I spend a lot of time reading Facebook posts and the comments ordinary people make on them. Either there are a lot of ignorant people about or the majority of the informed, those able to reason, do not post.
I get tired of hearing people complain about the president not doing more to bring back employment or to lower the cost of gas while, at the same time, they complain about big government and over regulation. Among the regulations they disagree with are those related to the economy. An example is the minimum wage. It seems to me that they want mutually exclusive things. They do not want government intervention but they do want jobs and low gas prices. They believe that, if the government just left the market alone then prices would fall, gas would be cheap and plentiful, jobs would return to America and it would be a veritable land of milk and honey. However, they forget that we do not live in the 1950's. The world has changed. Deregulation means that the market is free to exploit those changes.
It is also true that the failure to recognize the changed realities means that people hold views and vote in ways that are actually contrary to their own good and that of society. They also lead to people wrongly attributing blame, such as to the president or to the poor.
Extremes are dangerous. This certainly applies to societal models. Both extreme capitalism and the extreme socialistic world view: communism are dangerous and doomed to failure. America has moved ever closer to the extremes of unregulated capitalism. I will show below why any rational individual should consider the current situation unsustainable. I will also show why many of the criticisms and suggestions for solutions are simply ridiculous.
In the latter half of the 20th century, the world changed dramatically. Population levels rose massively, technology took great leaps in terms of transportation and communication, and less developed nations rapidly caught up with Westernized countries in terms of investment and infrastructure. As other nations advanced, the expectations and demands of their populations increased. An American who wants to buy beef, pork or bread today competes for those products with those in China, whose economy has changed radically. In 1960, the US consumed about 8 million metric tons of pork. Today the country consumes about 9 million tons. In 1975 the Chinese also consumed about 8 million metric tons of pork. Today they consume 52 million tons of pork! To feed those pigs, they now buy 60% of the annual global crop of soybeans. That makes soybeans more expensive for everyone and the cost is passed on to the producers of anything, including meat, that is based on soybeans. Chinese consumption is set to increase by 2.5% again in the next year. Prices here will rise accordingly. The current forecast (by US Department of Agriculture bureau in Beijing) is that Chinese beef imports for 2014 will be around 550,000 tons. That's an increase of 19 times in just three years. China is also increasing it's own home grown cattle production as well as importing more beef. Of course that means it is importing more cattle feed, mainly corn and alfalfa from the US. At a time when the Western US is experiencing drought, it is effectively exporting water in the form of alfalfa for Chinese cattle to eat. Again, that increased Chinese demand will raise costs here in the US.
In an unregulated market, where the government does not intervene, companies are free to sell to whichever customer is willing to pay the most. America is a resource rich country and could probably stand alone and meet many of its needs - as some commentators suggest - but to make it so, the idea of an unregulated market would have to be abandoned. Would Americans tolerate the idea of government telling companies, big and small, who they could sell to? True, there are already restrictions on the sale of technologies and weapons that could be used against the US or its allies, but every day trade? Few Americans would accept such draconian regulation.
Oil
The above applies to oil. All Americans want cheap gas and accuse the president of not magically reducing the cost. However, America is producing more oil than it has for decades. Peak oil production occurred in November 1970 when the US produced 10 million barrels a day. From that time production fell steadily to the low point of 2010, when global demand dramatically contracted due to the virtual collapse of the global economy - following the US collapse. At its lowest point, production was 4.7 million barrels a day. While it had a slow downward trend from 1970 to 1985, from then onward, the fall was dramatic. Since Obama has been in power, production has soared back to 8.4 million barrels a day, as at May 2014. In the last 5 years, oil production has jumped 65% in the US. So why aren't gas prices low? Well, apart from an embargo on selling crude oil, refiners can sell petroleum products, including 'gas' for vehicles, to whomever they wish. And they are. Mirroring the rise in oil extraction, the level of exports has risen too. Exports follow the same pattern as production. In 1975, the US exported 180,000 barrels of petroleum products. By the 1990's exports had risen to around a million barrels a day. This remained stable all through the 1990's and the first decade of the 21st century. Since Obama took power, exports have reached 4.4 million barrels a day. People demand that Obama do something about the cost of gas, but what? The only thing he could do, at this moment, is to forbid producers from selling overseas. The uproar can only be imagined. The president telling corporations who they can sell to!? Meddling in the 'free market'?! There would be outrage and he would be accused of overreaching his power. Could he increase production? That has been suggested by one of my less knowledgeable conservative Obama-hating acquaintances. But production is not the limiting factor. Infrastructure is. Refineries and storage facilities can not cope with the current levels of supply. Many (Kinder Morgan Energy Partners and Marathon for example) are investing in new infrastructure. But NOT for domestic distribution to lower gas prices at home, for export! Others are pressing the government to lift the embargo on oil exports. The increased oil production is not being used to lower the costs for Americans, but to sell overseas. In an unrestricted free market, gas prices are dependent upon international demand. Unless the president becomes a dictator and intervenes directly in the sale of oil, producers sell where they can get the best price and there is nothing the government and president can do about it.
Jobs
We no longer live in a society of high demand for manual labor. Technological advances mean that more and more tasks become automated. This applies to everything from food to cars. Large, complex machines do the work of hundreds of people, with minimal oversight from human beings. One man driving a combine harvester does the work in a day that it took tens of people days to do, harvesting crops.
Bulk transportation of goods in planes and container ships means that those goods can be produced by cheap labor overseas and shipped back to the US to be sold at high profit. Communications technology means that many jobs can be sent overseas and customers may not know where those providing the service are based in the world. Theoretically, we could return some jobs to the US by lowering wages here to be more like those earned by foreign workers. However, the consequences would be catastrophic. As we have seen, prices are rising in real terms due to international demand. Lower salaries in the US would not mean that goods and services simply become cheaper and US workers more competitive, it would mean that they would be even less able to compete with advancing nations for the limited supplies of many items like oil and food. Additionally, many people overseas lead simple lives and work for subsistence wages. That sounds good, and is good for the environment. However, their jobs are provided by the relatively wealthy in the West, who are able to purchase their products. Ok, so we move the low paid jobs back to the US. To think of our own interests, suppose we reduce wages to the point that sending jobs overseas is no longer attractive. We won't worry about foreign workers but think of our own. We end up with millions of Americans who can not afford the goods and services provided by other working Americans. That reduces demand, which reduces jobs and so on, in a downward spiral. It may be better for the environment but what we will do is basically roll back the societal advances, the growth of the middle class, that has occurred over the last 80 years. However, with the advance of technology, we will not return to a time of simple agrarian society with high employment, we will devolve to a state with a few, relatively wealthy people, and masses of poor. Rather like the middle ages of Europe. There would be mass ill health, ignorance and population decline. For the planet and the other living things upon it, that might be a good thing. But, for human beings, the golden age of the late 20th century would be over.
Of course this is a totally unnecessary outcome. It comes back to the idea of extremes being dangerous. Communism is dangerous because it results in a lack of incentive for people to strive for improvement. While many people are altruistic, the majority do expect to receive some reward for effort. If extra effort brings no reward and the lazy get the same reward as the hard working, why bother? The extreme of American style capitalism is also dangerous (as well as unfair) and leads to economic instability. In current American society, more and more of the available wealth is accumulating to fewer and fewer individuals.
In 1988 the average income in the US was $33,500. In 2008 the average was $33,000. However, the top 1% saw their income increase by 33%. Since 1970, the stock market has boomed an incredible 1,300%. However, the average American has not seen any benefit from this increase. At the same time prices have soared. In 1988 the cost of a gallon of gas was $1.08. A dozen eggs cost 88 cents and a gallon of milk was $2.30. Today the average costs are $3.69, $1.95 and $3.62. Everything costs more, for the above discussed reasons. So, the majority of Americans have seen wages remain stagnant while prices soar. The rich get richer.
Favoring wealth redistribution has been described as the politics of envy by that same conservative acquaintance of mine. However, it is rather, the politics of sanity. As the majority of Americans find their disposable income waning, their spending decreases. This reduces demand for goods and services. That lowers the number of jobs required to meet the reduced demand, and so on, as previously described. The real income to society has increased, as shown by the increases in the stock market and the incomes of the top 1%. So there is money available to pay people more. Lessening income inequality stimulates the economy. A few very rich people can not support an economy. A rich man can only drink one drink, eat one meal, watch one TV, drive one car, etc at a time. It is the demand of the masses, with income to spare, that creates demand and so provides jobs. Yes, some of that disposable income will be spent on goods and services provided overseas, but much of it will provide jobs here. Many services can only be provided locally or in person. Wealthy investors are required, within reason, but even they go bankrupt if no one can afford to buy the products of the companies they invest in.
As I said earlier, extremes are dangerous. Unless the extreme capitalism of the US is modified, we are heading toward another economic crash like that of the Great Depression of the early 20th century. In such a case, everyone suffers, rich and poor alike. The trend of the top 1% taking an ever greater percentage of the national income must be reversed. There should be an incentive for those who work hard and those who don't or can not work, should not get the same rewards as those who work - a la communism. But there must be a minimum wage that provides people with enough income to live on, with money to spare to stimulate the economy.
Repeated cycles of boom and bust not only cause human misery but they waste the investment of time and energy expended by society. They also ruin the future of those who have worked hard and lose out through no fault of their own, when the economy collapses.
Those on the right have to realize that there are no easy answers and that lack of regulation does not lead to their desired outcomes. Without regulation, wealth accumulates to the rich, everyone suffers and presidents can do little to rectify the situation.
