The heart of the problem, says economist Steve Slavin, is gross inefficiency. Since the end of World War II, America has been wasting vast amounts of its resources. As examples he cites the following key sectors:
·Healthcarewe spend nearly twice as much as other industrialized nations but achieve no better results;
·Educationjust half of our eighteen-year-olds can function at an eighth-grade level, while many European and Asian countries do far better educating their young people;
·Transportationby relying on cars instead of mass transit, we spend much more than comparable nations;
·The militaryseveral decades after the Cold War our military budget continues to be almost 40 percent of the world's total military spending, while few politicians ever question the necessity for such massive outlays.
In these areas and other sectors of the economy, Slavin proposes sweeping changes to eliminate inefficiency. These would include a restructuring of our healthcare system to make it affordable for all, a major push toward public transportation, increased emphasis on quality results from our education system, ways to eliminate waste throughout our vast military-industrial complex, and a renewed emphasis on manufacturing.
Refreshingly clear and readable, The Great American Economy will appeal to readers who want to learn what went wrong with our economy and how to fix it.
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About the Author
Steve Slavin, PhD, is the author of fifteen economics and math books, including two college texts, Economics (now in its eleventh edition), and Wiley Pathways Business Math (with Tere Stouffer), as well as the bestselling All the Math You'll Ever Need. He taught economics for thirty-one years at Union County College, Brooklyn College, and New York Institute of Technology.
Read an Excerpt
IS OUR ECONOMY FUNDAMENTALLY SOUND?
The economy is fundamentally sound.
— President Herbert Hoover, 1931
Because our poor economic performance has been such a hot topic, there is no shortage of books explaining what went wrong and how it can be fixed. Each author believes that if we can solve just one or two problems, we can get our economy back on course. It has long been part of our can-do national psyche that there is a simple solution to almost every problem — from curing bad breath or erectile dysfunction to bad credit or body odor. So common sense tells us that there must also be a simple solution for our bad economy.
Most Americans agree that our economic troubles stem from just one or two basic causes. On the political right, Tea Party supporters think that if we drastically reduce federal government spending, taxation, and regulation, we could restore our economic state of grace. And those on the political left want to raise taxes levied on the rich and on highly profitable corporations and to redistribute the proceeds to the middle class, the working class, and the poor.
OUR ECONOMIC FUNDAMENTALS
Donald Trump's 2016 presidential campaign slogan was "Make America great again." He observed that while some people were very prosperous, tens of millions of Americans had been left far behind. How would he fix our economy? Mainly by cutting taxes, government spending and regulation, bringing back manufacturing jobs that had been shifted to other countries, and negotiating more advantageous trade treaties.
He also proposed repealing and replacing the Affordable Care Act (aka Obamacare), raising military spending, spending one trillion dollars to rebuild our crumbling infrastructure, and building a wall on our border with Mexico to keep out illegal immigrants.
Because President Trump was in office for just one hundred days before this book went to print, it was far too soon to know whether Congress would pass the legislation necessary to put his proposals into effect. Indeed, with the exceptions of a $54 billion defense spending increase for fiscal year 2018 and a strong effort to repeal and replace the Affordable Care Act (Obamacare), the Trump administration provided few other economic policy specifics until April 26, 2017, when Trump released his tax plan, which called for rate cuts in the corporate income and personal income taxes and the elimination of the inheritance tax.
During his first one hundred days in office, President Trump did not have any notable legislative triumphs, but he did sustain a major setback. Although he spent weeks negotiating with Republican Congress members over a bill authored by House Speaker Paul Ryan to repeal and replace Obamacare, the bill was withdrawn when it became apparent that it would not be passed.
OUR TOP EIGHT FUNDAMENTAL PROBLEMS
Whenever Sen. John McCain looks back at the 2008 presidential campaign, he will probably never forget the day he may have lost the election. It was September 15 when he proclaimed, "The fundamentals of the economy are strong." In politics, as in stand-up comedy, it's all in the timing. So when Lehman Brothers filed for the largest bankruptcy in US history just hours later, McCain appeared very much out of touch.
But was he wrong? Before answering, please look at the list of our top eight fundamental problems shown below.
1. Our inefficient transportation system: because we go almost everywhere by car, Americans spend twice as much on transportation as the citizens of most other rich nations.
2. Our failing schools: just half of our eighteen-year-olds can function at an eighth-grade level.
3. Our sick healthcare system: healthcare costs nearly twice as much per capita in the United States than it does in most other economically advanced nations.
4. The military-industrial complex: we account for nearly 40 percent of the world's military spending.
5. The criminal justice establishment: we have, by far, the highest incarceration rate among economically advanced nations.
6. Our bloated financial sector: this sector is diverting increasing amounts of savings from productive investments into speculative activities.
7. Our huge and growing make-work sector: more than fifteen million Americans hold jobs that do not produce any useful goods or services.
8. Our shrinking manufacturing base: much of what had once been "Made in the USA" is now made in Japan, China, South Korea, Mexico, and other nations.
Let's consider the first two items on this list.
One very important factor in our rise to economic power was the world-class public transportation system we had built by the turn of the twentieth century. Since the 1930s it has been almost completely destroyed as we became increasingly dependent on automobile transportation. Nearly all our global economic competitors have far better public transportation systems.
By 1900 we had built the world's first free, universal public education system, providing our nation with a well-trained and well-educated labor force. Now, just half of our eighteen-year-olds can function at an eighth-grade level. On international examinations, our students usually rank below those from other economically advanced nations.
During the last eight decades, we have managed to turn some of our economic strengths into weaknesses. Are you old enough to remember the old Charles Atlas cartoon ad showing a beach bully kicking sand into the faces of a skinny guy and his girlfriend? That weakling took the Charles Atlas bodybuilding course, which soon enabled him to beat up the bully. Our nation seems to have taken a Charles Atlas course in reverse. We are well on our way to converting ourselves from an economic colossus into a ninety-seven-pound economic weakling.
Clearly then, many of the fundamentals of our economy are not strong. Henry Clay, a three-time presidential candidate, once remarked, "I'd rather be right than president." John McCain, sadly, was neither right nor president.
SIX ADDITIONAL PROBLEMS
We cannot reverse our economic decline without solving these eight fundamental problems. But even that would not be enough. These problems are largely responsible for six additional problems, which must also be addressed:
There is a great shortage of decent jobs.
The average hourly wage rate (adjusted for inflation) for nonsupervisory workers has not increased since 1973.
Our income distribution is becoming increasingly unequal.
Our growing permanent underclass perpetuates itself from one generation to the next.
Our huge federal budget deficits are unsustainable.
Because we are running large trade deficits, we must borrow more than $1 billion a day from foreigners.
Much of the debate about our economy has focused on these six problems. Indeed, the first three were central issues during the 2016 presidential election. Still, if we are to reverse our decline and once again become the world's greatest economy, we shall need to concentrate mainly on our top eight fundamental economic problems. Once they are solved, it will be much easier to deal with these six additional problems.
AN UNSUSTAINABLE ECONOMIC COURSE
Sixty years ago the United States was almost self-sufficient: we produced what we consumed and ran a trade surplus with the rest of the world. Today our nation consumes more than it produces, spends more than it earns, and needs to borrow large amounts of money from foreigners to finance its huge trade deficits. Wouldn't it be great if we could identify our problem, fix it, and then move on? But we can't point to any single cause, nor is there a magic bullet we can use to make it all better.
Our two most recent former Federal Reserve chairmen, Alan Greenspan and Ben Bernanke, have both observed that our current economic course is unsustainable. Perhaps they were thinking of Stein's Law, which was invoked by Herbert Stein, who had served as President Nixon's chief economic advisor: "If something cannot go on forever, it will stop."
Our top eight fundamental problems did not materialize overnight. The origins of some problems can be traced back to the Great Depression of the 1930s. During these last eighty years we sowed the seeds of our economic destruction. No longer the lean and mean industrial machine of the 1940s and 1950s, we are well down the road to long-term economic decline. To see how all of this happened, we need to look at the record.
Excerpted from "The Great American Economy"
Copyright © 2017 Steve Slavin.
Excerpted by permission of Prometheus Books.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.
Table of Contents
PART I. LOSING OUR ECONOMIC BEARINGS, 17,
Chapter 1. Is Our Economy Fundamentally Sound?, 19,
Chapter 2. What Went Wrong?, 25,
PART II. SIX CATACLYSMIC EVENTS, 31,
Chapter 3. Depression and War, 33,
Chapter 4. Suburbanization, 41,
Chapter 5. The Cold War, 51,
Chapter 6. Globalization and Global Warming, 59,
PART III. THE DEINDUSTRIALIZATION OF AMERICA, 71,
Chapter 7. The Rise and Fall of American Industrial Power, 73,
Chapter 8. Innovation, Infrastructure, and Industrial Policy, 81,
PART IV. JOBS, WAGES, AND THE JOB SHORTAGE, 97,
Chapter 9. Jobs and Wages, 99,
Chapter 10. The Job Shortage, 115,
PART V. WASTING OUR RESOURCES BY USING THEM INEFFICIENTLY, 119,
Chapter 11. Our Wasteful Transportation System, 121,
Chapter 12. Our Failing Public Schools, 133,
Chapter 13. Our Sick Healthcare System, 159,
PART VI. WASTING OUR RESOURCES BY OVERPRODUCING, 179,
Chapter 14. The Military-Industrial Complex, 181,
Chapter 15. The Criminal Justice Establishment, 189,
Chapter 16. Our Bloated Financial Sector, 201,
PART VII. WASTING OUR RESOURCES BY PRODUCING USELESS GOODS AND SERVICES, 217,
Chapter 17. The Internal Revenue Code and the Tax Preparation Industry, 219,
Chapter 18. Telemarketers, Ambulance Chasers, and Other Make-Work Occupations, 225,
PART VIII. THE ECONOMIC, SOCIAL, AND POLITICAL CONSEQUENCES OF WASTING OUR RESOURCES, 233,
Chapter 19. The Economic Consequences of Wasting Our Resources, 235,
Chapter 20. Our Twin Deficits, 243,
Chapter 21. Our Unraveling Social Contract, 253,
Chapter 22. Growing Income Inequality and the Shrinking Middle Class, 261,
Chapter 23. Poverty and the Growing Permanent Underclass, 273,
PART IX. RESTORING THE AMERICAN ECONOMY, 281,
Chapter 24. How We Are Wasting Our Resources: The Big Picture, 283,
Chapter 25. Solving Our Economic Problems and Saving the American Economy, 295,
Chapter 26. The Great Job Switch: Placing Tens of Millions of Americans in Useful Jobs, 307,
Chapter 27. A Long-Term Strategy to Save the American Economy, 325,