Our real economic problems

I’ve written several columns about the fact that this economic recession is structural and not cyclical.  Structural recessions require different responses.  While each of our battling presidential hopefuls try to convince us that his respective plans will fix the economy better than the other guy’s, academics are analyzing the real causes.  There is no quick fix to be employed by either Mr. Obama or Mr. Romney. 

Here’s the work of one academic quoted by Christopher Matthews in Time Magazine: “Robert J. Gordon, an economist at Northwestern University, posed in a recent working paper that most of the economic growth in the U.S. has been prompted by three separate industrial revolutions: the first occurred between 1750 and 1830 and brought us steam engines, cotton spinning and railroads; the second, between 1870 and 1900, brought electricity, running water and the internal combustion engine; and the third, between 1960 and the end of the 20th century, brought computerization and the Internet.

Gordon ends his paper by listing six headwinds that he believes will, when combined with the effects of diminishing technological advancement, reduce our average yearly economic growth to a depressingly low 0.2%:

Demographics: the population is aging, and the onetime economic benefit of women entering the workforce has already been realized

The plateau of educational attainment: the U.S. is slipping in international measures of educational success, and it is becoming increasingly difficult to afford postsecondary education for many

Rising income inequality is restraining growth because there are fewer people with disposable income

Globalization is forcing low-skilled but high-paying jobs abroad

Any effort to cope with global warming will slow the economy

Both consumers and the government are overly indebted and paying down that debt will slow growth.

All six of these headwinds are widely considered to be real threats to the American economy. And if Gordon is right. the U.S. may indeed settle into a period of the kind of slow growth that characterized much of the world before the first Industrial Revolution began in the 18th century.”

So in my view, it makes more sense to acknowledge these structural issues and develop strategies to deal with them.  Instead, our politicians are using our fears and concerns about the economy to their political advantage.  For example, The Republicans, in particular, are exacerbating the problem.  This from Time magazine, “reporting on the Republican plot to obstruct President Obama before he even took office, including secret meetings led by House GOP whip Eric Cantor (in December 2008) and Senate minority leader Mitch McConnell (in early January 2009) in which they laid out their daring (though cynical and political) no-honeymoon strategy of all-out resistance to a popular President-elect during an economic emergency. “If he was for it,” former Ohio Senator George Voinovich explained, “we had to be against it.”  Sound familiar, folks?

I’d like to pay them the compliment of knowing that neither party’s knee-jerk reactions to our economic problems are going to bring about quick solutions.  But I can’t.  As evidenced by one party’s meetings above, they are so committed to their own agenda they would sacrifice the country’s interests regardless of the real causes of our problems.

We are being told by both parties that this election will be the most significant choice point in recent history and how we vote will decide the future of America.  I beg to differ.  I think how we vote will determine how much damage we do to ourselves by applying solutions to symptoms rather than the real causes of our economic woes.

Our economic future is a potentially fearsome thing, but it’s better to be finding solutions based on the six factors mentioned above, rather than political simulations designed to work us up into a frenzied horde of non-thinking reactionaries.

Unfortunately, the latter is true.  I’ve stopped trying to have civil conversations about substantive issues.  I can’t find a partner.

Robert DeFilippis