The World is a Complicated Place II

This is something the conservatives should remember when they are contemplating their belief that it is their way or the highway.

I found some interesting blurbs on the internet.  Apparently, the Tea Party is fed up with the GOP establishment (which to my amazement includes Karl Rove) for throwing Todd Akin under the bus.  For those who don't recall Todd Akin, he is the Missouri Senate candidate who said women's bodies shut down when they are raped and they can't get pregnant.  Of course, this was just a rationalization for his (and many others in the GOP) for their belief that abortion should not be available in any case, including rape, incest and mother's health.  So my advice to the Tea Party, is you just lost many elections in part because of this stance, think about what it takes to gain a working majority of votes.

The NY Times yesterday had a really thoughtful column by Timothy Egan on the complexity of American Society and what it takes to get a majority of voters to agree with you.  Although aimed at Republican's and complementary about how America maintains itself, I would use it to remind Democrats that although they won, balance is needed in stabilizing government finances and that includes Entitlement Reform.  There are good Republican ideas and there are good core Democratic ideals, but no ideal can be delivered if it is not affordable.  Look to Simpson-Bowles for the answer notwithstanding Paul Krugman.

Link to Excellent Thought Column


The most solid form of economic growth occurs when the budget is balanced, the economy is near full employment, the government's spending is roughly 21% of GDP and there is no inflation.  George Bush II ruined us by forgetting that and going all in on supply side economics.  Deficits should shift to surpluses when the economy is still progressing toward full employment, not just at full employment.

The Economist this week did a piece on the complexity of poverty.  It made me sad because I know how fortunate I am to have been able to use education to escape from that part of the economy that has been decimated by globalization and automation.  My intellectual interest always has at its core a thought process of what does this mean for economic development and improving the lives of the underclass.  Poverty is as complex as finding nationwide voting majorities.  Each poor person has an individual story and in the end, only they through their hard work, can escape poverty.

But at the same time, there are government policies that can help.  The Economist focused on a working woman in South Carolina who holds 2 jobs what provide her with 57.5 hours of work a week.    She makes roughly $32,000 a year but neither job provides health insurance, even though she works in a  medical clinic for 37.5 of those hours.  She is not unusual, while 15% of the people are below the poverty line of $23,000 for a family of four, a much bigger percentage of the population earns something between the poverty level and $40,000.  Depending how big their family is and whether there are 2 incomes or not, these people are on the edge of dropping back into poverty if they lose a job.

Fortunately, the government policies that help these people will be protected.  ObamaCare should provided access to health insurance for those without beginning January 2014.  The Earned Income Tax Credit was enacted in the Ford Administration and the Child Tax Credit was passed by the GOP led Congress under Clinton.  Combined, these 3 programs encourage people to work and not stay on welfare.  It is critical that they be protected for those earning less than $40,000.

What made me sad about the article was it brought home to me something that I intuitively understand.  Globalization and automation have created an underclass in the United States.  I don't know what beyond excellent education and health insurance we can do for these people.  Eventually, wages in China, Mexico, Brazil, Indonesia and India will rise to the point where transportation costs motivate employers to bring low skill manufacturing jobs back to the U.S. and pay a wage level that makes life affordable.  But this will not happen for another 10, 20 or 30 years.  30 years is almost an entire working career and this process really hit home when the construction real estate boom ended in 2008.  I hate to think there is no government policy that can help these people but I can't think of anything beyond education, health insurance and targeted tax policy.  Supply side economics doesn't work because those who benefit reinvest are in the global economy and either save their money or reinvest it lower wage places.

Of course, the people who are suffering through their lot in life are a diverse group of people.  They fuel the anger of the Tea Party, they fuel the anger of the anti-Wall Street crowd, they fuel the strident belief on the left that all social programs should be maintained and expanded.  This diversity is why Mitt Romney lost.  Romney preached a return to the policies that created the crisis and did not address the needs of the underclass.  While Mitt had the support of the angry Tea Party, he scared many others who care about the underclass but understand we need to restore fiscal sanity in a balanced manner.

The world is a complicated place.