Category Archives: Economics

The Legacy of American Imperialism

Slave Auction

Americans do not think of their nation as imperialistic, even though it is a common epithet in many parts of the world.  From the day in 1492 when the first European set foot on American soil, the Americas were part of empires, and later established their own empires.  Currently the conflict the United States faces is the legacy of imperialism. 

Empires form when foreign territories are conquered.  Spain, Portugal, England, France, and Russia all took land from Native Americans.  In every case, natives were killed, enslaved, relocated, or died from alien diseases.  The situation has not changed 500 years later.  Indians remain at the bottom of the social hierarchy.  Labor is needed to exploit new land, so slaves were   introduced.  Cotton and sugar cane are examples.  The slaves also occupied the bottom of the order.  The same situation applies today.  Those people are black or  brown, and insulate poor whites from the bottom of the heap. 

Race is the problem.  If people are Quechua, Mayan, Sioux, Navajo, or African-American, they are born into discrimination.  Europeans rule.  Political systems reflect the racial divide.  In Latin America, the oligarchies in power are of Spanish or Portuguese heritage, with most Indians excluded.  In the U.S., the divisions are starting to blur, but Republicans are mostly white and Democrats are more somewhat more diverse.   

In the race to include minorities in the Democratic coalition, the white working class tended to be neglected.  Their economic status has weakened as many good-paying jobs have moved offshore.  Moves to include minorities tend to threaten the status of white working class people’s place in the social hierarchy.  Their anti-immigration stance results from the fear immigrants will take the good jobs.  In addition, immigrants tend to be brown and vote, a threat to white working class men. 

Mr. Trump won the election due to the racial divide.  In the rust belt (and swing) states narrow majorities for Trump tipped the Electoral College.  There is a paradox in this.  The Republication party core constituency is not working-class friendly, but the white tea party folks have joined them.  Trump’s cabinet appointments are mainstream Republican or Wall Street, and offer little to the mass of people who voted him into office. We will see how they react to Trump’s policies in the near future.   

Trump won claiming he can bring back those lost jobs.  It isn’t going to happen.  We are seeing a fundamental shift in our economy away from basic raw material and manufacturing to a service and information based economy.    The traditionally excluded minorities are now joined by poorly-educated white people, many who lost their socio-economic status during the Great Recession.  Neither party is coming up with any viable answers to this problem, which will be exacerbated by race.  The riots will return.   

Mr. Trump’s victory has also encouraged our white extremists.  We will see more racism, anti-Semitism, and violence.  Instant communication accelerates the process.  Tweets are a good example.  I avoid Twitter because I tend toward impulsivity.  Have an impulse, write it down in 140 characters, hit send, and it’s there for all to see.   Mr. Trump is ruled by impulse, therefore, Twitter.  And extremism.

More on Discontent

The Age of Steam

The Age of Steam

Our economy has been one of change since the beginning.  When the railroads came to Colorado in 1870, a lot of teamster jobs hauling freight from Omaha and Kansas City went away.  The automobile would not have happened without the new petroleum industry.  Coal retained its strength from powering locomotives, heating homes, and fueling industry.  Industry and manufacturing grew, making the American economy one of the largest in the world.

What a combination, land, natural resources, transportation, a growing population of people with ambition, mobility, and a willingness to try something new.  Some were left behind.  Native Americans, African Americans, and those new citizens in the Southwest who were once part of Mexico with its traditional ways.  As always, immigrants ended up at the bottom because of language and discrimination.

There were troubles.  Low wages, a turbulent labor history, drought, an unstable business cycle creating panics individuals were helpless to influence.  There were some adventures the government engaged in, such as Cuba, the Philippines China, Japan, all the trappings of empire.  In many ways the American West was an empire, won at the expense of those who were living there.

John Deere

John Deere

Agriculture was becoming more mechanized, displacing people who moved to the cities to work in industry.  All the change continues.  There is a tremendous amount of wealth in Silicon Valley, not so much in Michigan.

The West has been boom-bust from the start.  The fur trade collapsed, but the gold rushes started.  The government started giving land to the railroads and individuals.  The short grass prairie boomed with hopeful wheat growers, then the droughts came.  Oil and gas grew and grew, and grew.  As old fields played out, new oil fields were discovered.  A couple of big wars really heated things up.

It all looked great.  Yes, lots of change, but people could find good jobs and things steamed along.  The real upheavals were when the business cycle threw millions out of work.  The 1930’s were a terrible time, but a war healed all that.

The West That Never Existed

The West That Never Existed

The 1950’s seemed like a golden age.  Lots of jobs, the U.S. Ruled much of the world, and television built a myth of stability, prosperity, and a bright future for everyone.  the myth came from relative prosperity and the ubitiquous westerns on television promoting a life that never existed.

The 1960’s brought social upheaval accompanied by a growing shift in how people made their living.  Steel mills closed, imported cars were on the roads, and computer-driven automation started taking industrial jobs.  The word Yuppie became a term of derision, but the Yuppies were the wave of the future.  They possessed education and a skill set many people could or would not obtain.

The skilled trades fell out of favor. It is college or else.  The trade jobs are filled the way they have always been filled, by immigrants.  This time however, the immigrants are not easily assimilated Europeans.  They are Latin, and and bring their culture with them.  Many are just not as interested in assimilating, and many are undocumented.

All this change leaves a huge segment of our society out of the good life.  Many are rural, where big mechanized farms haven taken jobs.  Many just do not have social and intellectual requirements to move into the new economy.  What’s left?  Low-paying service economy jobs, often for an out of date minimum wage inadequate for one person, let alone a family.  It is hard to build a life mowing lawns and doing kitchen work.  Much of the time jobs that used to be stepping stones have turned into dead ends.

The trouble is just beginning.  Those people marginalized by an economy where they don’t fit can be radicalized and turn to violence and terror or Donald Trump, which may be same thing.  The discontent is just not with the marginalized working class.  There are lots of well-educated people from middle class families making pizzas and living in their parents’ basement.  They thought they were doing the right thing going into debt to get an education and found nobody wants them.

This is still a rich country.  There is a huge imbalance in the distribution of wealth which has to change.  The change agent must be government.  A true progressive tax structure and an end to the massive influence of special interests in government are desperately needed.  The nation has the resources to provide everyone with an income providing them some dignity and the flexibility to enhance their station in life.  Given a decent income, most will seek ways to do even better.

We will always have the wealthy and the poor.  Now, there is too much concentrated wealth for a few and too many poor.  Trying to revert to an American utopia which never existed will only add to social instability.

Happy Days Are Here Again

Happy Days Are Here Again

There should be no food banks or coat drives.  There should be no one sleeping on the streets.  People with mental health problems should not be cast out.  Everyone should have the time and resources available to build better lives for themselves rather than being trapped in poverty.

In other words, we need a new time of progressive change, not an attempt to return to a myth.  How to pay for it all?  A realistic progressive tax system to redistribute income.

Follow the Money

Lots of corporations and individuals complain about government regulation of their businesses and lives.  The complaints come with much complaining about high taxes.  Other than the paperwork involved with regulation, regulation is good for individuals and business.  Making regulation a political issue is just that, politics.  In some cases profits are affected, but in most cases, not so.   

Let’s use ozone as an example.  Ozone is toxic to us if we are exposed directly.  It is beneficial in the stratosphere as it absorbs ultraviolet light, which is harmful to living things.  UV light increases sunburns, contributes to skin cancers, and is an immunosuppressant.  Worldwide, governments banned chlorofluorocarbons, chemicals used in refrigeration (Freon).  The refrigeration industry fought the regulation, citing increased costs, lower profits, and job loss.  Guess what?  The Freon had to be replaced, and who had to do it?  The refrigeration business.  The increased regulation actually helped the industry and the ozone holes in the atmosphere began shrinking.  The controversy continues, however. 

Refrigeration prices increased, but were more than offset by the economic gains brought about by the change-over to safe refrigerants.  More jobs, bigger refrigeration companies, more profits, all money going into the economy.  The benefits more than offset the cost of eliminating chlorofluorocarbons.  Public health gained from the reduction in sunburns and skin cancers worldwide.  Everybody gained. 

The same applies to the auto industry with all the safety and emission requirements.  Car prices increased, but accident deaths and air pollution decreased.  Everyone gained, and governments will profit from the fines Takata and Volkswagen will pay. My Toyota dealer profited from replacing dangerous airbags. 

In economics the win-win effect of regulation can be explained by the multiplier effect.  If money is spent, the recipient spends those dollars in payroll, capital investment, taxes, and a host of other things.  Those dollars get spent, and the economy grows.  This even applies to digging holes.  People move to Denver and need a place to live.  A developer decides to build an apartment building.  He borrows money from the bank and hires architects, engineers, and contractors.  The contractor needs to put in the basements and foundations.  Thus, a need for a hole.  He hires an excavation contractor who digs the hole.  He is getting lots of business, so he hires equipment operators and laborer.  He buys a new trackhoe from Caterpillar.   The dirt has to be hauled away, so he hires a trucking company, and so it goes.  Government benefits from tax revenue and the fees for all those permits.  The revenue pays for more cops.  On and on it goes. 

The next time you hear someone say. “Get government out of the way.”, ask them if they know about the multiplier.