Posted by
Boris Tiraspolsky on Wednesday, July 14, 2010 1:52:43 AM
"Is local political leadership in America mature enough to realize that according to the Amendment Ten to the Constitution of the United States the Powers to regulate Commerce within the States are “reserved to the States”? "
Are the States in America Ready for a Real Economic Rebirth?
By Boris Tiraspolsky
In cooperation with Howard Shorr
The current economic turmoil, long-standing, unaddressed, and frankly deliberately provoked, is our most important domestic issue. According to recent reports “with the US trapped in depression, this really is starting to feel like 1932.” “The US workforce shrank by 652,000 in June [2010], one of the sharpest contractions ever. The rate of hourly earnings fell 0.1%. Wages are flirting with deflation.”
"Home sales are down. Retail sales are down. Factory orders in May suffered their biggest tumble since March of last year. So what are we doing about it? Less than nothing," “Roughly a million Americans have dropped out of the jobs market altogether over the past two months. That is the only reason why the headline unemployment rate is not exploding to a post-war high.” That is happening all over the United States!
"Eight million jobs have been lost. The average time needed to find a job has risen to a record 35.2 weeks. Nothing like this has been seen before in the post-war era. Legions of individuals have been left with stale skills, and little prospect of finding meaningful work, and benefits that are being exhausted. By our math, the crop of people who are unemployed but not receiving a check amounts to 9.2 m."
The above analyses of our economy appear to be accurate. The main trouble here is that no one seems to have a coherent idea on how to turn the situation around.
There are calls for returning to what existed before this current depression began. For that, some demand to combine fiscal and monetary tightening by banks, which seems to be too little and much too late. The most popular call, however, is to increase the role of the government. For instance, Bureaucrats in the White House are saying: “a lack of regulations (?!) triggered the economic crisis”. The latter sounds especially preposterous.
For some reason, most economic experts do not want to admit the true explanation for this “economic crisis”: it is abandoning the fundamental principles of classical American economics and entrepreneurial capitalism in long use before the current depression occurred. Among those discarded principles are:
1. U.S. Created Wealth, which is the opposite of our chronic waste of economic resources: dumping our production based economy and losing entire wealth-creating industries;
2. Self-reliant Economy Driven by an Advanced Technology Workforce of U.S. Economic Actors in contrast to our present dependency on foreign economies producing for us almost all basic necessities;
3. Availability of Capital Necessary to Fuel the Creation of Wealth, instead of exporting scarce Capital from America primarily for the sake of “cheap” labor abroad;
4. Presence of the Invisible Hand, -- the natural force inspiring healthy, inventive and dynamic problem-solving competition in our economy -- replaced with mountains of “regulations” by the all-to-visible Bureaucratic Hand insisting on yet still more “regulations”, which severely obstruct investment, hiring and training necessary for the creation of wealth.
It is common sense to return to the above principles of classical capitalism as the only way to get out of our current depression. However, there are three major problems preventing our economic recovery. They must be addressed and solved.
The first one is that the U.S. Economy has rapidly become a declining part of a so called “global” Economy, but no one knows what happened and how it should be managed. This abrupt change of our economy without proper adjusting and testing of the old working Economic Model of classical capitalism, to a new “global” environment, was not a good idea. It is like sailing an old, but still good river boat across a stormy ocean after we removed appropriate navigation instruments.
It is self-evident how quickly the U.S. Economy and especially our State and local economies became increasingly more vulnerable and less sufficient. Therefore, it seems logical that a different new practical Economic Model based on principles of classical capitalism needs yet to be developed for the “global” Economy. The sooner, the better.
The second problem is that the principles of classical capitalism historically worked well on a level of National Economies. The very name of the book by Adam Smith is “An Inquiry into the Nature and Causes of the Wealth of Nations..” However, they never were intended to serve a “global“ Economy that destroys the Wealth of Nations world-wide.
It also seems quite logical that a vital role in reversing the current destructive trend of the “global” Economy should belong to the economic welfare and prosperity of local economies all over the world. In other words, the current economic crisis points out that the new Economic Model necessary for the future recovery of the U.S. National Economy should favor a revival of the State and local Economies. Here comes the third problem.
Are the States in America ready for a real economic rebirth? Will local business communities be eager to shift to that new Economic Model merging the “global” Economy and classical capitalism? Will populations of States be willing to adapt a role as self-reliant Economic Actors who must directly compete and win against China, India, South Korea, Japan and etc. in the “global” Market Place? That is a big question.
Another big question is: do local political elites in America have the courage to challenge the Federal Bureaucracy with the Supreme Law of the Land limiting Feds’ Powers “to regulate Commerce with foreign Nations, and among the several States”? Is local political leadership in America mature enough to realize that according to the Amendment Ten to the Constitution of the United States the Powers to regulate Commerce within the States are “reserved to the States”?
Until these Powers are properly exercised by the States, the new Economic Model cannot be developed, or implemented, and economic recovery in America remains unattainable.