It’s 1930 Again…This Time, For the Whole World

There’s a physical law: “Action and reaction are equal and opposite.” I’m unsure what to call it, but there seems to be an economic equivalent.

The U.S. got rich by throwing ambitious people from all over at nearly unlimited resources while government left them mostly alone and supported their efforts with investment in infrastructure.

There was no single, cemented-in socio-cultural system to lock behavior and no regulatory government to limit opportunity. The economy grew apace. By the lattter 1800s, the U.S. was a world leader in both manufacturing and agriculture, in spite of the Civil War.

But the human dislocation from the industrial revolution, the urbanization resulting and the Civil War’s own dislocations provided opportunistic politicians a clientiele susceptible to promises of government solutions to their economic problems. The Progresives arose to save mankind from rampant capitalism by use of government power. They came to power in the late 1800s with the Interstate Commerce Act, the Sherman Anti-Trust Act and legislation establishing national parks and federal lands. Government effectively took over the economy at that point.

From there, government control has grown until today, the U.S. economy is no longer productive enough to provide a wealthy middle class; the country is devolving toward the historical norm of a small class of wealthy and a large population of relatively poor. The average household income has dropped about 7% since 2008 and the present number of workers no longer in the workforce has returned to 1983 levels. Employment is over 9% with the young the worst off.

Meanwhile, the populous baby boomers are retiring, expectint to receive pensions from a government that is already spending much more than it takes in without them.

The same process that originally produced the wealth, also made the factors that have cut off the cornucopia. This time, it’s not just Europe and the U.S, the whole economically intertwined world is headed down the same path. The action produced enormous wealth for the U.S. and Europe; now the reaction is taking it away.

About Jack Curtis

Suspicious of government, doubtful of economics, fond of figure skating (but the off-ice part, not so much) Couple of degrees in government, a few medals in figure skating; just reading and suspicion for economics ...
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