Wednesday, January 26, 2011

State of the Union address: back to Clinton....and we're not in a Sputnik moment

There was so much in the State of the Union address last night that seemed eerily familiar. The declaration that we're in a new era of technology, which means we shouldn't invest in conventional jobs, the call for less government, and the notion of encouraging the economy by letting business do what it wants. It was all reminiscent of Bill Clinton and the Third Way centrism that dominated the '90s.

To take a few points, the idea that the U.S. government is like a household, particularly like a poor household, and that it can't take in more than it can spend, is a fiction that can be disproved in a second. The problems there are that households can't raise taxes, thereby raising their income, to finance themselves, and that unlike households experiencing pain right now the U.S. government can finance its deficits and its debt in a longer term timeframe, so that in bad times it can increase spending and in good times decrease it and pay off the debt itself. In fact, this flexibility is one of the key benefits of government in that it can do what is beyond the capability of households to do in order to be able to act in a way that helps the economy.

Similarly, the idea that we're in a "Sputnik moment" is flawed as well. The collapse of the economy didn't come bound with any particular advancements in technology on the horizon. In fact, I would say that it's our dependence on the old economy, things like cars, house wares, electronics, furniture, virtually every other consumer good, and the fact that the old economy is being manufactured elsewhere, that helped fuel the economic crisis. It can be argued that one of the reasons why credit and money from home loans was so attractive was because of the general downturn in the economy over a long period of time, that made advancement or even retention of status difficult. Pure greed and feeding at the trough was not necessarily the only story. Now, when we need jobs, where we can find them isn't really a hard question. We can find jobs, the jobs that actually create most of the goods we use, but they're located in the third world.

Renewable energy, while trendy and necessary, isn't going to save an economy that fundamentally can't make most of the products that it uses. Agricultural security is looked at as very important, it's realized that a country should be able to feed itself; industrial security should be looked at as just or even more important. Which doesn't mean that literally everything we use should be made here, but at this point we're not even trying to support ourselves in this way. Restricting what job growth should ideally take place, or is likely to take place, to exotic new fields like biotechnology overlooks the very large elephant in the room and in point of fact concedes almost all the field to other countries. Obama made some good points in his last State of the Union address about the need to create real jobs that had components that were high tech, that were helped along in very modern ways, but he overlooked the real jobs part of that this time.

And not making that connection is a seal of approval given to the practices of the business community, which has moved the jobs overseas because of the greater money to be made by using cheap labor. Bringing jobs back to the U.S. will cut into that easy profit margin. Biotechnology and clean energy products won't do that nearly as much because the infrastructure hasn't been created yet. Unlike factories manufacturing televisions in other countries, where duplicating their efforts in the United States would cost lots of money, new technologies that don't really exist yet only require a single investment. If that's the future, then the future belongs to the countries that are doing the actual work that we depend on, not to us.

Overall, the State of the Union was filled with nice sentiments about reconciliation, about moderation and about responsibility, that had almost nothing to do with the realities facing people in the United States right now.

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