Tuesday, January 3, 2012
Challenges for My Grandchildren
Every generation is faced with unique challenges, and yours, my grandchildren, is no different. However, you have additional challenges, because my generation screwed up. The “Greatest Generation” won World War II, and set up my generation pretty well. We had high productivity, high employment, good wages for everyone, a (then) modern infrastructure for transportation and education. They even developed national parks along with building roads, bridges, railroads, airports and schools. We also inherited Social Security and Medicare as social safety nets. Though some label these benefits of government as “socialism,” I think of them as a helping hand for the unfortunate.
My generation has not been labeled yet, but “Lunkhead” might do very well. We have squandered or are in the process of squandering the legacy of the “Greatest Generation” and pass on to you, their Great Grandchildren, a “bit of a mess.” Here is a little of what you have to face.
Global Warming is Here
During the 1800’s, scientists understood the greenhouse effect that keeps the earth warmer than the surrounding space. They also suggested that burning fossil fuels would increase carbon dioxide concentrations in the atmosphere, which in turn, would increase the greenhouse effect and warm the earth. Since then, evidence has mounted that human activity is increasing carbon dioxide levels, and the earth is warming as a consequence.
We Lunkheads have done little but politicize scientific research on global warming and demonize the researchers. The consequences of this failure to act will likely cause you great discomfort. However, mitigating that harm and adapting to warmer climates will provide opportunities.
Higher Education Leads to Prosperity
Any country needs a well educated workforce to compete in the global economy. Early in the twentieth century, an eighth grade education was enough for individual success. Currently, anyone with less than a high school diploma is most likely to be excluded from the workforce. College grads are comparatively well employed.
In recent decades, we have seen domestic businesses move not only manufacturing operations overseas, but also research and development. The former is to be expected; the latter is a condemnation of our educational system and access to it.
We Lunkheads have neither improved the educational process nor made it more accessible to all. Some prospective students wonder if higher education is “worth it.” Perhaps, California’s Proposition 13 in 1978 and its repercussions across the nation were events that undermined state supported education. California quickly lost its preeminence in education and technology.
Environmental and Financial Regulations are Essential
Energy and food production result in too much pollution in air, land, and waterways. The current neoliberal politics favors the notion that environmental regulations cost too much and that employment opportunities will suffer. They do not mention that technology developed to mitigate pollution creates jobs.
Much the same can be said for financial regulations. For, at least, the last 30 years financial deregulation has been the norm. Experience shows that free markets, contrary to the neoliberal catechism, do not regulate themselves. Hyman Minsky, an economist ahead of his times, predicted that financial success would create overconfidence and demand for more financial success. Regulations would be relaxed to achieve this success resulting in more frequent and severe business cycles between prosperity and recession. Experience over the past 50 years has vindicated Minsky’s predictions.
If you continue the neoliberal pattern of environmental and financial deregulation, you can also become a Lunkhead.
Keynes Needs a Revival
To counter natural business cycles, John Maynard Keynes showed that government spending during a recession and relative government austerity during prosperity would maintain a steadily growing economy. The neoliberal economic philosophy begins with a political assumption that an active government is not in the best interest of business.
This has lead to the Lunkhead assertion that governments don’t count and that austerity leads to prosperity. While that holds for households, it does not hold for a national government that issues and controls its own currency.
That leads to Modern Money Theory (MMT), which is the most promising post-Keynesian economic theory for our future. However, the neoliberal Lunkheads can’t or won’t understand it, because MMT violates their catechism.
It’s All Up to You
We bequeath to you dilapidated infrastructure, a warming planet, a dysfunctional education system, under-regulated environmental and financial systems, confused economic and political ideas, and last of all, a health profit system that costs twice as much as other countries, yet it covers a lower fraction of the population and has inferior medical outcomes.
PS: You may find it some consolation to learn that, contrary to a prominent neoliberal myth, you won’t need to pay off the national debt; it is not a mortgage.