Many people believe the economy is not what it used to be. No economic recovery for them.
Politicians promise, “jobs, jobs, jobs.” They claim they want to help the struggling middle class, worried about not getting ahead. Vague promises of more and better jobs lead people to believe they will get one of those jobs and enjoy a new prosperity.
The truth is different. If elected, officials won’t be able to return the economy to the prosperity of the past or ensure that the frustrated middle class will gain.
For one thing, the economy is better than it seems. Economic analysts point out that people are living longer and have access to constantly improving technology. Taking a long view, they note that average personal income, after taking inflation into account, is much higher than it was.
So why are so many people unhappy or uneasy? Those with relatively little education or previously employed in manufacturing are less well off. Incomes have stagnated. And the security that came from working for the same employer for an entire career has been replaced by an almost permanent sense of uncertainty.
Add to that a widespread sense of injustice about the accumulation of great wealth by the few benefiting from special tax breaks while the middle class struggles.
Politicians simply cannot turn the situation around. While it is easy for them to blame lost jobs on countries lacking environmental standards and where workers are badly paid, countries with higher standards can compete effectively with the U.S. A global economy has helped create worldwide sources of production.
Many lost jobs will never be recovered. But there are steps that can be taken to reduce manufacturing costs and prevent that sector from disappearing in the U.S.
Energy costs have declined, and they need to keep being reduced. There’s little question that jobs have been lost in Maine because of its cost of electricity is much higher than in much of the rest of the country and the world. Maine dismantles hydropower, while China builds dams.
Workers need to be better trained. Will government put more money into community colleges or will voters starve them by insisting that government is too big and spending should be cut?
Responsible politicians need to have the courage to explain that restoring prosperity requires government help. This not a question of more government jobs, but public spending to work with private sector employers to develop growth plans that will promote more job opportunities.
But roads, bridges and public facilities are not being well maintained, and the country urgently needs to spend public funds on the jobs that will repair them.
To induce recovery, the U.S. cannot rely on the Federal Reserve alone to promote growth by keeping interest rates low. Whatever people think of government spending, the American economy competes with countries making more public investment in jobs.
There are only two ways to raise public money: tax increases or more debt. Debt is easier for politicians, so we may hear less about its “crushing burden.” But more tax revenues would be better.
Dealing with immigration is also part of the solution. It adds consumers, who are also new taxpayers, to help stimulate the economy and pay for government programs.
Workers themselves need to understand the country cannot return to an economy that no longer suits the times. Because they will change employers and even change the type of work they do over their careers, people will have to accept that the comfort and certainty of long-term employment is probably gone for good.
That means going back to school in mid-life to become equipped for new jobs that continually require increased skills. More importantly, it means regaining confidence that the economy will provide good paying jobs, though without the same certainty that came from working for the same employer for one’s entire career.
Fortunately, Maine has suffered less than other states, but its lower unemployment is partly a function of young people simply moving away. That’s not an economic policy. The state needs more workers and more jobs.
The economy has changed, and we cannot go back. People should understand that political promises alone will not restore their faith in the American economy. Manufacturing will never be the same, and new jobs require new and better skills. Tax reform is needed to provide a greater sense of economic justice plus more revenues.
To move ahead, the country needs cash and confidence. That means increased government support and better understanding of how to deal with the new economy.