America’s Challenge - How bad is it?
When a person seeks to learn the status of the many key indicators of America’s
national health, a full scope of information is readily available from a simple
Internet search. By looking at the areas of government, the economy, society and
the family, a very stark
portrait of the depth of problems now facing the United States is revealed. What is more troubling is that these problems were firmly
established before the recession that began in 2008, and are tied directly to the
root cause of wealth depletion. The trend toward contraction of the American
experience has been decades in the making, and it is highly improbable to
suspect that the economy can simply be “kick-started” back onto the road to
growth and prosperity.
More and more Americans are feeling the effects of a contracting economy.
Currently, there are two prevailing sides of the debate on how to reverse the
economic crisis in America. One is to lower taxes on the job creators
and cut government spending. The other is to raise taxes on the wealthy
and provide government spending to meet the needs of those citizens who
require assistance. Unfortunately, neither of these holds promise as a
viable long-term solution as they do not address the basic root cause - the root cause
being the need for increasing national revenue. We must face the harsh
reality that we can not tax or save our way out of this crisis. We have
but two options. Accept the contraction of the American standard of
living, or increase our national wealth.
But to further understand how
this can be done, we must look to the past for some valuable lessons.
What Went Wrong?
In the period of time from the Great Depression to today, the United States has
experienced its highest highs and its lowest lows. Logic would dictate that this
period of history provides valuable insights to the origin of our current
condition - which it does very clearly!
The Great Depression - 1930s America.
An analysis of history and the factors that led to the Great Depression reveal a
situation not unlike our situation today. This history also reveals how the
massive government spending during the New Deal and World War II did not, on its
own, end the Depression. It was the resulting unrivalled industrial base that
supplied products to the entire world in the 1950s and 1960s that brought
unprecedented wealth and prosperity - creating the great consumer economy of the
The unrivalled status of America's industrial base began to erode in the 1970s,
as products produced with low-cost foreign labor began entering the U.S. market
- first from Japan, and later from other areas of the Pacific Rim.
The result was the ongoing closing of American factories, until many industries that once
thrived had completely vanished. The deficit in trade of manufactured products
meant the exodus of vast amounts of U.S. wealth. Finally, as China emerged as a
major supplier of manufactured products to the U.S., the transfer of wealth
escalated to an all time high. With few areas for foreign investment in the U.S.
appearing viable, there was still the U.S. housing market that had remained
vibrant through the Federal Reserve's establishment of historically low interest
The massive inflow of foreign products to the U.S. market has led to the
transfer of U.S. wealth to foreign economies.
The flood of sub-prime mortgages led to an environment of speculation in the
housing market, which eventually gave way - with its well reported impact on not
just the U.S., but the world as a whole. In truth, the decline of wealth was the
root cause. The housing bubble was merely a symptom.
What Can Be Done?
So now, the U.S. government is faced with the task of wading through the
aftermath of the troubled economy that remains. Drawing from the game plan used
during the 1930s and 1940s, the government has committed massive amounts of
money in the form of stimulus funding as was utilized in combating the
Great Depression. This has had some positive impact on slowing the economic slide from
the recession that began in 2008, and certainly preventing the devastation that
was seen during the Great Depression of the 1930s. In view of the concept of the
Spending Multiplier, this is understandable. The Spending Multiplier effect
suggests that infusing money into an economy translates to an even larger
stimulus of demand. But there is a flaw in the long term logic of stimulus
funding today. This strategy worked during the 1930s and 1940s only because the
U.S. industrial base in the post war era had no substantial global competition.
This is not the case in today's world.
It is the value-added wealth generation capability of manufacturing that is
critical for national economic health. In the context of current economic
challenges, when the stimulus spending runs out, there is currently no strong
U.S. industrial base to start the real wealth flowing into America. For this
reason, the conclusion is that there is a vital need to fortify America's
ability to have strong exports of manufactured products to the world market.
Without the inflow of wealth from manufactured products, the deficit of wealth
depletion will continue - leading to a very unpleasant shift in the standard of
living for millions of Americans.
The wealth generated by manufacturing is the key to resolving the economic decline of America.
CAM is promoting a number of positive measures that can be taken to fortify
manufacturing and substantially increase the export of U.S. manufactured
products. Most importantly, the U.S. needs to aggressively support the process
of capitalism, encouraging entrepreneurial investment in manufacturing, and the
introduction of innovative new products for the world market. A key component of
this strategy would be tax-based support of the manufacturing-based entrepreneur
- while vigorously ensuring that these benefits are not extended to
organizations that choose to utilize offshore labor. Notably, this investment by
the U.S. government can be done without actually spending money. And through the
effects of the Spending Multiplier, the money from these manufacturing ventures
would spread money throughout the economy, and would actually add tax-based
revenues for federal, state and local governments. In addition, the jobs created
by a fortified industrial base would translate to a full range of both
production and service jobs - again, creating more demand and a larger tax base.
This message, in the coming months, will be communicated through other media
channels, such as videos on YouTube and through printed materials available
from this Website. It is our most sincere hope that this message will spread,
leading to a unified voice of informed voters calling for genuine corrective
actions – while there’s still time!
Learn how to get involved >>>