WILLIAMS: Exchange the past for the future

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ANALYSIS/OPINION:

There was once a time in America when all the women were beautiful and the schoolchildren were above average. But now it seems that the middle-class ideal that once steadied our nation is a shrinking memory of the past.

The American economy, undergirded by two fundamental strengths, once offered the world an unbeatable value proposition; an abundant agricultural sector combined by a robust industrial work force. But all that has changed.

While, even today, America’s corn and wheat silos overflow with grain, not only producing enough volume to fulfill our needs, but also feeding much of the third world, something has been lost in the process. Yes, there’s plenty of food around, but the quality has declined. The corn, lima beans and potatoes one finds on supermarket shelves have declined in nutritive value and lost much of that hearty feel they once had.

Today’s American farms, more aptly called “agricultural conglomerates,” focus not so much on producing good crops, but on producing a profitable operation. They operate under strict theories of agricultural economics, which dictate that they control production and corner markets. These megacorporations have literally transformed the landscape of America’s heartland. For the most part, what were formerly towns bursting with individual drive and creative potential, have become washed out dust bowls.

In place of the family farm, the manufacturing sector then became the driver of middle-class achievement. In the post-World War II era, from the 1940s until the 1970s, America migrated in droves from farm towns for the big cities in search of well-paying, unionized jobs. During this period, people with solid high school education could expect to earn a living that would afford them a home, car and a comfortable retirement by age 65. Relatively few people could afford a college education, but attaining a college degree did not preclude a productive and comfortable life.

All of this began to change in the 1970s as large numbers of new entrants to the work force came on board. The social upheavals of the 1960s broke down barriers to women and minorities who had been excluded, by law and custom, from middle-class jobs and educational opportunities.

For the most part, this was a good thing, in that new talent and energy became available to America’s corporations. But as America opened up, so did the world. Advances in transportation and communications technology, as well as the growth of a robust international trading system, shrunk the great big world to byte-sized proportion.

While globalization has its benefits - among them drastically reduced costs of sourcing labor and raw materials - it also has its drawbacks. Foremost among them is that the American work force - once prized for its productivity, ingenuity and efficiency - has lost its appeal. In the face of foreign competition by countries with less stringent labor and environmental regulations, the protections America once afforded its work force now only restrict America’s ability to produce and export goods.

American industry initially responded to this threat of increasing foreign competition by automating its industries. Consequently, in the 1980s, the American automobile industry, then on the brink of disaster, shed much of its work force and made major capital investments.

The party was over for the American middle class, in reality probably by the early 1990s. But we had another trick up our sleeves - financial leverage. With financial leverage, even as Americans were earning less in real dollars, they could still afford the trappings of success. Thus, Americans could still drive a new car and live in a new home. Only this time, rather than buying their car with cash and paying off their home in 10 years or less, people began purchasing those items on credit.

Car companies were able to survive for a while on this shift in the economy, and it looked as if things could go on like this forever. It didn’t matter so much that Detroit was falling behind other countries in its manufacturing prowess. In fact, the actual product became somewhat of an afterthought - as decades of uninspiring models with poor quality ratings attested to. That’s because the U.S. automakers had become credit card companies who just happened to be selling cars. GMAC, the General Motors’ financial arm, became more profitable than GM, the manufacturing arm.

But the recent financial crisis brought reality crashing down again. As America was forced to de-leverage, the credit-card corporations were caught flat-footed. In today’s climate, the product, not just the deal, once again matters. And so now Detroit is faced with the daunting task of having to build cars that people want to drive and can actually afford, rather than deals they just can’t refuse.

The government and the people cannot try to stop the clock and remake the American economy of the 21st century in the nostalgic image of the post World War II economy. Americans as individuals must educate and train themselves to be nimble so they can adapt to this changing economic world.

The government needs to provide individuals with the proper incentives to adapt to change. It should not attempt to recreate a mythical economy of Lake Woebegone, where all the women are good-looking and the students are above average. And while wistful memories of our past glory may be fondly held, they have no place in our positive future.

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