JUDGING PAROCHIAL FEDERALISM, XII

 

An advocate of parochial federalism continues his/her presentation[1] …

Student Economic Interests [2]

          As often stated in this blog, the US has opted for an individualistic perspective in its economic activities.  As is usually the case, this has affected Americans across the board.  This and the next posting will look at two groups and how current economic factors are affecting their, including their families’, economic interests.  The two groups are manufacturing laborers and prospective business owners.

But to start, it is worth pointing out that while economic developments and actual economic conditions are in constant flux, some general principles seem to hold through the years.  In general, one can attribute economic growth to increased levels of productivity.  That is, the more the production of goods and services take less amounts of production inputs (raw materials, labor, and management) to produce them, the more the economy is prone to grow. 

Beginning in the 1990s, to a significant degree, productivity increases regarding goods were due to corporate downsizing – especially in American factories and other production facilities – which entailed the exporting of production jobs.  One economist who wrote back then of this move was Robert Reich.[3]  He pointed out that these moves have lowered costs which have made American prices more competitive. 

For years, the rate of inflation had been very low until the more recent developments caused by the COVID pandemic and now enhanced by the war in Ukraine.  That lower inflation rate and its causes had consequences.  One has been that real wages have been lowered for millions of Americans – mostly those who held the production jobs that are now located abroad. 

Considering the average standard of living statistic, it can be misleading when judging the welfare of individuals. They occupy various life situations relative to how the economy functions.  Overall, Americans find themselves in very favorable positions relative to those in other countries.  But one needs to look more closely at how different segments of the workforce have been affected.

The following excerpt gives the reader a sense of the advantages many have experienced.  In terms of aggregate standard of living measurements, Americans rank first.  But even when one considers more quality-of-life measurements, they do very well, thank you.

 

[Based on the standard of living statistic, it] confirms the conventional view that, broadly measured, American living standards are comparable to those of the richest Western European nations but much higher than the living standards in emerging market economies. For example, this calculation puts economic welfare in the United Kingdom at 97 percent of U.S. levels, but estimates Mexican well-being at 22 percent. Interestingly, this comparison shows that Western European countries such as the United Kingdom, France, and Italy are considerably closer to the United States in terms of economic welfare than differences in per capita income or consumption would suggest, reflecting the fact that Western European countries do relatively well on the other evaluated criteria (namely, leisure, life expectancy, and inequality). For emerging and developing economies, however, differences in income or consumption per person generally understate the advantage of the United States, according to this measure, largely due to the greater levels of inequality and lower life expectancies in those countries.[4]

 

All in all, Americans are doing well whether one looks at aggregate numbers of income and wealth or more relative numbers such as measurements of leisure, life expectancy, and inequality.  But this overlooks the plight of the former manufacturing job holders. 

Given the changes that the economy has experienced, there have been pockets of workers (or other citizens) who have experienced changes that are not in line with this overall picture.  In this blogger’s book, Toward a Federated Nation, he reports the following:

 

The inevitable ranking of individuals leads to an uneven distribution of material values.  Such a reality, though, threatens the level of moral equality in the commonwealth – especially if the unevenness is extreme or functions to prohibit others from aspiring to improve their level of advantages.[5]  In current parlance, the problem is not that there is a top 1% (that’s a mathematical certainty), the problem lies in that 1% enjoys inordinate percentage of the national income or the national wealth.[6] 

If that is the case, not only does such a condition threaten the integrity of those not enjoying a reasonable income, but it makes those upper-class individuals have inordinate resources to affect the formulation of public policy.[7] 

 

And at this point, one is well served to look at the interest of young people who are caught up or reflect the financial situation their home or family situation sustains.

The point is whether young people have been raised in the tumultuous years since the 1990s during which this shift in production transferred those manufacturing jobs to low-wage nations such as China or Vietnam.  Some have argued that a more communal approach – perhaps as those used in Germany and Japan[8] – would encourage a more involved perspective among the young as their parents tell of their daily job experiences at home. 

One can argue that this other general view in society is more republican in nature.  But this nation’s more individualistic perspective has instead encouraged, one can argue, a more passive, pleasure-seeking ethos.  But this is not solidified among all Americans.  Robert Dahl wrote of this bifurcated view – the communal vs. the individualistic view – some years ago:

 

We Americans have always been torn between two conflicting visions of what American society is and ought to be.  To summarize them oversimply, one is a vision of the world’s first and grandest attempt to realize democracy, political equality, and political liberty on a continental scale.  The other is a vision of a country where unrestricted liberty to acquire unlimited wealth [and that] would produce the world’s most prosperous society.  In the first, American ideals are realized by the achievement of democracy, political equality, and the fundamental rights of all citizens in a country of vast size and diversity.  In the second, American ideals are realized by the protection of property and of opportunities to prosper materially and to grow wealthy.  In the first view, the right to self-government is among the most fundamental of all human rights, and, should they conflict, is superior to the right to property.  In the second, property is the superior, self-government the subordinate right.[9]

 

Yes, this oversimplifies a complex – what has become – international issue, but it gets at the heart of this dialectic struggle (between a parochial federalist view and the natural rights view) and provides students with a confusing economic image and befuddled ideals as to what they should be.

          This turn in the economic history of the nation, by the way, can be associated with what has come to be known as the polarized political landscape one observes today.  Those who have suffered from this loss of jobs become fodder for nationalistic political messaging.  In turn, that messaging represents policies that many describe as either authoritarian or undemocratic. 

Here’s a line of argument that has been professed in terms of explaining what has happened. 

 

1.    There is a significant number of workers who held good paying jobs.

2.    This caused them to either have rising expectations of a better financial future or an expectation that current levels of relative affluence would continue. 

3.    Then, in short order, those good paying jobs are lost. 

4.    This loss of jobs counters the rising expectations of those former workers and high levels of anger and general attitudes judging the events as illegitimate. 

5.    Rebelliousness or feelings of rebellion result. 

6.    These people become prime potential followers of any demigod who might arise promising to upend the whole existing system.[10]

 

With that line of events – here offered as form of a hypothetical chain of events or developments – this blog will end this posting. 

The reader is given the opportunity to consider it and decide how true it happens to be.  As for this blog, it is offered as a hypothetical development.  The next posting will continue with this topic, the “economic student interest,” and highlight perspective entrepreneurs.

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[1] This presentation begins with the posting, “A Parochial Subject Matter” (March 11, 2022).  The reader is reminded that the claims made in this posting do not necessarily reflect the beliefs or knowledge of this blogger.  Instead, the posting is a representation of what an advocate of parochial federalism might present.  This is done to present a dialectic position of that construct.

[2] William H. Schubert, Curriculum:  Perspective, Paradigm, and Possibility (New York, NY:  MacMillan Publishing Company, 1986).  The meaning of this term has been shared in previous postings.

[3] For example, Robert B. Reich, The Work of Nation:  Preparing Ourselves for the 21^st-Century Capitalism (New York, NY:  Vintage Books, 1992).

[4] Ben Bernanke, “Are Americans Better Off Than They Were a Decade Or Two Ago?,” Brookings (October 19, 2016), accessed May 5, 2022, https://www.brookings.edu/blog/ben-bernanke/2016/10/19/are-americans-better-off-than-they-were-a-decade-or-two-ago/ .

[5] As the calendar approached 2020, one could report:  “Currently, the richest 1% hold about 38% of all privately held wealth in the United States; while the bottom 90% hold 73% of all debt. According to The New York Times, the richest 1 percent in the United States now own more wealth than the bottom 90 percent.” “Wealth Inequality in the United States,” Wikipedia.

[6] In 2015, the average gross income of people in the top 1% was $480,930; for the top .01% it was $35.1 million, and for the top .001% it was $152 million.  The top 1% paid 39% of the federal income tax.  The gap between the top groups and the rest is growing.  See Aimee Picchi, “How Much Do the 1, .01 and .001 Percent Earn?” CBS News (February 27, 2018), accessed March 28, 2019, https://www.cbsnews.com/news/how-much-do-the-1-01-and-001-percent-really-earn/ .

[7] Robert Gutierrez, Toward a Federated Nation:  Implementing National Civics Standards (Tallahassee, FL:  Gravitas Civics Books, 2020), 197-198.

[8] See Michael Ivanovitch, “Only Germany and Japan Have Room for Economic Stimulus,” CNBC (September 6, 2019), accessed May 9, 2022, https://www.cnbc.com/2019/09/06/commentary-only-germany-and-japan-have-room-for-economic-stimulus.html .  One point this cite makes is:  “Germany and, to a lesser extent, Japan have plenty of scope for large public and public-private partnership investments in growth-enhancing infrastructure projects of transportation, information technology, life science and social welfare.”

[9] Robert Dahl, A Preface to Economic Democracy (Berkeley, CA:  University of California Press, 1985), 162-163.

[10] This chain reflects the theoretical ideas of the Davies “J” curve model.  See John T. Jost and Avital Mentovich, “J-Curve Hypothesis,” Sociology and Political Science, n. d., accessed October 14, 2019, https://www.britannica.com/topic/J-curve-hypothesis .