Declining prosperity is now a settled fact of American life.
Prosperity is not measured by the day’s average of stock speculation, or the profits of bankers, or the munificence of government subsidies and salaries, or the consumption of luxury goods, or even by the Gross Domestic Product. It is amazing how in a few short decades American “educators,” “experts,” “journalists,” and “statesmen” have banished age-old truths from public discourse.
Prosperity is when the great bulk of families have some property and a secure source of living, large or small. When nearly everybody has an abundance of necessities and access to some small luxuries and leisure. Naturally, debt, the ancient nemesis of prosperity, is minimal and temporary in a prosperous society for both government and people—it is a device for emergencies or starting up promising ventures. A prosperous society is made up mostly of people of middling economic status, with relatively few very rich and very poor. Government apparatus is small, unobtrusive, and mainly local. Religion, charity, education, and the arts flourish, especially where there is cultural cohesion, through private patronage. (Cultural cohesion would seem to be typical of societies with widely shared prosperity.)
Americans have been too pretentious in touting our country as THE land of opportunity. However, it is true that America has been a land of opportunity. Not always. There have been stretches of history when it was not true, the most recent of which is now. But as a general proposition “land of opportunity” has had until recently a good deal of accuracy. America has been with some justice thought of as a land where ability and effort counted more than inherited status, where people could expect to be more prosperous than the previous generations, where, sometimes, the sky was the limit for the enterprising and gifted. A land that was very good, compared to the Europe left behind, for the common man. Frederick Jackson Turner thought that this was because of the great excess of unexploited resources over population, a condition which, he pointed out at the end of the 19th century, was coming to an end.
If I have drawn a proper description of prosperity, there cannot be much disagreement about my opening proposition of decline. A vague sense of this decline is what motivates the people who are joining Tea Parties. When I was a college undergraduate a half century ago, a professor asked a large class for a show of hands—who expected to be more prosperous than their parents? There was at least an 85% response rate. I doubt if it would be 20 percent today—even less among native white Americans. Unemployment and underemployment is now the settled lot of millions of people who once would have been solid members of the middle class—even among the skilled and highly skilled. The young remain longer dependent than they used to on the older generation, who were able to accumulate some wealth in better times. Meanwhile, the rich have reached levels of wealth unprecedented in human history and which in themselves are irrefutable proofs of social ill-health.
Surely starting and operating one’s own business has never in America been more difficult and less promising than now. You can be sure that that optimistic 20% of young folks are not thinking in traditional terms about hard work leading to success. They are thinking that they are smart enough to get a cut out of the going racket. Some of them will be disappointed. And millions of hard-working Americans live on a dangerously small margin of survival. Millions more live off the books in an all-cash economy.
The belief that merit leads to appropriate reward has always been only a partial truth. It does not make allowance for such important considerations as native endowment, luck, circumstances, and connections, and that human beings are more complicated (and more valuable) than mere units of labour. But there has been enough truth in the proposition to serve as an essential factor of social morale. The connection between merit and reward has been largely abolished in American society today and most people do not believe in it any more. How, after all, did Michelle Obama, who twice failed the bar exam, merit a quarter million dollar salary? And that is only one of countless examples.
The consequences of this loss of social morale could in the long run be more serious than a revolution or world war. And this at a time when the eternal global superiority of the American way is proclaimed by presidents and pundits (with incredible ignorance and short-sightedness).
The public discourse (and the “professional” discourse, too) on economics is cursed by the natural proclivity to treat sequences as consequences. If B follows A, then A was the cause of B. In fact, in understanding the wealth of nations that is a bad assumption—because there are always multiple variables, some of them unknown, unpredictable, too deep to be observed, and even spiritual and unmeasurable.
But this natural tendency is invaluable to politicians (and “experts”). It allows for endless obfuscation of real issues and avoidance of honest analysis and debate—which, indeed, is the purpose of American public discourse. Bad B follows my opponent’s bad A, while good B follows upon my good A. The politicians, of course, don’t care whether the description is true or beneficial, only whether it is advantageous to themselves. That is the difference between a politician and a statesman, an extinct species the last doubtful sighting of a live example occurring over half a century ago.
Studying the economic conflicts of earlier American history has convinced me that public discourse has almost always been carried on in deceptive party polemics and seldom has touched the root issues. Whether there should be a Federal Reserve or not is not the proper question. The Federal Reserve was merely a centralisation of a power over money that the federal government under Lincoln had already given away to the bankers long before. The real question is who, if anyone, has the right to expand and contract the money supply? All the blather about tariffs and free trade likwise misses the point. There never has been such a thing as pure free trade and it does not exist now. Here is the root question: When tariffs were beneficial to the Northern rich and burdensome to everyone else, the U.S. had tariffs; when “free trade” is beneficial to the Northern rich and a burden to every one else, we have “free trade.” Why? I see no reason to expect the Tea Partiers to ask the right questions, much less come up with answers.
We are told that a multi-billion dollar bailout of Goldman Sachs is necessary to save “our” economy. Just recently the buffoon Colin Powell (a museum-quality exhibit of the disconnect between merit and reward) announced that “we” need illegal aliens to operate “our” economy. The Economy, Stupid, has become a monstrous god without any interest in the well-being of his people. Now and then his priests inform us what sacrifices we must make to keep in his good graces.
Nobody can understand or manage completely a large economy. Surely there are not many “lessons of history” more obvious and certain than that? But economics is a matter of human thought and action. Human thought and action can be applied to such matters as trade, labour, the money supply, in ways that are better or worse. But better or worse for whom? We need to remember what prosperity is supposed to feel like. But first we must find out who “we” are.
SOURCE: Originally appeared ay www.chroniclesmagazine.org, December, 2010.