Linda Yueh[1]
points out a new economic development that seems to attempt to draw back to an
earlier time. This is being felt across
western nations. President Biden’s
current call for the American government to have an infrastructure program represents
America’s version of this newer effort. This
is the case since the president is calling for that program to rely on American
produced products.
This and the next posting address this shift in American
policy. This current posting gives a historical
background that one should keep in mind when considering any new initiative
regarding employment policy options. The
next will address the political-economic factors currently affecting governmental
and business decision-making.
Such policy as promoting
infrastructure expenditures to obtain domestic manufactured goods, as being
experienced in different advanced countries, is meant to kickstart the
manufacturing sector of those economies which has experienced a deemphasis in
the last few decades. Of late, many of
the advanced nations have been deindustrializing and shifting their economies
toward service industries.
And this leads one to become conscious of what seems to be
a historical progression which began eons ago.
To begin, humans were mostly nomadic.
They traveled and caught game as their paths followed changing
conditions of the year. Some finally hit
on agriculture that allowed them to settle, build homes and communities, and
began to establish social institutions that mark all human settlements. For example, all established societies have
the institutions of government, religion, economy, family, and education.
In various agricultural
settlements, according to Arnold Toynbee, due to challenges – e.g., rising flooding
tides of a nearby river or two – local populations potentially met those
challenges with responses to placate the ensuing damages the challenges created. That called on them to organize themselves to
the degree that a civilization resulted.[2] Of course, this entire development is complex
and deserves its own analysis, but certain insights can be drawn for the
purposes of this and the next posting.
Initially, this “civilization”
result was the exception and only occurred after centuries of mostly agricultural
dependence. But once civilization broke
out, the effects of civilized societies spread throughout much of the inhabited
world. For example, all of Europe became
civilized even though that vast area was not affected by the original challenges
that spurred Western Civilization.[3]
This civilizing effect, in
turn, led to many developments in various human pursuits. Roughly, in the nineteenth century, the
academic and business sectors of the European civilization developed
combustible engines and industrial economic activity took off. Why?
Well, the obvious reason was the variety of goods that such activity
produced. But a more economic reason was
that the productivity – the amount of output per unit of input – rose enormously. Therefore, not only were people’s wants more
readily satisfied, but profits surged upward.
But that advancement was limited to certain societies,
mostly western nations in Europe, North America, Australia, and eventually in non-western
Japan. In each country, an inherent
battle ensued between the owners of production and labor. Initially, industrialists were able to offer
employment to workers, but at subsistence (in some cases, below subsistence)
wages.
Workers organized unions
and during the late twentieth century began winning significant wage increases. In the US, an autarky, and
other countries, this led to inflation – higher prices for goods and services. It also led in the US to lower quality
products. It seems that when an economy lacks
competition, higher prices and lower quality of goods seem to ensue.
The
answer for industrialists, who seemed most conscious of the high wages, was to find
low wage labor sources. That existed in
pre-industrialized countries such as China and India. All this coincided with advances in computers
that facilitated doing business with areas around the world. Therefore, a lot of manufacturing found its
way to China, India, Vietnam, and other preindustrial countries since the 1970s.
Oversimplifying
things, one can judge these changes as a formula for developing a global economy
and heightened competition for US producers and workers. The next posting will describe what all of
this has meant for the current political-economic conditions of this
country. As a bit of prevue, the results
are not limited to the US, but they also affect other Western countries.
In
the coming years, will the US, a la Toynbee, meet the ensuing challenges
with effective responses – which according to the theory means advancement to an
even more enriched future – or will it mean a failing future in which the fate
of this democratic republic might truly be at stake? Or stated another way: What does January 6 really mean?
[1]
Linda Yueh,
What Would the Great Economists Do?:
How Twelve Brilliant Minds Would Solve Today’s Biggest Problems (London,
UK: Penguin, 2019).
[2] Arnold J. Toynbee, A Study of History (New
York, NY: Dell Publishing Co.,
1971/1946).
[3] In terms of Western Civilization, the following is offered
by the New World Encyclopedia:
“Arnold J. Toynbee,” New World Encyclopedia (n.d.), accessed January 29, 2021, https://www.newworldencyclopedia.org/entry/Arnold_J._Toynbee .
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