During the 1992 Presidential election, the entire nation realized something was happening to the economy that couldn't be explained in conventional terms. The experts were all perplexed.National anxiety was at an all time high. This high anxiety led to an unprecedented interest in the 1992 political campaigns and to the election of a new President, Bill Clinton. What caused this sense of uneasiness about the economy? Why was change such a dominant theme?
After hours of explanations and pages of written text, no satisfactory answer has been given yet...that can explain why the recession of 1983 -1989 did not follow the usual pattern. Electing G.H. Bush, Bill Clinton and G. W. Bush in 2000 as Presidents still has not quelled the anxiety most Americans feel about their future. Why? Most professional economist have tried to answer this question with their standard explanations of GNP growth charts, economic indicators and the usual comparison to past recessions.
As before, their answers are long on rhetoric and short on substance. To find an acceptable answer to this growing feeling of uneasiness, economist should look much further back in time. A major economic transition is occuring. The only transition that occured of comparable magnitude happened in European history.
From the 1000s thru the 1300s, Europe experienced a period of expanding population and dynamic economic growth. Then for reasons historians still can't explain, Europe went into a prolonged period of economic decline that culminated in the Black Death (1347-1351).
Europe survived this crisis without being plunged into another period of barbarism. The 1300s saw the end of one era and the beginning of another. Few people living at that time realized they were witnessing the emergence of a new socio-economic era that would usher in unprecedented changes.
Years later, that new emerging socio-economic period was called the Renaissance. The old Fedual economic system was supplanted by a much more dynamic socio-economic interaction; which eventually led to the Industrial Revolution and our modern era.
Is history about to repeat itself? I believe so. It is my firm belief that we are in the early stages of another emerging socio-economic reality. This new emerging socio-economic system, like its predecessor will usher in unprecendented changes.
Since the beginning of the Renaissance to the present, no major socio-economic shift of comparable magnitude has occurred...that is until now. Until someone comes along with a better descriptive term, I shall call this new emerging socio-economic reality, the Global Economic Age or the Age of Global Macro-Economic Interaction.
I will define Global Economic Interaction as the interdependence and interrelationship of an extremely competitive global economy and its impact on national and local socioeconomic systems. In the Age of Global Economic interaction and high tech industrialization, the traditional relationship between government, business, the environment and the people will change forever.
The recession of 1980 was not just economic, it was also social and in essence became socio-economic. Not only is this socio-economic recession not over, it has gotten progressively worse in real terms, but not in artificial terms. If you examine just economic statistics, the economy has grown. This growth is not real, it is artificial and is being maintained by hundreds; if not thousands of hidden taxes and borrowed money. When President George Herbert Walker Bush was elected in 1988, (1989-1993) the illusion of the recession being over was maintained. When 2008 arrives, America will have been in a socio-economic recession for 28 years.
The prisons are filling up because real unemployment is still increasing, while statistical unemployment is reportedly decreasing. Crime is still growing, infrastructure and social deterioration are still spreading. Yet, in the mist of this ever growing reality, economist, financial experts and government leaders are still claiming the economy is growing. Nothing is further from the truth, the economy is growing artificially, but not realistically.
The real reason why decline has not been more dramatic is because of "White" America's low birth rate, illegal immigration, abortion, deficit spending, the size of America's economy, the technology explosion of the 1980's and 1990's, the huge number of government employees, subsidy programs and recipients of government checks.
The nation is top heavy. There are more paper managers than production managers. It is just a matter of time before this bureaucracy collapses from its own weight. In addition, there no precedents that can adequately explain this artificial economic reality in which we find ourselves living. That's because this is the first time that we have encountered a deteriorating social actuality, in the middle of an expanding Global Economy.
Why This Recession Will Continue
There are a number of reasons why this socio-economic recession will continue. Some of the contributing factors are apparent, many are not.
First: Just by examining the current size and extent of America's internal market development, future economic expansion will be limited. Therefore, real job growth is going to be slow well into the 21st century,. Slow job growth means higher unemployment among the educated class, unofficial sanctioning of illegal immigration, importing low wage earners, expanding government subsidy programs, more crime and increased pressure to sustain our economy by borrowing money.
Second: The overall population is getting older. Therefore, entitlement and health care programs are going to become increasingly more expensive. This means Federal revenues that could be used to pay down the national debt and provide additional tax incentives for infrastucture improvements must be diverted.
Third: More countries are beginning to industrialize. Therefore, new factories and plants can be built far more economically abroad than at home and with state of the art technology. Newly emerging industrial nations come "on line" with high tech industrial capacity. This makes them instant international competitors. They have the ability to supply their own internal markets and foreign markets with capital goods and consumer goods.
Furthermore, many of these newly emerging industrial societies have much smaller populations. This allows countries like Taiwan and Korea; just to name a few, to devote much more time and money to international market development. Plus, their cultural and political heritage, greatly enhance their short term competitive position.
Because these emerging industrial societies can manufacture high quality capital and consumer goods at attractive price points and have supportive socioeconomic and political institutions, an international market environment is developing that is making it very difficult for American industries to compete and maintain our high standard of living. This is an emerging economic reality economists and financial experts have not even begun to address.
Fourth: These newly emerging industrial societies are adding their production capacity to the already formidable manufacturing capability of Japan, Europe, England and Canada. In the very near future, China will also become an industrial force to be reckoned with. If the former republics of the Soviet Union and Eastern Europe survive, they too will be added to this growing list of international competitors. This is the essence of Macro-Economic Interaction in an expanding Global Economy.
Fifth: This desire by national industries to become more competitive, is the driving force behind corporate reorganization, dismantling our manufacturing base and out-sourcing. Without major reform, home based American industries won't be very competitive in the new global economy. Unless, the emerging industrial societies become more like us or we become more like them slow job growth, illegal immigration or importing low wage earners will continue and the recession.
Sixth: If America continues to lose the battle for international market share, the trade deficit will worsen. This translates into more unemployment, out-sourcing, an even weaker economy, more social problems, more political unrest and a recession of growing magnitude.
Seventh: Global Macro-Economic Interaction and High Tech Industrial Capacity are having much more impact on the American economy than most people realize or are willing to admit. Therefore, little or no strategy is currently being contemplated at any government level to lessen its impact.
Eighth: Most Americans do not want to accept the fact that we have entered a period of economic decline. Until this fact is accepted by the vast majority as a reality, the nation won't have the resolve or the political will to enact meaningful and badly needed reform.
Ninth: Many of the nation's leading economist and financial experts are still mired in statistical economics; rather than reality based economics. Therefore, local municipal leaders can expect little or no help from them. Past strategies will not solve multi-dimensional Global Macro-Economic problems.
Tenth: The current socio-economic recession is worldwide in scope. Until, leading industrial nations can negotiate comprehensive and far reaching trade agreements; beyond the GATT initiative, future economic growth in many municipal communities will be marginal, slow or none.
Eleventh: Even though the "Cold War" is over and the war against "Radical Islam" is just beginning, the armed services must remain voluntary; with an increased reliance on high tech destructive weapons and weapon platforms. This means more Federal entitlement expenditures, higher real unemployment, more national debt and less concern about local socio-economic problems by Federal legislators. Multi-national trade, international problems, the growing cost of the War against "Radical Islam" and Federal budget difficulties will dominate their concerns.
Twelfth: Past fiscal mismanagement and overspending have left little financial room to maneuver. Therefore, Federal policies designed to stimulate real economic growth to end this socio-economic recession will not and can not materialize.
If you total the 12 reasons I have covered up to this point; as to why this recession will continue and combine them with "pork barrel" politicking, well entrenched special interest, poor leadership, disproportionate wealth distribution, a divided electorate, over priced stock and residential real estate markets, declining real tax revenues, over extended financial institutions, increasing inflationary pressures and a commercial real estate glut; it becomes painfully clear that all the necessary ingredients are in place for a real economic collapse. This economic collapse might not become the next Great Depression, but its impact will be catastrophic.
