Economic Recovery

It seems to me…

The reality is that our economy has recovered to prerecession levels.  The continuing problem – and part of the new reality – is employment prospects have changed forever.  Politicians are being dishonest in their refusal to publicly admit that our economy has passed through a point of discontinuity affecting employment opportunities which necessitate retraining the unemployed into entirely different job categories.  Additionally, some of these categories will require initial capitalization if their potential is to be realized and the jobs which they create are to remain in our country.

Employee productivity increases resulting from technological innovation and advancement along with globalization have enabled companies to increase output with fewer people in all sectors of the workforce: both manufacturing and white-collar.
Neither neo-luddite protests nor politically motivated refusal to face this new reality can reverse this trend.  7 million fewer workers are now required to maintain the same level of productivity as prior to the recession.  (The actual number probably is closer to 24 million when the under-employed and those that have stopped looking are added in.)  And worker productivity is going to continue to increase in the future resulting in even fewer employment opportunities in some current occupational sectors.  Fortunately, those technological advances responsible for improving productivity will create entirely new industries and opportunities if prospective employees have the necessary skills to fill those positions.  Otherwise, those jobs will be forced overseas following the trend we have witnessed all too frequently in recent years.

In a global economy, opportunities for unskilled labor migrate to the lowest cost areas.  This combined with continual improvements in manufacturing, such as from automation, reduces the need for unskilled labor.  With only a limited number of unskilled workers required, job migration results in an overall decrease for this category of worker in locations where employee costs are not globally competitive.  Knowledge workers, on the other hand, rely on creativity and normally start entirely new companies when provided the opportunity.  Many categories of service workers; e.g., retail sales; similarly are not subject to foreign displacement but these jobs are primarily in lower paying occupational areas.

There is a general refusal by politicians to face this new reality.  Unless action is taken relatively quickly, we could lose our place and status as a major world power and become a second-tier country.  The time to reverse our nation’s decline and build for the future is now.  It will require commitment and funding –for politicians only willing to consider a quick and easy “fix”, both of these traits seem to be in short supply at this time.  Economic recovery and future employment opportunities will increasingly be dependent upon research, development, and innovation.

Part of the problem is that continued technological development and global economic flattening will result in further employment contraction unless action is quickly taken to reverse this trend.  If allowed to continue, our budget deficit difficulties could continue to degenerate in coming years as tax revenue correspondingly decreases as a result of falling wages and possibly even higher unemployment levels.  This cycle could quickly worsen as the available support network and social infrastructure deteriorates.

Let’s consider some actions that must be taken to reverse these trends.

Manufacturing Costs

U.S. manufacturing costs are too high.  Continuing to saddle employers with retirement and health benefit expenses will force additional manufacturing overseas.  Congress must remove these burdens from employers and move to federally controlled programs if they do not wish to force remaining businesses to move the majority of their workforce to other countries.

“Buy America” campaigns are counterproductive.  Limited personal budget discretion mandates that consumers purchase the best quality product available at the lowest cost.  Consider U.S. auto industries initial refusal to improve their products when faced with increasing foreign competition.  A similar result can be seen in all sectors of our economy.

Basic Education

Education has become an unacceptable burden that very few students can any longer afford.  We must remove this burden and encourage a higher percentage of students to enter science and technology programs.  No longer can we continue policies discouraging education when our nation increasingly depends on the ready availability of trained and educated workers.

K-12 standards need to be raised and any student not meeting minimum proficiency requirements should be returned to their graduating institution for additional work; higher level educational institutions should no longer provide remedial classes.  A system of vocational and two-year junior colleges which students could attend without personal cost should be available to everyone within a reasonable distance of everyone’s home so as to reduce expenses associated with obtaining an education.

Anyone majoring in science or engineering should be ableto do so without personal cost through graduate school.  Anyone serving one year in the army or marines, two years in the navy, three years in the Air Force or Coast Guard, four years in the Peace Corp, or five years in any AmeriCorps VISTA or Volunteers in Service to America also should be able to complete their education without incurring personal debt.  Anyone from a foreign country who completes an advanced degree in science or engineering and wishes to stay in this country should be allowed to do so – we need all the talent we can get – and provided a path to citizenship.

Educational assistance should be restricted to attendance at academic institutions fully accredited by nationally recognized accrediting agencies determined by the U.S. Secretary of Education to be reliable authorities as to the quality of education or training provided by those institutions.

Retraining

As a result of rapid changes in technology and global flattening, many of those unemployed or underemployed find themselves with few viable alternatives.  Without skills considered useful in the new economy, their future prospects are very limited.  About 44 million Americans in 2009 either were out of work or considered among the “working poor” and living below the poverty line.  The jobs they hold tend to be in low-paid service occupations and industries.  Many have exhausted any financial savings and are totally dependent upon unemployment benefits or other federally funded programs.  People out of work, whose mortgages are greater than their house values and have wiped out their savings, are not able to take on additional expenses for retraining.

Contrary to general opinion, those who qualify for welfare benefits are predominantly married families, in their prime working years, have at least high school educations, and work many hours.  Some of the support programs available include:  Supplemental Nutrition Assistance Program (SNAP) (formerly called “food stamps”) which provides families with debit cards to buy food in grocery stores.  The “Section 8” program pays for a percentage of the rent for a house or apartment for qualifying individuals.  The Federal Housing Administration backs mortgage loans for those who can afford them but may not qualify on their own or who cannot afford a 20 percent down payment.  The Medicaid program provides health care to individuals whose income level and available assets are low enough for them to qualify.

Rather than continue to provide support to an increasing number of people, long-term expenses could be substantially reduced through a comprehensive federally funded retraining program.  Any retraining program should be provided through educational institutions fully accredited by nationally recognized accrediting agencies as stated above.  The long-term unemployed should be required to participate in retraining programs as a requirement to continue receiving nemployment benefits.

Published back in the 1960s, the “Report of the Ad Hoc Committee on The Triple Revolution” still has relevance today and is worth reading.  Unemployment currently is around 9 percent.  (This means 91 percent of those actively wanting to work are employed.)  If the desired unemployment rate should be about 6 percent to control inflation as recommended in the report, the unemployment rate needs to be reduced only by about 3 percent – a much more manageable number than attempting to reduce the current figure by 9 percent, or almost 1 out of every 10 people, to zero.

While the report dealt primarily with the effects of automation, it concluded that automation would result in an overall increase in the number of available employment opportunities though those opportunities would be in new areas rather than those previously available.  Employee re-training programs therefore are critical in order to maintain full employment.  This is an area in which we currently are failing to provide adequate assistance.

Research

Economic recovery and future employment opportunities will increasingly be dependent upon the results of research, development, and innovation which only will be possible if a properly educated workforce is available for employment.  Many new ideas initially come from either university or corporate research centers but are dependent upon educated people being available to work on them.  We not only have neglected this area in recent years, in many ways people have been discouraged from even entering these fields.  It normally requires about fifteen years of experience in a field to obtain sufficient knowledge to develop the creative skills necessary for new product conceptualization.  Many of the people currently in these positions are nearing retirement age so it is necessary to begin developing an adequately skilled work force as quickly as possible.

Traditionally, Congress has been motivated to fund technological innovation only if deemed necessary by the Department of Defense.  Much research consequently was funded either directly or indirectly by DARPA (the DOD Advanced Research Projects Agency).  An alliance between the military, universities, and corporations originally formed by Vannevar Bush following the Second World War very effectively resulted in much of the scientific and engineering innovation responsible for job growth during the post World War II period.Unfortunately, much of this funding was either totally eliminated or significantly reduced following Vietnam.  Now we are paying the price for that mistake.

There is a mistaken belief that the majority of initial research and development comes from within the private sector.  Historically, most initial development is government funded.  In this respect, the space program represents one of the most worthwhile investments our country has ever made.  Only after a technology is available, is the public sector able to exploit it.  Research funding must be less politicized and more merit based.

Businesses and corporations in this country have reduced the percentage of their research investments as a result of tax structure changes.  We no longer have corporate research facilities formerly typified by AT&T Bell Labs, IBM, GE Schenectady Research, Xerox PARC and other similar corporate institutions.  Research in many of our universities and other institutions of higher learning has likewise been reduced by lack of funding.  Not only was this funding an important motivator for basic research, it also supported a considerable percentage of graduate and post-graduate school attendance.

Without sufficient funding, where will the next break-through in nanotechnology, communications, energy, transportation, or biology come from?  These are the employment opportunities of the future but, unfortunately, if they are not developed here in our country, then they most likely will be in China or India.

As I have said elsewhere, I do not believe in a free lunch.  If we have the basic will to survive, and I believe we do, we have to pay for it.  This, unfortunately, means increased taxes – not the reduction currently favored by many politicians.  Rather than increasing income taxes, a national sales tax, probably of about 3 percent restricted to research and higher education might be acceptable.  Yes, this not only would be an unpopular
suggestion but sales taxes also are regressive and unfairly penalize those at lower personal income levels.  Unfortunately, I do not see any other alternative if we are not going to become a second-class nation.  There also should be a business tax credit of at least 6 percent for approved training and research programs.

It is time for our nation’s leaders to wake up and recognize we live in a new world where economic opportunities have changed and it is increasingly critical that government policies also change if we are to exploit those opportunities we now have.  But the window of opportunity is narrow and will close if we do not quickly take advantage of it.

No, I do not know how we can pay for all we need to do.  But I do know with absolute certainty what the results will be if we do not rapidly chose to change the direction in which our country is heading.  Our political leaders have placed us on a long slow downward cycle from which it will be increasingly difficult to recover.

That’s what I think, what about you?

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About lewbornmann

Lewis J. Bornmann has his doctorate in Computer Science. He became a volunteer for the American Red Cross following his retirement from teaching Computer Science, Mathematics, and Information Systems, at Mesa State College in Grand Junction, CO. He previously was on the staff at the University of Wisconsin-Madison campus, Stanford University, and several other universities. Dr. Bornmann has provided emergency assistance in areas devastated by hurricanes, floods, and wildfires. He has responded to emergencies on local Disaster Action Teams (DAT), assisted with Services to Armed Forces (SAF), and taught Disaster Services classes and Health & Safety classes. He and his wife, Barb, are certified operators of the American Red Cross Emergency Communications Response Vehicle (ECRV), a self-contained unit capable of providing satellite-based communications and technology-related assistance at disaster sites. He served on the governing board of a large international professional organization (ACM), was chair of a committee overseeing several hundred worldwide volunteer chapters, helped organize large international conferences, served on numerous technical committees, and presented technical papers at numerous symposiums and conferences. He has numerous Who’s Who citations for his technical and professional contributions and many years of management experience with major corporations including General Electric, Boeing, and as an independent contractor. He was a principal contributor on numerous large technology-related development projects, including having written the Systems Concepts for NASA’s largest supercomputing system at the Ames Research Center in Silicon Valley. With over 40 years of experience in scientific and commercial computer systems management and development, he worked on a wide variety of computer-related systems from small single embedded microprocessor based applications to some of the largest distributed heterogeneous supercomputing systems ever planned.
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