For the past two weeks I have watched the debate of the USA debt unfold on television from the vantage point of Chile where I now live.  The politicians and pundits there would do well to step outside the Capital Beltway and even outside the USA border so that they can think clearly and face the obvious truth that the economic situation in the USA is not going to get better anytime soon.


The internet and globalization have killed off for good the unionized well paying jobs that made America such a prosperous country in the 1950s and 1960s–that post war prosperity lasted into the 80s and 90s and fell apart today.  The USA used to manufacture trucks and cars and build computers and such.  Now we build nothing.   Instead everything seemingly comes from China because the cost of production is lower there.  Blame this on Reagan and Clinton; Walmart and Apple; NAFTA and GATT; and everyone else who clamored for the removal of trade barriers so that capital and goods could move across borders unencumbered by tariffs.  Those lost manufacturing jobs will not come back to the USA until wages fall by half at least to make them competitive with Mexico and elsewhere.  That could take 10 years or more.



Globalization was probably good for the professional classes in the USA who can buy their iPhones and iPads cheaply but bad for the working class stiff who fat, lazy, and uneducated can no longer simply show up at the construction site to make $16 USD per hour building houses.  There is no more home building industry.  All of that is gone, vanished, given up in an instant in the great speculative bubble which was the real estate bust and mortgage market collapse of three years ago.  So what are the Bart Simpson’s of America going to do now?  


The liberals in Congress have got it all wrong when they look to the government to create jobs for the legions of unemployed persons there.  Government cannot create jobs unless it staffs up the bureaucracy.  But the recently passed budget bill goes in the other direction–it will sharply cut the bureaucracy.  Minorities are going to be hurt in larger numbers than the rest of the population in the coming downsizing of government because they have relied on government more than have others for employment. What is a Howard graduate to do?  Not even the Post Office is hiring any more.

What about the doctors in America?  Here where I live in Chile I snapped a picture the other day of a sign that read “Medical Consultation $5″.  That omen perhaps signals what is ahead for America’s doctors.   When the newly formed debt-reduction Congressional commission starts to look at Medicare and Medicaid they are going to reach the logical conclusion which was not addressed during the health care debate–price controls and rationing are looming on the horizon. Now that the entire world realizes that the USA is broke not even the howls of malpractice attorneys and senior citizens is going to slow the juggernaut of the cost cutting tea party Republicans.  Little old ladies with blue hair are going to have to move in with their kids as Medicaid coverage of nursing homes will be cut.  Generic drugs will shove aside more costly ones as government insurance will no longer pay for that which is not listed at the government rate.  Here in Chile we all take the same medicine for blood pressure. It works fine and has been on the market for decades.  If someone wants something newer or better they will have to pay for it themselves.  Insurance will no longer do so.


What about the fat market which is government contracting that has carried companies like Booz, Allen, and Hamilton for so many years?  I worked on two government contracts during my career and I can tell you that the employer-of-last-resort is bloated and inefficient.  It will be easy to carve away layers and layers of contractors and government employees who do nothing but push forms and procedure in an endless circle with no clear destination in sight in some kind of Kafkaesque parody of how things are done in the private sector.  No one working in government is really thinking.  Instead they are lost in the complacency that their fat multi-year contract or government pension and salary will carry them through the tough times that those working in the private section have had to weather.  These individuals are going to have to find something else to do.


What is ahead for the USA?  I would say 10% unemployment cannot be sustained forever and unemployment benefits and savings are rapidly running out.  Some Americans are returning to farming.  The Motor City which was Detroit is being bulldozer and plowed under to make way for rows of corn.  Recent university graduates are flocking to organic farms trying to find some alternative to the corporate culture which has dissolved around them and left people feeling morally adrift.  The working class of course is not thinking of morals–they are not thinking at all.  So they will work at the Walmart and CVS pharmacy, turn to plumbing, engage in some kind of barter such as might have sustained a village in medieval times.  What else can they do since they have no skills and there is no movement afoot to train them to do something new?  The USA is too disparate to come together around some kind of long-term plan for prosperity as has done Germany.


Maybe some poets will rise from the ashes of American Capitalism to reflect on all that has been lost in this the Great Recession.  While the economists will argue that recovery is on the horizon the writers and philosophers–if they are any left in the nation of philistines—might reason that none of that matters any more.  Maybe what is important is family and health or erudition.  Wouldn’t it be great if we started to reflect once again instead of spending all our time trying to make money.