Can America create another round of extraordinary economic growth and prosperity again? There's no reason to believe we couldn't. After all, we've overcome tough challenges before. If we don't lose our optimism, and our common sense, we can leverage our energy independence and technology expertise to lead a new round of global growth. But we can't get mired in defeatism.
When the OPEC oil embargo shocked us in the 1970s, it was a blow to America's vision of unlimited growth. Who could have predicted that forty years later, America would be the world's largest oil producer?
When doom and gloom-ers predicted the end of America's economic dominance, as rust-belt jobs were lost in the 1980s, who was forecasting the technology boom that would spur our economy in the following 20 years, creating new jobs and prosperity?
That's why I'm always annoyed by those who think that every current crisis spells doom for our economy. We won't lose America's financial future -- unless we deviate from the basic principles that have created economic growth.
And that's why I was especially shocked to hear the President's statement, while pressing Congress to extend unemployment benefits at year-end, that "unemployment benefits are one of the best ways to create economic growth." With all due respect, Mr. President, the need for extending unemployment benefits symbolizes the fact that we're doing something wrong in our economy.
All of the government spending -- an "extra" $4 trillion over what we collected in taxes over the past four years -- hasn't created significant economic growth. And all the Fed's money creation hasn't been able to spur much growth, except for a stock market boom. Maybe it's time to give the real economy a chance to show what it can do.
A new report from Bankrate.com shows income disparities widening in America. Income is different from "wealth," which includes investments -- but there is a direct correlation. You can't create real wealth without re-directing some of your income toward investments, whether the stock market or housing. And, according to the Bankrate report, the income gap grew 21 percent from 1992 to 2012 for 35- to 44-year-olds, more than any other age group. Their salaries -- or their lifestyles, or their goals -- don't seem to allow for savings and investment. Prosperity that brings rising wages would help a lot.
Similarly, there's a big push to raise the minimum wage. There's a great argument over whether the minimum is intended to provide a "living wage" to those employed in those jobs, or whether it is a "starter" experience, designed to create good work habits for younger employees. The sad fact is that too many people now rely on those "minimum wage" jobs for their entire income, and they are by no means all "starter" jobs. Only economic expansion will provide the better-paying jobs that people need to support their families.
So what's the way to provide a rising standard of living to the generations following the Baby Boomers?
- Do you believe that the government can tax, borrow, or print and distribute enough money to help close the income gap?
- Do you believe that a government can require employers to pay higher wages, without causing the employer to cut back on the number of jobs being offered?
In other words, do you believe that government spending, taxing, and regulating can create jobs and prosperity?
These questions will generate strong arguments on both sides of the debate. But a look at recent history, around the world, suggests that a sensibly-regulated free enterprise system creates more prosperity than any government-dominated economic system. A look back at the old Soviet Union gives a practical demonstration of the failures of a government directed economy. Ask Cubans or North Koreans about government economic direction. Even China is recognizing the benefits of free enterprise, though not without its own version of government controls.
The real issue here is not which extreme is correct -- but where the balance lies in the middle, between too much reliance on government, and too little faith in ourselves. That's the Savage Truth.