to 50,000 using robots.  And textile plants which have been “re-shored” (bringing production back to the U.S.) have brought with them almost no employment.  A factory in South Carolina, for example, that produces 2.5 million pounds of cotton yarn a week employs only 150 workers.

This is certainly not a new force.  In small, localized ways, the impact of automation on jobs was already being felt 50 years ago.  But over the decades it has grown and has now reached the critical mass where its impact will be like an avalanche.

The future all these books foresee is a “brilliant,” “prosperous,” technological world, but one where a vast percentage of the working age population will be unemployed.  And so they dutifully come up with various schemes for government to provide the unemployed a minimum living income.  That doesn’t cut it as far as I’m concerned,

In the past it was argued that retraining technology-unemployed workers and providing youth superior school education was the key to ensuring high employment in the technological workplace.  In this future world, however, it seems not even education will guarantee a place in the work force.  The quantity of jobs just won’t be there relative to the size of the population because of the greatly reduced workforce needed to produce a given amount of product.  Nevertheless, equality of educational opportunity will be even more important.

The really scary thing is that none of these books, written by people from various fields - law, finance, and political theory, say we have to somehow stop this from happening.  Nor do the glowing reviews or the New Yorker article.  There is a forgone conclusion that it will happen, that it’s on balance good, and the only question is how to provide for the unemployed masses.  

Clearly, the angst felt by white middle class workers in 2016 will only get worse, and the affected group will broaden, regardless what the Trump administration does because it’s responding to the wrong threat - the past, not the future.  If this future does come to pass as described, the robotization of the workplace will be the death knell of the American worker.  Even white collar technology jobs such as software engineering will be impacted.  

In this envisaged future, income inequality in the U.S. will be far worse than it currently is.  The vaunted American standard of living will be no more.  It will destroy our democracy because it will create a society where half the population has nothing to do and lives on the dole, and the other half is well-employed.  It portends huge unrest which could bring about a police state, an age of fascism, because that is the only way the elite employed will be able to keep their status secure.  I know this sounds extreme, but the future depicted by these books is extreme.

It we want to be true in any sense to Lincoln’s “government of the people, by the people, and for the people,” America cannot allow this to happen.  The American people cannot allow this to happen.  The American government cannot allow this to happen.

So how do we avert this disaster?  This is so complex and important that there needs to be a public discussion within and between government, business, academia, and the people.  The issue can no longer be ignored.  We must together find a way to manage the future for the benefit of all.

I can see two possible avenues to explore.  They both have their challenges, to put it mildly.  But I think the first is more practical, easier to realize, and delivers more benefit than the other.

The first avenue is a new division of labor, so to speak.  The law concerning corporations would remain more or less unchanged.   They would compete globally and roboticize their operations as they felt warranted.  

At the same time, a reenergized government would take on or resume the task of making America’s infrastructure second to none through a new version of the WPA (Works Progress Administration) which would directly or through subcontracting employ the vast numbers of manual or low-technology workers left out of the new-technology job market.  Thus there would be no massive unemployment.  This would not be government as an employer of last resort, but an employer charged with keeping America strong and using the vast workforce needed in that effort.

The virtue of this approach is that we would be meeting two national security needs - one existing, the other new - with one stroke.  This would truly be making a virtue of necessity.

The other avenue is to put an end to the age of unchecked, government-supported capitalism.  In its place would be a system of socialized capitalism in which companies would be limited in the extent to which, in the name of increasing shareholder returns, they could reduce their workforce. 

Corporations are a creature of the law.  They were created, and shielded from many liabilities and taxes, because their growth was felt to ultimately benefit the welfare of the larger society, the common good.  But it’s getting to the point, or already is there, where this is often no longer the case; just the opposite.  And so one can argue that it’s time to change the rules.

There are several problems with this scenario.  Many will say that this approach would make products more expensive.  But to my mind this is not a problem.  We have too long wanted things to be as cheap as possible without thinking of the dear price we were paying.  Globalization with its job dislocations was the first price we paid; robotization with an even greater impact is the next.

One problem, possibly intractable, is how the economics of this would work out.  I know America does not exist in an economic bubble, that global competition exists.  Another is that it would certainly be strongly opposed by powerful forces.  In the end, I think the scenario suggested above goes a bit too far.  It is too much of a change and I would not advocate it given the alternative solution.

That said, I do think that social consciousness should be part of a corporation’s decision-making process because they exist only by the grace of the law to benefit the greater good.  Having lacked that perspective, corporations have done much harm to that greater good, whether it’s as polluters, manufacturing products that include dangerous chemicals, destroying the environment, etc.  The process therefore must be broadened beyond the question: what’s best for the shareholders?  And so I think it’s time to change the rules. 

Finally, although in one sense this has nothing to do with the issue of automation and the reduced workforce necessary for a technology-driven economy, the issue of population growth is relevant.  The reason why we need to produce so much and employ so many is our ever-expanding population. This also provides the economies of scale necessary for the investment in robotization.  As recently as 1960, the population of the world was only 3 billion, far more manageable.  Now it is 7 billion and expected to reach 9 billion by 2040.  So in addition to helping control climate change and the destruction of the environment, controlling the population would mostly obviate the need for the economy and firms to constantly grow.

We must all come together to talk about how to manage the future for the benefit of all Americans.  Regardless of the path taken, we cannot end up with a country, a society, as nightmarishly pictured by the books cited in the New Yorker article.**

______________

* This does not contradict the post I wrote some time ago, “The Problem Isn’t Capitalism, It’s Our Society,” which addressed a different issue … people have railed against capitalism for causing the exploitation of people and the environment.  The reasoning there was that the same basic problems have existed in all modern societies regardless of the type of economic system.

** Eric Brynjolfsson and Andrew McAfee, The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies, Norton

Martin Ford, Rise of the Robots: Technology and the Threat of a Jobless Future, Basic Books

Jerry Kaplan, Humans Need Not Apply: A Guide to Wealth and Work in the Age of Artificial IntelligenceI, Yale

Alec Ross, Industries of the Future, Simon & Schuster

Growing a Stronger America - More Self-sufficient, a Stronger Citizenry, a World-Class Infrastructure

America is a great country.  But we are slipping.  If we want to remain great, we need to grow a stronger America.  America must become more self-sufficient.  It must do everything it can to create a better educated, healthier, more engaged citizenry and rebuild a strong middle class.  And it must either replace or repair an aging, often archaic, infrastructure with one that will both meet the needs of the citizenry as well as support our economy’s competitiveness into the next century.

More Self-Sufficient:  The impact of globalizations has been a disaster for America’s well-being.  Instead of the advertised promise of globalization, it has become a curse for all but the multi-national corporations engaged in it.  Yes, most of us do like spending less money for all sorts of merchandise, and it has kept the inflation rate down, but we have paid a heavy price for that benefit.

First there is the well-publicized loss of good-paying, middle class jobs.  This has resulted in millions of previously well-employed men either being unemployed, employed in a new field at a fraction of their previous wage, or at the same job but at a wage that has stagnated for decades.  This has decimated the middle class.

That impact may have gotten the most publicity, but there is much more.  The loss of earning power by a large segment of the population has resulted in a weaker domestic economy.  You can’t buy as much when you’re not earning as much.  It’s as simple as that.  And the influx of less-expensive goods from abroad together with our dependence on imported oil has worsened our balance of trade deficit, thus weakening our economic independence.  Foreign countries own 34% of US debt, and China alone owns over 7% or $1.2 trillion.

Beyond weakening the domestic economy by reducing spending, globalization together with tax policy has increased income inequality.  From 1980 to 2014, the US per capita GDP increased from $28,133 (adjusted for inflation) to $50,211.  That’s an increase of 78%.  (The figures vary considerably, so I used the ones showing the least growth.)  By comparison, the increase in the US median personal income (not the average, but the center point) rose from $20,919 to $28,829, an increase of only 37%.  By contrast, looking at the increase in average personal income, which is skewed by the increase of those in the top income categories, the increase is 104%.  

The economy has grown, multi-national corporations have profited, the rich have gotten richer, but the average worker has not.  Without question, the middle class has been left behind and adversely impacted by these forces.  This is not healthy for our economy or our society.

Further, we have now become more dependent on the health of other, specifically Asian, economies.  The fortunes of our corporations and thus the stock market are subject to the vagaries of these economies, as we’ve often seen.  The stock market has been more volatile since globalization than before.  And surprisingly it doesn’t matter how strong or unconnected with global trade a company is … markets are so interconnected that when there’s a rumble in Asia’s economy, all U.S. stocks go down.

Lastly, but significantly, because what is happening in distant corners of the world has become even more important to American corporations and our economy, it has given more credence to the argument that we need a huge military able to go to any spot in the world to defend our national security.  We are witnessing an increased blurring between what is in our national security interest and what is in the interest of our multi-national corporations.  But they are not the same.  

That’s really what happened in Iraq, as our national security was never at stake, not even had there been WMDs in Iraq. We should never be in a position of going to war to protect corporate supply lines.  We should never expend the lives of our youth and our material wealth for such a purpose.

For all these reasons, we must do everything we can to make America more self-sufficient.  We must bring manufacturing back through tax and other policies.  And we must engage in a serious effort both to conserve energy use as well as wean ourselves from our addiction to oil by developing alternative energy sources and alternative energy transport.

A Stronger Citizenry.  The United States, when compared with the rest of the industrialized world, ranks nowhere near the top, more often near the bottom, on various markers that measure the strength of its citizenry:  education, health, and political engagement.

Education.  Whether we look at the PISA (Program for International Student Assessment) math and science scores which show the US ranking  25th and 24th, respectively, among 30 OECD countries, or data that places us 18th out of 23 comparing high school graduation rates, or 15th in college completion, or 10th in the percentage of 25-34 year-olds holding an associate degree or higher, the status of US education is definitely not world class.  (Note: the number of OECD countries used for comparison varies because of the number that have available data.)

Health.  Looking at health status compared with the other OECD countries, the US again does not fare well.  The US ranks 26th in life expectancy, has the 7th highest rate of infant mortality, ranks dead last (first) by far in the percentage of overweight and obese children and adults, has the 6th highest rate of diabetes, ranks 18th in 5-year survival for cervical cancer though it does rank 1st in breast cancer survival, and ranks dead last in access to health care (2013, so before Obamacare fully kicked in) … oddly the US ranks 1st in people self-reporting that they were in good health … all this despite the US spending 2 1/2 times the OECD average on health care per capita.

Political Engagement.  The US ranks 31st out of the 34 OECD countries in the percentage of voting age population who actually vote.  The result is that a rather small minority typically decides who governs us.  For example, in 2000, the voter turnout was 

51.2%.  Since Bush won with 47.9% of the popular vote (actually less than Gore got), only 24.5% or less the 1/4 of the voting age population elected Bush.  In 2008, the voter turnout rate was higher, 58.2%.  And Barack Obama won with 52.9% of the vote.  But that still meant that 30.8%, less than 1/3, of the voting age population elected him.  

It should be a point of extreme concern and embarrassment, if not shame, that the US … the founder of the modern democratic state and the wealthiest and economically strongest country in the world … has its elections decided by such a small minority of its voting-age population.  That election results express the will of the majority is even more important now that the two major parties have such extremely divergent positions on most issues.

Regardless what the cause is … voter apathy, voting barriers (for example, our elections occur on a weekday whereas most occur on the weekend or a declared holiday), poor campaigns, lack of education … something is not right and it must be addressed.  For starters, just changing the day that our elections are held, or declaring at least Presidential elections a national holiday, would most likely make a significant difference.  

But Republicans seem intent on doing everything they can to create more barriers to voting, not less.  Could this be because studies consistently show that non-voters are disproportionately poor or less well-off, younger, and tend to favor higher taxes and more government spending?  For example, 46% of nonvoters have household incomes below $30,000, while the percentage among voters is 19%.  43% of nonvoters are people of color, while only 22% of voters are.  And 34% of nonvoters are under 30, while only 10% of voters are.

Our democracy is based on the philosophy of majority rule.  But the reality is far from that.

How can we be a great country, let alone the leader of the world, with a citizenry that is relatively poorly educated, less healthy, and not politically engaged when compared with other developed countries?  A country’s strength and competitiveness are not based on the strength of the top 20% of its citizens, but on the strength of all its citizens.  

In addition to these factors on which there is comparative data, I noted in a recent post, “Our Failed Economic/Social/Political System,” that America has not lived up to its promise or its potential to provide true equal opportunity regarding “life, liberty, and the pursuit of happiness” and that this was critical to our country’s future well-being.  I noted there that in addition to various factors, including equal access to health care and a quality education, rebuilding a strong middle class was critical.

Improving education, health care, and political engagement, providing meaningful equal opportunity, and rebuilding a strong middle class will require more than a band-aid approach.  We must find the strength to rethink these issues at the most fundamental level and devise a strategy for each that will lift America’s citizenry up to an appropriate level for a country that proclaims itself to be the best in the world.

A Healthy Infrastructure.  In another recent post, “Our Archaic Transportation System,” I lamented how our transportation system is not up to meeting our needs now, let alone in the coming decades.  The same has been reported elsewhere on everything ranging from our electric grid to the state of our water and sewer systems.  

We pride ourselves on being a great and powerful country, on the cutting edge of technology, and yet in many important areas of our nation’s infrastructure, not only is it outdated but it is often crumbling and undependable.  This situation must be corrected if we are to continue being a strong nation and a world leader.  

Addressing most of the issues I’ve noted will necessitate a shift in our national priorities, as I’ve noted in various posts.  If we are serious about growing a stronger America, improving our nation’s health, it will require us to reexamine what is important and how best to use our resources to provide what is needed.  This will require a nation and a Congress who first and foremost ask, “What is in the best interest of the nation,” because they understand that what is in the nation’s best interest is ultimately also in our own individual best interest.

How to End Wage Stagnation and Bring Back/Increase Jobs

Two of the most important issues facing our country is how to improve the wages of workers (as opposed to management), who make up the bulk of our workforce and whose spending accounts for a large share of our economy, and significantly increase the number of living-wage jobs either by bringing them back to this country or creating new ones.  These issues are important from a variety of perspectives: economic, of course, but also moral, societal and national security.

We have seen wage stagnation for the past few decades because workers no longer have any clout.  Whether a workplace is unionized or not, corporations haven’t given raises because they know that workers have no place else to go.  They can’t leave even if they are disgusted with their pay because alternative jobs just aren’t there.  They’ve gone overseas, making it an employer’s market.

So how do you change the situation?  There is going to be much talk in the coming months about revising the tax code, both for individuals and as it applies to corporations.  As a general matter, I would argue that any tax break for corporations should be tied to their better performance in a variety of areas affecting the public good, such as the environment and wage stagnation.

I would therefore suggest a new provision that would provide that if corporations give workers a percentage raise in a given year equal to the percentage rise in profit, then such corporations would get a tax break.  Corporations need to be incentivized.  Some might say they should be penalized if they don’t provide such a raise, but that would never fly in Congress.

The same is true for bringing jobs back to the US.  At some point, given increasing labor costs overseas and what will be increased transportation costs, it will make economic sense to bring jobs back here.  In the meantime, the government needs to provide a tax incentive for companies to expand domestic operations that provide living-wage jobs.

But in addition to the problem of jobs being sent overseas, one must face the following fact.   In an age of ever-increasing application of technology to the production process, the same number of jobs are not going to be created even if production is brought back because they just aren’t needed to produce the product.  

That means that a large share of the increase in good-paying jobs needed to keep the economy and the middle class robust will have to come in the form of public works projects.  Luckily, there is no end to the infrastructure projects, both improvements and new, that are desperately needed to support our country’s functioning at the highest level.  

Thus, the government will need to embark on an ambitious plan, similar in scope to the Interstate Highway System, to insure an ongoing strong economy, not just in terms of GDP increase but in the strength of the middle class.  The radical Right will no doubt respond by kicking and screaming about socialism and the deficit.  

But such a plan is even more justified now than the Interstate Highway was when Republican President Eisenhower proposed its enactment.  While Eisenhower’s rationale that the system was needed to improve the country’s defense was overstated (it was more honestly an economic measure), one can argue with a straight face that the proposed infrastructure plan is critical to the nation’s security, both in a physical functioning sense as well as in the strength of the economy.

This is a challenging time for the United States.  If we do not rise above petty bickering and join together to support a nation that is strong, not just in military might and the power of its multi-national corporations, but in the health and welfare of the average citizen, then we are doomed to become a shell of our former self, a Potemkin village.

Strengthening America by Changing from a Consumer Economy to a Nation-Building Economy

While our culture of consumerism has been a boon to corporate America, it has been bad for our citizens, bad for our economy and bad for our nation. 

Psychologically, mass marketing images have led to a nation of individuals who are constantly dissatisfied with their lives ... whether it’s how they look, the job they have, the amount of money they make, the home they live in, etc.  There is not a single aspect of our lives that escapes this need of ours … not to be better individuals in some meaningful way but to project success or power/popularity, mostly through the acquisition of material things.  And we always want more; it’s never enough.

You won’t find evidence of this in polls because our culture places a premium on having fun, being happy.  Since people feel that they’re supposed to be having fun and be happy, that that state is valued by our culture, people put on that façade … not knowingly but in an act of self-deception. 

While I know of no studies that document what I am about to posit, I believe that the huge increase in the extent of depression in this country stems not from more awareness of the problem as has often been stated but results from this constant dissatisfaction that people feel about themselves.  Indeed, it is not uncommon when people are feeling down to get a “fix” by going out and buying something.

Our economy has also become addicted to consumerism.  70% of our GDP is derived from consumer spending. But consumerism is a very unproductive use of the nation’s wealth.   It does not move our country forward.   And since much of what we consume is no longer produced here but overseas, it doesn’t even help employment like it used to, just the revenues of American global corporations.

Meanwhile, the United States is falling behind other countries and entering a dangerous period because we cannot afford to do what needs to be done to keep this country strong … and I don’t mean military spending.   I mean spending on infrastructure … both maintenance and new.  I mean spending on education.  I mean spending on cutting edge research and development, investment in new industries that will drive our economy in the future. When measurement is taken of national and individual wellbeing, the United States typically finds itself towards the back of the pack of developed countries.  Not in front as we like to believe.

In order to find the money to invest in our country’s wellbeing, we must switch our economy from one that is primarily based on consumerism, to one that is based primarily on building our country.  This involves changing the components of our GDP but not lessening it or our growth.  Actually, because it mostly would involve projects that must by their very nature be accomplished in the geographic United States, it means a greater bang for the buck when it comes to job creation.

To get from the consumer economy to the nation-building economy, we will need to wean ourselves from the need to constantly buy things to be happy.  And instead of using discretionary income for self-gratification, we will need to learn to be comfortable with that money going to the government in the form of taxes to be used for projects that will benefit the nation, and thus ultimately ourselves.

Many will howl at this suggestion, but we must remember that the United States has by far the lowest tax rate of any developed country.  Yet, and this bears repeating, the people of these other countries nevertheless prosper and have a higher level of wellbeing … whether it’s their health, education, or other measures … than we do.

Making such a change in our culture will take principled leadership and preferably a united political front.  This must be approached like a war used to be … all hands on deck and united.  And everyone must be prepared to sacrifice. At this point in our history, that concept … a united political front … seems impossible to imagine.  And yet we must strive toward that end if America is once again to regain its global strength and provide its citizens with a secure and high standard of living.