Reality Check

Published 3:25 pm Friday, October 29, 2010

Mid-term elections have always been an opportunity to introduce moderation into leadership and governance. Its a bit of a reality check for the party in power but Im beginning to think that there is nothing real in the process this time.&bsp; Though the economy is recovering, it is still struggling.&bsp; There is plenty of finger pointing by all the political groups, but very little useful dialogue that will improve the decades-long decay of the US economy.&bsp; We just get more of the same old ideas and attitudes that clearly have not worked in the last 30 years. Going back to the same old dry well expecting it to miraculously start producing water again borders on insanity.

Unfortunately, the era of the statesman and pragmatic leader has given way to ideological nonsense on both sides of the political spectrum. As a result, this gridlocks our ability to confront and turn back the real economic threats to our nation. Lets try to understand the nature of the significant challenges that we face in the economy and governance.

Economy

We need an attitude change about what makes our economy tick. We are not an island unto ourselves anymore. We operate in a complex international economy that becomes more competitive each day. The reality is that we are dying a death of a thousand cuts.&bsp; Under our current structure, our businesses and especially manufacturing&bsp; have to compete with an international private sector that essentially ignores human rights and the environment because of the costs. In addition we must overcome barriers put in place by other governments to protect their own interests like value added taxes (VAT). VAT causes US made products to be priced as much as 30% higher (more than the US labor component) after it hits the dock of the importing country (e.g.; China, EU).&bsp; And, of course, there is the political favorite Chinas currency exchange rate.

Quite simply, the American economy has been in general decline since the 1980s. Its an indicator of a structural imbalance. If the structure doesnt support private sector opportunity for all, then it is out of balance.&bsp; The middle class is the engine that creates economic and social stability in any culture.&bsp; However, the middle class is shrinking and its directly related to the loss of manufacturing in this country. There is nothing that has replaced it and in spite of all the decades-old economic theories about becoming a service-based economy, its clear that those theories are voo doo economics just as Former President Bush (the Senior Bush) characterized them. We had better not only find a way to innovate, we had better find a way to manufacture those innovations in the US for export into a worldwide marketplace. &bsp;

We need to quit trying to function as if Free Trade is Fair Trade because its an absurdly ridiculous concept that cant exist in the real world. &bsp;

My reality check is that those that control the money (Wall Streeters), those that have controlled the power center (Washington, DC) for the last 30 years and those that are vying to become the new power brokers have consistently acted and taken positions detrimental to the US economy and its people.

Governance

Structural issues are the purview of the Government whether it is tax codes, physical infrastructure, money supply, regulation and, most importantly for our future, foreign relations.&bsp; We have a governance model that is clearly out of balance and being distorted by powerful special interests.&bsp; Its in this context that we are now looking to our Government to play their role in modifying our economic structure and bring it back into a balance that provides growth and hope to the middle class.&bsp; Poor governance based on absurd ideologies has drained the financial resources of the country and shifted that wealth into the hands of the privileged few and foreign governments.&bsp; The low tax rates in the Middle East are there because the US subsidizes those governments (and terrorists groups) through the money US citizens pay for imported oil. We also pay for stability in the region through our military expenditures and lost lives.&bsp; The trade imbalance that we have with China funds their rapid build-out of an industrial economy and infrastructure shifting wealth from the American middle class to Chinas middle class. Our economic wizards see great opportunities in China if (and thats a big if) they ever become a consuming nation. In the meantime, our middle class continues to disappear mostly because of 30 years of bad policy and leadership.

The reality check is that the government will have to spend more money on rebuilding our economic infrastructure, not less.&bsp; There are opportunities to reduce government spending in some areas but not enough to offset the tremendous need we now have.&bsp; The middle class has already paid the price for Free Trade.&bsp; No doubt they will be soaked again by the power brokers and elite if our economic infrastructure is ever updated to bring us into the 21st century.

Summation

Given the economic and governance crises that we face, it would appear that we have not seen the worst. Democracy and our economic system do have a tendency to upright themselves over time but the agony and damage caused to the backbone (the middle class) could be tragic.&bsp; If there is hope, it is in the will of the people to not tolerate the selling off of America anymore. We need to be wiser, smarter, pragmatic and single-purposed in protecting our short-term and long-term interests as a Nation. And keep in mind — there are no special interest groups looking out for you.

Rodney Gibson is the former Mayor of Saluda.