A New Social Compact

There is no doubt in my mind that America has raised several, successive generations of spoiled citizens. While we have experienced ups and downs in our economy, the Great Depression was the last time we saw complete economic upheaval. During the 1930’s, the rest of the world experienced the same thing, and it was a contributing factor to World War II.

After World War II, the United States was the only game in town as the rest of the world lay in shambles. It was during the 1950’s that American corporations became the “nanny’ providing unionized jobs, health care and pensions to their workers. Unions said we want more…corporations said Amen. America entered into an alliance with Big Business, Big Labor, and Big Government. And they fed off each other.

The old rule used to be “guns or butter”. The economy couldn’t tolerate paying for both…until the 1960’s and Lyndon Johnson’s simultaneous Viet Nam War and Great Society. Midst a time of war and plenty, the “Kum Ba Ya” generation of hippies and freaks took to the streets, and America became the source of all things evil and wrong in the world.

But a funny thing happened while we weren’t looking. The rest of the world caught up to the United States and the third world turned into emerging markets. BRIC (Brazil, Russia, India, and China) are giving the traditional western democracies (United States, Japan, Germany, and Britain) a run for their money, literally. Not only that, they are changing the rules. Computers and the digital age, providing instantaneous communication and transfer of capital, have made the world a much smaller place. Add to the mix a bunch of totalitarian and theocratic states controlling the energy flowing into the capitalistic democracies…the United States had better learn the new rules of the game. Liberal Arts academics haven’t figured it out yet, and the media has done a terrible job of explaining what the new rules are. The Kum Ba Ya crowd still thinks that we are a solo player.

Those of us in the trenches learned the rules the hard way. My wife and I ran a business for 6 years. We sold crafty stuff in over 30 states and employed 20 women who helped us to make all sorts of things. Right after we started the business, the Chinese ascendency began, and it became clear that there was no way we could survive as we were operating. It was downright scary. We began to import items from China, and how it worked was amazing. We would send an original item to a Chinese company, and they would send us their prototype, along with a form asking how many containers we wanted. That’s shipping containers, folks…those great big things you see on the news that need cranes to move them. The put the container on a truck, and drop it right at your door. But then my wife was called back to her teaching job after lengthy litigation. The governmental pension was too much to turn down, and we closed the business. But we certainly learned how things work. And still have some things left over from the first shipment we imported to prove it.

The collapsing Detroit car makers are the last vestige of the 1950’s way of doing business. While hard times have certainly hurt the southern car makers, they are still viable. The root of the problem came out in the Congressional loan hearings yesterday…what do we do about health care and pensions for the American company autoworkers? We are the only country in the world that puts the burden of health care on employers...with the end result that we are at a competitive disadvantage notwithstanding the system has provided us with the best health care in the world. The same with taxes. We have the highest corporate tax rate in the industrialized world. Couple that with high wages...what do we do? THAT is the debate.

While the current economic crisis was caused by bad loan policy established by the government under both the Clinton and Bush administrations, a completely ridiculous accounting rule in an over reaction to the Enron crisis, and bad energy policy under every President since Jimmy Carter, the effect has brought to the forefront the need for American companies and the citizens of the United States…you and me…to enter into a new social compact that takes into consideration the new world order.

The current bad times will pass as they always do, and America will come back strong, but there needs to be serious debate as to the new rules, and it has to be done in a realistic, hard nosed manner. The far left political agenda of radical environmentalism and a nanny government will not allow America to compete in any meaningful way…and our standard of living will decrease rapidly.

Personal responsibility and individual initiative will lead the way to prosperity. That should be the framework of the new social compact.