Americans who earn average and below average incomes are in free fall. A few hundred dollars per family as economic stimulus will not help much, and won't even be a speed bump in the downhill rush of the economy.

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What is Really Happening to America's Economy? 

As a layman, I don't know more than anybody else, but in the interest of speaking out for lots of Americans, here is my assessment of the immediate challenges facing our nation:

"Where Are We?" 

We are mired in an endless war that has looted America to the tune of nearly a trillion dollars so far. That is $1,000,000,000,000. The cost of the Iraq adventure continues to mount, running up the bill on future generations despite recent "successes."  

Americans who earn average and below average incomes are in free fall. A few hundred dollars per family as economic stimulus will not help much, and won't even be a speed bump in the downhill rush of the economy.  

Our "growth economy" is based on printing and borrowing more money, which is similar to a snake swallowing its tail because it ignores inflation, diminishing resources, outsourcing and cheap competition. We are caught in a vicious cycle of periodic meltdown that results from a nexus of bad policy, poor leadership and flawed design. 

Tragically, the Bush promises of smaller government and cutting spending have not been kept, but tax cuts are sacrosanct. ("It's the tax cuts, Stupid" has been on the Republican chalkboard for thirty years). Tax cuts have again helped shift the wealth upward and increase the deficit. 

Deregulation has given us Enron, blackouts, higher prices, energy dependency, financial chaos and corruption. Wal-martization has allowed small businesses to be crushed or swallowed up by corporate greed. Our global trade and business practices undermine America and Americans. 

Government has abdicated its sworn responsibility to the people in a drive toward privatization, ignoring existential issues such as response to disasters and emergencies, rebuilding the military and acting on planetary survival. 

"How Did We Get Here?" 

In the beginning, there was the Constitution. The Federalists were for a strong central government as opposed to a loose federation of sovereign states. Alexander Hamilton conceived the idea that if the central government were to go into debt, it would tie things together and the United States would become a single, unified nation.  

Conventional wisdom holds that Hamilton's concept of indebtedness was the catalyst for our becoming the greatest nation on earth by the 20th century. Other candidates for that distinction include the American Spirit, free public schools, the income tax, free market capitalism, and free land, to name a few. 

We hit the Industrial Revolution, the Gilded Age, anti-trust scandals, three wars, Income Tax and the Great Depression going way too fast. New Dealers credited FDR with saving the nation from economic destruction with government leadership. For decades, there would be no protests against taxes because during the Great Depression and the recovery, Americans could see a direct connection between the revenue raised and the government programs that were their lifelines.      

Then came the Cold War, the highlight of which were not just two wars of attrition fought against Communists in Asia, but the downfall of the Soviets, whom we ostensibly outspent into oblivion. Apologists claim Reagan intended just that all along, despite his administration's record spending and the resulting record deficit. 

"Reaganomics" promised to lower taxes, cut spending and most important, reduce the size of government and all its growth-stifling regulations, taxes and general interference in the real business of America, Business.  

In reality, Reaganomics produced unprecedented numbers of small business failures and an even uglier phenomenon, widespread homelessness. For the first time, a new class emerged: the working poor. Many worked, but lost their homes anyway.  

 The large number of the homeless had less to do with the economy directly than with Reagan's huge cuts to the states in health care and other critical programs. An unknown number of the homeless were patients "dumped" by health care facilities, federal and state. There were estimates that 250,000 of the homeless were veterans and another 250,000 were children. 

When the mainstream media reported all the above, there was no media frenzy and following outcry, just a vague understanding that the economy must be really bad if all those "people" had lost their homes.  

Thus, "It's the economy, Stupid," became the famous battle cry in Bill Clinton's campaign, which helped boot out George Herbert Walker Bush, who had just won the Gulf War but was as much the victim of Reaganomics as anyone. 

The Reagan economic policy was never really scrutinized, but became the prelude to George W. Bush's policy, which called for massive deregulation, tax cuts and fast-track free trade, for starters. Outsourcing and trade inequities were a "stealth" policy. The Bush administration has never considered the outsourcing of jobs and manufacturing and a gigantic trade deficit as real threats to our economy. 

"Where are we going?" 

I wish I knew. I do think something BIG is imminent. The best I can do is suggest some solutions to the problems outlined above and offer both old and new ideas and approaches for a better future:

 We should immediately end the Iraq Debacle and use a few months' savings on the war to revive the economy. 

It would benefit the nation and all participants to have a program of universal public service: perhaps two years after high school on Public Works projects restoring national infrastructure. We need to revitalize public education without a crippling bureaucracy. Privatization in education is antithetical to creating a strong nation. 

It is imperative that we grow a diversified economy based on manufacturing and export, not debt and consumption. One reason we can't "Buy American" is that America doesn't make many products anymore. We have to end outsourcing and tax breaks for companies that practice it.

 We have to encourage entrepreneurship with incentives and subsidies for small business. We can return to the concept of employees as a company's most valuable resource and re-establish real employee ownership and profit sharing. These changes would restore America's pride in our people, products and our place in the world. 

We need to re-establish family and/or tribal agriculture, trading and manufacturing. We have to find practical ways to de-urbanize and diversify the population. This would help localize industry, reduce the size and increase the autonomy of communities. It would introduce a "coop" economy at the local level. 

It is time to abandon our present role as World Police and reduce our military presence all over the world, strategic bases excepted. We should increase the size and reconstitute the National Guard and Reserves. We might establish a Veteran's Land Board at the national level and implement a "Service for Citizenship" program for immigrants to earn their right to citizenship through military or other national service. 

Thus ends this short history of American economics with emphasis on where we've been, where we are and where we may be going. The future is unknown, but this is a certainty: 

If we want an America we can still recognize after the present economic crash, an America where we can thrive, not just survive, big changes are necessary and time is of the essence.  _____________________

Submitter: Jay Farrington

Submitters Bio:
Fulbright in 1966-67; Visiting Lecturer in American Literature with Baghdad University/Texas University Exchange Program. Guest Lecturer for the American Authors Lecture Series for the United States Information Service in Iraq.

Co-authored with Carole Chaney "Baghdad Letters" in 2003, a collection of letters and journals written in 1966-67 in Iraq.
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