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Chapter Thirty-seven: My Vision of a Better World
Yes, we are living in a global economy. Immigrants from all countries make their home in the United States. Also, the situation of people living outside our country affects the well being of the American people. Some outsourcing of U.S. jobs will and should continue. We depend on trade with other countries for many important raw materials. We depend on foreigners for new products, new ideas, and creative influences of various kinds. We depend on them for cooperation in protecting the natural environment, global security, and basic human rights. We are, in fact, citizens of the world as well as U.S. citizens.
Any vision of a better society must
be a vision of a better world society, not just one in the United States. That
said, the U.S. Government also has a duty to protect the interests of its own
people. In our pursuit of a better world, we ought not allow the U.S. economy
to collapse or be weighted down with hopeless debt to serve the interest of
a privileged few.
Political conservatives often suggest that government is bad. Huge government bureaucracies are wasteful and corrupt. Free the private sector from the shackles of government and watch this economy bloom.
I think, however, that eliminating government from involvement in the economy is like eliminating the police officer on the street. In the absence of centralized power, individuals tend to abuse each other. Violent acts are performed to advance personal interests. We do need a structure for community cooperation along with mechanisms of enforcement to bring peace and justice to our land. On the other hand, I do agree that government does tend to become corrupt if its leaders lack a vision of a better society. Given that vision, they will be proud of their community-building role. Lacking it, they will use their positions in government to enrich themselves or otherwise betray the public trust. As a Minneapolis landlord, I have seen that happen in my own community.
While not everyone will agree, I think that were seeing the end of a commercial and business culture that has existed for hundreds of years in the west. Every living organism goes through a life cycle which includes both growth and decline. The signs of decline in the U.S. economy are quite evident. This emphasis on reviving the entrepreneurial spirit is a symptom of its malaise. Growing economies dont need to revive spirit because people already know how to respond to opportunities around them. Although the drug dealers on the street outside my home are highly motivated entrepreneurs, I would prefer that they peddle their wares elsewhere.
No civilization or culture lasts forever and ours is no exception. When an priesthood of money managers and business graduates takes charge of business, that is a sign of its decay. The Henry Fords and Thomas Edisons will not return. Been there, done that. Contemporary life is not going to continue to improve through a continuing stream of new products. We should begin to set our eyes on opportunities of another sort as we build the civilization of the future. And government will play a role in that process. I think that government has a role to play as a regulator of free markets.
I would expand the governments constitutional authority beyond that which it has in regulating foreign and interstate commerce. Governmental authority should embrace a new concept. One of the governments functions should be to regulate the supply of labor and of other commodities. This means that government should limit supply. Government should not intervene directly in production and distribution of goods and services but limit their supply. The reason for doing this is that limited supply stabilizes or increases prices. Prices provide income for people who furnish the products. Adequate incomes stabilize employment. Stable, well-paid employment is the foundation of a better life for working people. National and global economies are sustainable on that basis. Governmental power to limit supply of production is the key to it all.
In my discussions with people in Louisiana, I was struck by the importance of commodities. Louisiana farmers and fishermen were facing intense competition from Central American and Asian producers. As more supply of crawfish, rice, sugar, or other commodities was put on the market, prices fell. All those producers who thought they would become rich by selling more product found that falling prices defeated that purpose. Yes, there was a temporary gain in income when a surge of new product hit the market, but eventually prices and income dropped and everyone in the industry was hurt.
Whats more, overproduction of farm crops and overharvesting of fish depleted the natural environment. Countless acres of rain forest in Brazil were being deforested so that crops could be grown in these places and more product be put on the market. U.S. farmers wanted to sell more corn in Mexico, but, when that happened, numerous small Mexican corn growers could not support themselves when corn prices fell. They, of course, flocked to the cities in search of work. Some came across the border into the United States.
What can government do about this situation? It can pay farmers to take their fields out of production. It can supplement farm income by providing crop subsidies. It can buy up or preserve farmland, rain forests, northern timber land, and wild grass lands so that no crops are grown in these places, at least not until demand warrants the added production. Then prices can be maintained. Price is the key to agricultural prosperity. Even with smaller volumes of production, farmers can remain prosperous if the price levels are adequate. It also helps to have small industries in rural areas so that farm people can have seasonal jobs to supplement their incomes.
But, again, the perspective must be global. Limits on supply must be globally maintained or else each nations farm producers will be threatened by foreign competition. The idea of each nation encouraging its farmers to maximize their comparative advantage as foreign markets are pried open by free trade is self-defeating from a global standpoint. The resulting low prices for agricultural commodities cost more than the benefits gained. The important thing is to keep as many people in the world as possible productively employed and employed at a level of income which will comfortably support them. Even if keeping a large number of small producers on the farm is not the most efficient way to produce farm commodities, it is the best way to manage an economy.
The late E.F. Schumacher, an economist who was a friend of my mothers, popularized the idea of appropriate technology. This meant that productive efficiency was not the only consideration in deciding which technologies or processes to employ. In countries with teeming populations, it was important to keep people employed even if their production was less efficient. And so, obsolete technologies of production were appropriate in rural India or Latin America where labor was abundant and capital was scarce. One has to look at the whole picture.
The most important type of supply is human labor. Most people in the world do not own farm land or enough business equipment to support themselves. Their livelihoods depend on selling their personal time, knowledge, disciplined effort, and commitment to perform a task which together are embodied in that commodity called labor. They have contracted with an employer to sell their labor in exchange for money. This is the moral basis of economic life in most nations. We encourage people to advance themselves economically through labor.
How can government limit labor supply? The most obvious and important way is to limit the time when people are working for wages. That was the idea behind the Fair Labor Standards Act of 1938. During the Great Depression, federal policymakers believed that an appropriate response to the limited demand for labor was to limit supply. They set a standard workweek and imposed financial penalties when employers devised work schedules whose hours exceeded the standard. Such employers had to pay their workers one-and-one-half times the regular hourly rate of pay for each hour worked beyond the standard. As employers cut back on hours to avoid this expense, they hired additional workers to maintain labor supply at a level appropriate to demand.
The quantity of labor is expressed in terms of man-hours (or person-hours) of work. This quantity is the product of hours worked per person and the number of people employed. It makes no difference if fewer people work longer hours or if more people work for shorter periods of time: quantity is expressed in their product. Therefore, if an economy is having difficulty in providing full employment, an appropriate response is to cut average hours of work.
In terms of the Fair Labor Standards Act, one can either reduce the standard workweek - change it from 40 to some smaller number of hours - or increase the penalty rate so that more employers find it financially advantageous not to work people overtime. A third approach is to make more people eligible to receive overtime pay. The government should not reward people for working these extra hours but discourage employers from allowing such hours to be worked. Then more people can be employed. That does not mean that wages will necessarily drop. If employment rises in the context of reduced labor supply, the price of labor increases. That is why, in the long run, wages do not decline as working hours are cut. By the law of supply and demand, the price of labor rises with declining or stable labor supply.
One may ask how the economy will get all its work done if people work for shorter periods of time. There are two answers.
First, the increase in labor productivity (which has already taken place) through the introduction of labor-saving equipment, better production methods, and other efficiencies make it possible to maintain required levels of output when labor supply is reduced. We let capital investment make up the deficiency in human labor.
Second - and this is controversial - much of the work being done in todays economy really does not have to be done. If we had more people fully employed, I believe we would have less crime and, therefore, less need for prisons. Shorter work hours would mean less stress and less medication. Excessive litigation is a special case: I propose that the government put caps on permissible attorney fees and thereby drive the excess lawyers into another line of work.
Generally speaking, the more pressure which
is put on the economy to get work done, the more of this work will go toward
producing goods and services which people truly need and want. Less will go
toward satisfying that which we call necessary evils. The public will insist
on having its real needs met before these other services are provided.
Enough jobs will be related to useful functions that make-work projects will
not be needed.
I must admit, however, that the time-based model of labor is not complete. Not all labor units are the same. A man-hour of Einsteins deliberations is worth more than an hour of attending a parking lot. Another element, then, is knowledge. The employer is purchasing access to an employees knowledge of providing a certain function. This knowledge is supplied instantaneously, not in proportion to time. Sometimes employees are on call to supply a knowledge-based service if it is needed; they are not really working during that time. Knowledge is a result of previous experience. It is a stored commodity. It is sometimes employer-specific. Government should not attempt to limit the supply of this commodity but let knowledge spread in ways that benefit society.
A similar labor dynamic applies to all industrialized societies. Most national economies are experiencing both the benefits and the strains of improved labor productivity. Unemployment is high almost everywhere. Underemployment is even more pervasive. We need to cut the developing countries some slack in doing what they must to start the process of industrialization. Some labor exploitation will take place.
At a certain point, though, the health of the world economy requires that all nations get behind a program to develop their industries in ways that the mass of people will benefit. Real wages need to increase. Hours of work need to be reduced to an appropriate level. The wealth generated from industrialization should be shared by a wide segment of the population. And, of course, the natural environment should not be ruined while this process is taking place.
Although there is much resistance to the idea of global economic planning - especially in this country - the present individualistic approach is inadequate to meet the needs of the future. The nations of the world can, I believe, cooperate in seeking to build a better world society. If the U.S. government throws its weight behind such an idea, that would go a long way toward making it a reality. As the power to execute economic policies rests with national governments, I am writing primarily from the standpoint of that which the U.S. Government has the power to control. The program of global economic development must, of course, involve cooperation among many different nations; yet, the U.S. Government would be responsible for part of it.
This brings us to employer-specific tariffs. Were it not for free-trade agreements and the WTO which tie our hands in this respect, the federal government could set tariffs in any way it wished. The U.S. Constitution gives Congress unquestioned power to regulate foreign trade. I am proposing, then, a new type of tariff which is both legally and technically feasible. The government would set individual tariff rates for business firms which produced goods and services in a foreign country and exported them to the United States. These tariff rates could be changed each year to encourage a certain kind of corporate behavior. The rates would be lowered when the behavior improves; and raised when behavior fails to meet standards.
When I discussed this idea in Louisiana, my employer-specific tariffs were presented as a way to save U.S. jobs. I said that the federal government might discourage outsourcing of U.S. jobs by imposing tariffs on imported products whose rate recaptured the cost savings from closing a facility in the United States and then opening one in a low-wage country. The companies already know how much they save in labor costs through outsourcing. Simply calculate its percentage of total product cost and develop a tariff whose percentage rate neutralizes the cost advantage. That way, business firms could still outsource their production but there would be no point to doing so except in the context of true trade relations.
Some would interpret employer-specific tariffs as a nationalistic measure that would invite retaliation by other national governments. I have suggested that the federal government could minimize that risk by directing the tariff at employers rather than at products imported from particular countries. Really the purpose of such tariffs would be to create a tool by which national governments could effectively prod multinational businesses to upgrade their labor offering in foreign countries and protect the natural environment. Wages could be dirt-cheap when industry first came to a Third World country, but eventually business would be expected to raise them. If wages were not raised according to a particular annual schedule, then the importing country - the United States - might impose a tariff to make the company pay this cost anyhow. The same would be true of working hours. Hours could start high, but, as the business became established, they would have to come down for the company to avoid paying the tariff.
It is in the advantage of both developing nations and the developed nations which imports products from developing ones to have living standards rise in all countries. From our standpoint, if wages stayed low in China, the Chinese people wou not have the money to buy products from the United States. Low working hours in China would mean that employment opportunities there would be spread broadly through the population so that a larger consumer market would develop. Then we could have real two-way trade.
Under the present free trade system, the name of the game is for a business firm to save money from outsourcing by cutting out the high-priced American labor. Much the same product will be sold at much the same price as before to U.S. consumers, but production costs will be much lower. The cost savings becomes pure profit. Then eventually top management will claim its reward for good financial performance. This will give them the money to retire comfortably to the Riviera or some other luxurious place while the U.S. economy falters and the Chinese population is mired in low wages.
Alan Greenspan has rightly said that if employers were pressured to raise wages in China, they would simply go to another low-wage country. Some companies have short-term contracts to lease facilities in foreign industrial parks. Successful union drives mean that employers will cease operations there and find an arrangement elsewhere to maintain the low wages. Playing the job-location game, they cannot lose. On the other hand, these employers cannot avoid abiding by the rules of the nations to which they export their products unless they engage in smuggling operations. I propose that companies which seek to perpetuate low-wage or long-hours production abroad be slapped with high tariffs when their products come to market in the United States. I see no other way than tariffs to control the situation.
I do not claim that my scheme is politically feasible. The business community may be too strong at the present time to allow something like this to happen. I do claim, however, that it advances the vision of a better world society. To those who argue that the scheme would entail a large bureaucracy with much paperwork, I respond that computer technology makes it possible to do this today with relative efficiency where it would not have been practical in years past. Companies already collect cost and other financial data. They are already audited by outside professionals for compliance with various kinds of standards. Some companies even employ labor-standards auditors. The technology and organizational structure is in place to allow such a system of employer-specific tariffs to be implemented.
My vision of a better world would be for the
earths population to be spread out in small villages and towns, and in
farms, as well as in large cities. Except for the independently wealthy, every
able adult might be working in a useful and productive enterprise of some kind,
receiving an adequate wage and having enough leisure to pursue family and personal
interests. The governments of many nations and the institution of the United
Nations would cooperatively regulate international trade to promote this better
society. Would it be a lethargic, colorless place filled with persons of middling
incomes and meaningless leisure, living in a drab government-controlled environment?
Would we miss all the wars?
No, the positive part of this future society would be what individuals are able to create for themselves within the space afforded to them by adequate income and leisure. Even though the earths supply of oil and gas may no longer support the modes of transportation to which we have become accustomed, we will have more advanced communication technology and the Internet which will let us go quickly anywhere in the world. Given the right historical outcome, we will have more personal freedom. We will have more culture, knowledge, and entertainment. There is a politics out there waiting to advance that better society which it is possible for us to have, even with human imperfections and mistakes already made. I had the privilege of trying to do something about this in 2004 while campaigning for President in the state of Louisiana.
The United States of America stands at the proverbial crossroads having to choose between two prospective futures. Will Americans continue in the superpower mode, aggressively advancing our interests through military and economic muscle; or will we seize the opportunity to build a better society at home? Backing down from the Iraq misadventure, we can reassess our current politics to use political power as a tool to create what we would want for ourselves and our children in our own land. As I see it, Americas better future consists of several elements.
First, we are a society based on the principle of human freedom. This starts with freedom of thought and personal expression, which must be defended against the imposition of lies by powerful interest groups. We need to create small-scale free-speech forums that can compete against the mass media. Freedom also extends to the economic sphere. To the greatest extent possible, individuals should have freedom to contract with employers to sell their labor or go elsewhere if the offering is insufficient. This means that a reasonable balance should exist in the supply and demand for labor. It means that impediments to labor mobility should be removed, such as vacactions or pensions tied to length of service with an employer or the provision of health-care services. An important dimension of freedom is also free time - time away from work and other pressing obligations, time to fulfill ones personal desires. More free time is a prerequisite for a better society. And what will be the content of that society? One cannot say. It is whatever people want to make of their freedom.
A second aspect of the better society which has been and will yet be created in America is its democratic form of government. This democracy should be put back in the hands of the people. Certainly the influence of money on the political process is intolerable in a nation which professes democratic ideals. However, the restoration of democracy in America starts with the communication process. Its scandalous how privately owned broadcast interests, which have managed to gut original requirements to broadcast in the public interest, have taken control of political discussion and debate while making the candidates and their contributors pay for it. The lack of transparency in the print as well as broadcast media is also a threat to democracy. Let journalists tell people where they are coming from when they make those political decisions about which stories to hype and which to ignore. The solution to this problem may not be government regulation of the commercial media but a grassroots effort to create alternative media and to build political parties that serve as centers of communication with respect to certain issues.
Finally, The United States of America is unique among the earths nations in the extent to which our society consists of various races, nationalities, and types of people who live together under a common system of law. We are unique in having the headquarters of the United Nations located in our own largest city. This is our institution as much as anyones - historically our national leaders created it - and we should be proud of the United Nations and of the peaceful aspirations it represents. In the years ahead, as the world grows closer together, the United States will be at the center of an emerging global society. Our people will personally have close ties with people in other nations. The Internet and other communication technologies will make global consciousness a practical reality. This is to be welcomed, not denounced. Given reasonable restraint by the U.S. Government and its corporate clients, America would be surrounded not by enemies but by friends.
Having said this, I must also speak to the needs of Americas own demographic core. I am referring primarily to white people and to all those others who have no other political identity other than to be part of Americas majority population. Is your culture only to eat at McDonalds, attend college, and root for the areas professional sports team? You need to do something about the self-hating message that eminates from your own cultural and political elite class. The Civil Rights model of political activity, which envisions someone elses bright future and your own continuing decline, is no longer a healthy one - certainly not for you. If America is to be a spiritually strong nation in the future, you need to take the initiative now to make it so. You will need to be resourceful and courageous.
Who are your people? What is their bright future? Only after you have confidence in yourself as a people of some worth with an honorable place in this world will you be able to deal with others in a spirit of true friendship and good will. So let that process of political and cultural self-definition begin. World history awaits the story of your effort.
This book is available in soft cover from Thistlerose Publications, 1702 Glenwood Avenue, Minneapolis, MN 55405 for $13.95 per copy (discounted $3.00 from the list price) plus $3.00 for shipping and handling (flat price disregarding quantity). Besides its greater ease of reading, the printed book contains over 280 illustrations - mostly photographs taken during the campaign trip to Louisiana.
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