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Bush's "Ownership Society" Already Doomed by his Trade Policies
AmericanEconomicAlert.org ^ | Friday, September 10, 2004 | Alan Tonelson

Posted on 09/10/2004 2:36:36 PM PDT by Willie Green

For education and discussion only. Not for commercial use.

OK, let´s suspend the bashing of President Bush and his Democratic presidential opponent John Kerry for their stupefyingly awful records and platforms on trade policy. Let´s turn instead to how their utter inability to understand America´s globalization challenges will sandbag other major policies they´re pitching. To date, there´s no better example than Bush´s goal of turning America into an “opportunity society.”

Anyone who likes free markets and capitalism, will rightly love the concept of an ownership society; and it´s no wonder that the Republicans are making it a centerpiece of their economic platform (even if most details remain to be filled in).

Ownership´s essence is that the individual knows how to handle resources better and more responsibly than the government. So the crises America faces in, say, health care costs and retirement security are best dealt with by giving Americans “more control over their lives,” in Bush´s words.

If the taxes currently financing government´s gigantic role in these areas are cut, then individual Americans can take the proceeds and purchase their own medical care, and make the investments they find most promising to pay for their golden years. Further, not only are individuals more likely to make the choices best for their circumstances, but they also will have overwhelming incentives to use their windfalls as efficiently as possible. Along with the elimination of costly government bureaucracies, these efficiencies will produce savings for the entire economy.

Ownership society advocates also seek, in the President´s words, to enable more Americans to use tax relief to “own their own home or their own small business,” as well as to choose their own job training program to keep them competitive in the global marketplace.

These ideas are so innovative and optimistic that only gloom and doom liberals and other economic girlie-men would object, right?  Not by a long shot – at least if you pay any attention to the economy and its major features and trends.

Each of Bush´s proposals faces compelling objections on its own terms. For example, are individual investors really supposed to keep up with the nanosecond-by-nanosecond changes in the financial markets? Even most finance professionals fail at this task. Is health care really just like any other good or service, and will consumers really shop for it just like they shop for sneakers or SUVs?

But the biggest obstacle to the ownership society is the steady stripping from Americans of the resources needed to buy control over their lives. And one of the biggest forces behind this worsening incapacity is a trade policy designed to plunge Americans into competition with much lower-paid third world workers, and drive down domestic wages and salaries in the process.

The facts are beyond dispute – except among Washington´s bought and paid for globalization cheerleaders. Adjusted for inflation, total U.S. private sector wages peaked at $8.62 per hour (measured in 1982 dollars), in April, 1978 – scant years after the great opening of the U.S. economy to imports began in earnest. Real manufacturing wages peaked at roughly the same time, at $8.97 per hour. (We won´t bother with public sector wages because they´re not directly set by the market.)

Since these peaks, real private sector wages have fallen 4.4 percent – a performance previously unheard of in American history. And manufacturing wages, which are most affected by international competition, have fallen 5.6 percent. Worse, even though the economy has technically been recovering from the last recession for nearly three years, real private sector wages during this period are up only 0.4 percent, and real manufacturing wages are up only 1.4 percent.

More disturbing, signs keep appearing that the link between work and economic viability is growing weaker in America. Last month´s announcement that the official national poverty rate had risen in 2003 for the third straight year, to 12.5 percent, attracted deserved attention. At least as important, however, is the large and growing number of impoverished Americans who are working Americans. One in every four working Americans today earns less than $8.70 per hour (in 2004 dollars) – the effective federal poverty-level wage. As social policy analyst Beth Shulman wrote on Labor Day in the Washington Post, this trend “undermines our most fundamental [national] ideal: that if you work hard, you can support yourself and your family.”

Far from encouraging greater responsibility-taking, these trends inevitably are creating greater government dependencies. One indication: The share of Americans enrolled in government health-care programs such as Medicare and Medicaid stands at a two-decade high of 26 percent. And as made clear by rising federal budget deficits, the national appetite for public services regardless of the public´s willingness or ability to pay just keeps growing.

It should be obvious to everyone why stagnant and falling incomes will doom the opportunity society. Tax cuts will only marginally help workers who earn increasingly meager wages and, therefore, have less and less taxable income to begin with to cut and transfer to private health and retirement accounts. The idea that these workers will be able to buy a business or a home after tax cuts is downright moronic. Tax cuts will be equally pointless for workers deciding among job training programs if the economy keeps losing job opportunities that can pay a living wage.

In other words, tax cuts and privatization can´t drive U.S. economic policy unless the United States retains, or rebuilds, a meaningful tax base. If President Bush knows how to do this without reversing his outsourcing-centered trade policies, now´s the time to tell us. But that´s unlikely unless his opponents start asking him.

Alan Tonelson is a Research Fellow at the U.S. Business & Industry Educational Foundation and the author of The Race to the Bottom: Why a Worldwide Worker Surplus and Uncontrolled Free Trade are Sinking American Living Standards (Westview Press).


TOPICS: Business/Economy; Constitution/Conservatism; Culture/Society; Foreign Affairs; Government; Politics/Elections
KEYWORDS: baloneyandbs; buygoldnow; classenvyhatespeech; debt; deficits; eeyore; globalism; goldbuggery; goldgoldgold; goldmineshaft; joebtfsplk; monorailwillsaveus; morebs; ownershipsociety; politicsofenvy; residentbushbasher; thebusheconomy; trade; wishfulthinkingwilly
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To: Erik Latranyi
Communist China will not exist in 25 years without a shot being fired

"Capitalism" has worked really well in all those communist regimes, right? Name a few.

121 posted on 09/11/2004 6:28:26 AM PDT by ninenot (Minister of Membership, TomasTorquemadaGentlemen'sClub)
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To: DoughtyOne

While your understanding of the Loral treason is excellent, do not forget Loral's allies: Clintoon, Motorola, and Boeing.


122 posted on 09/11/2004 6:32:49 AM PDT by ninenot (Minister of Membership, TomasTorquemadaGentlemen'sClub)
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To: DoughtyOne
I will say that the next time we get a guy like Clinton or his wife in there, I do believe the Patriot Act will be abused.

Precisely why Jim Sensenbrenner, (R-WI) opposed some provisions of the Act. He has a 99.5% ACU rating and saw the same flaws.

123 posted on 09/11/2004 6:37:31 AM PDT by ninenot (Minister of Membership, TomasTorquemadaGentlemen'sClub)
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To: FITZ
American labor cannot survive on the $0.50 an hour that a Mexican worker can or the $0.25 an hour that a Chinese worker can. No way can the typical average American pay $4,000 property tax a year, 1/3 his income in income tax, high Social Security, taxes, Medicare taxes, gasoline taxes, high sales taxes and all the other many taxes and earn those kinds of wages. End all taxes and the American could work for far less also.

Another problem is the cost of housing, which is usually a family's biggest expense. Back in the early '80s, a young, newly-divorced friend of mine with a toddler was able to afford a nice apartment in a nice section of Paterson, NJ, on a minimum-wage salary. Can't do that now. Even ten years ago, rents were not unreasonable. Since the mid-nineties, though, the cost of rent and mortgage have skyrocketed.

124 posted on 09/11/2004 6:40:53 AM PDT by Siamese Princess
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To: WilliamofCarmichael
What's it called when citizens are asked to defend with their lives those corporations that will not hire them because to "turn a profit" corporations must give the jobs to people in other countries?

The heads of these corporations will one way or another convince the government to go to war ostensibly on America's behalf but really on the their behalf. The public will be sold a bill of goods, a pack of lies.

125 posted on 09/11/2004 6:44:49 AM PDT by Siamese Princess
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To: Willie Green

Not disputing the issues raised, but given we have a choice between Kerry and Bush, now is not the best time to be trying to solve this issue. The next president will appoint several Supreme Court Justices and set the agenda for the war on terrorism for the next 4 years. It's about like arguing monetary policy in 1942.


126 posted on 09/11/2004 6:45:22 AM PDT by Casloy (qs)
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To: Casloy; RFT1

Not to worry. Neither Bush nor Kerry will pay any attention at all to these issues, whether elected or not.

Bush's econ bunch are all dedicated fans of the Determinist School of Economics--'those who cannot compete should die.' It's closely related to the Determinist School of Sociology--remember that one?

It's the Economic makeover of racism, derived precisely from Darwinism.


127 posted on 09/11/2004 6:56:29 AM PDT by ninenot (Minister of Membership, TomasTorquemadaGentlemen'sClub)
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To: Erik Latranyi


Wrong again. The Ford Fairlane in the late 60s had a 3 year product cycle, just the 67-69 model years, the Chevy Impala/Caprice had a 4 year cycle. Also most Chevelles were not muscle cars, but the midsized GM car that people bought to go from point A to point B.


128 posted on 09/11/2004 7:19:26 AM PDT by RFT1
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To: RFT1; Erik Latranyi
Don't forget the real good Falcon you could get from Ford in those days.

A little reminder of very popular Richard King, WLW Cincinnati, 1960s. One of his sponsors was a Ford dealer and he'd get away with telling his listners to go there for a real good Falcon.

129 posted on 09/11/2004 8:12:57 AM PDT by WilliamofCarmichael (Benedict Arnold was a hero for both sides in the same war, too!)
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To: ninenot

Since we are being hopelessly simplistic, how about, "those who won't compete should come to the rest of us for a handout." Remember that one, it caused more deaths worldwide than all wars put together?


130 posted on 09/11/2004 8:49:29 AM PDT by Casloy (qs)
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To: Wolfhound777
Almost the entire federal tax base of this country is the top 5% of wage earners. They pay 75% of all federal taxes.

Why that certainly seems grossly unfair. Are you suggesting that we should redistribute the wealth producing assets of the upper 5% so that rest of the population can carry its fair share of the Federal Income tax burden?
131 posted on 09/11/2004 9:38:52 AM PDT by ARCADIA (Abuse of power comes as no surprise)
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To: Erik Latranyi
If it is OK for capital to flow to those states where wages are lower then why is it wrong for capital to flow to those countries where wages are lower?

Why have borders?
132 posted on 09/11/2004 9:46:04 AM PDT by lelio
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To: snopercod
Rather than calling American an "ownership society", I think a more appropriate name would be "credit card society".

IMHO, Bush's vision of an "ownership society" is patterened after the one that wealthy Mexican landowners established over the peon lower classes. His embrace of global corporatism is merely an expanded version of the one-party rule of the Mexican PRI.

133 posted on 09/11/2004 10:41:12 AM PDT by Willie Green (Go Alan Go!!!)
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To: Willie Green

ping


134 posted on 09/11/2004 12:05:39 PM PDT by XBob (Free-traitors steal our jobs for their profit.)
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To: Willie Green
IMHO, Bush's vision of an "ownership society" is patterened after the one that wealthy Mexican landowners established over the peon lower classes. His embrace of global corporatism is merely an expanded version of the one-party rule of the Mexican PRI.

I have such suspicion - that a large section of establishment longs for Latinization of USA.

135 posted on 09/11/2004 2:05:52 PM PDT by A. Pole (Madeleine Albright:"We are the indispensable nation. We stand tall. We see further into the future.")
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To: A. Pole

Before we get into ownership, we might consider the formation of capital that enables ownership. With the largest spending spree on record and the greatest credit expansion, the public has a fat chance of much ownership. Economic slavery would be a better term for the Bush-Greenspan vision of ownership. What the banker giveth, he can taketh away.


136 posted on 09/12/2004 4:24:43 AM PDT by meenie
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To: sinkspur
Luddite bump

Anti-globalists are to Luddites as Elephants are to beekeepers.

Care to try again?

137 posted on 09/12/2004 3:59:33 PM PDT by iconoclast (Conservative, not partisan)
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To: Erik Latranyi
That is why we must compete with low-cost workers worldwide---keep our industries sharp and innovative so our economy stays strong.

Birds fly over the rainbow, way up high. Birds fly over the rainbow, why then, oh why can't I?

138 posted on 09/12/2004 4:04:11 PM PDT by iconoclast (Conservative, not partisan)
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To: bvw
I'm sure Bush's mind changed in that grade school room on Florida. Let's give him a chance ...

Granting that he's not the quickest pony in the corral, but what has he said/done to bolster your optimism?

139 posted on 09/12/2004 4:07:17 PM PDT by iconoclast (Conservative, not partisan)
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To: iconoclast

No, luddite.


140 posted on 09/12/2004 4:20:49 PM PDT by sinkspur ("Can someone tell me where to find an ordained archpriest?"--Cardinal Fanfani)
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