Prosperity isn't an entitlement

Discussion in 'Politics' started by Trader666, Nov 11, 2011.

  1. Rosen: Prosperity isn't an entitlement
    By Mike Rosen
    Updated: 11/10/2011 09:17:46 AM MST

    From London to Greece to Occupy Wall Street, angry, indignant mobs have taken to the streets in protest. They imagine they've been deprived of what they're "entitled" to: a well paid, gratifying job; forgiveness of their student loans; a bigger share of other people's wealth; a world without war, and so on.

    This notion of entitlement and the belief that government can deliver happy endings is a delusion. Their actual argument is with economic reality.

    From its beginnings, America was blessed with abundant natural resources, wide open spaces, a free market economy, individual liberty, limited government, class mobility, and generous rewards for individual enterprise. These attributes propelled waves of immigrants to personal success and the nation to world economic dominance for generations.

    That was then; this is now. Natural resources are scarcer and more expensive. And foreign competition has gotten tougher. We import relatively more and export relatively less. Americans continue to enjoy a standard of living that's among the highest in the world. There's no abject poverty in this country, only relative poverty. That's a very different thing. Americans who fall below the government's official poverty level live better than three-quarters of the world's population and better than the middle class in most countries.

    But we don't dominate the world economically to the degree we once did. Advances in communications technology and international transportation have given rise to a global economy where the rules have changed and we've lost much of our comparative advantage. Now, the task is to regain it.

    Labor in less developed nations and rapidly expanding ones like China and India is cheaper than ours for a variety of reasons. But protectionism, tariffs and trade wars aren't the answer. That would only raise consumer prices. Foreign labor has long been cheaper. In the past, we've trumped that by being smarter. To reassert ourselves, the U.S. needs dramatic advances in productivity and economically viable new technologies. Failing that, our overall standard of living will inevitably decline.

    We're not entitled to high wages and an elevated standard of living simply because we're Americans. The world doesn't work that way. Throughout history, wealthy empires have come and gone. National prosperity must constantly be earned.

    In a market economy, employers pay wages based on the expected value that a worker adds to a product or service. That applies at all pay levels, from NFL quarterbacks to movie stars to CEOs to the take-out window at MacDonald's. The decline of the U.S. auto industry was largely a consequence of a labor union cartel extracting compensation for its rank and file greatly in excess of their value added. Ultimately, economic reality intervened. The middle class can't long be prosperous at the expense of their employers, consumers or the government. And "eating the rich" is a one-time feast that wouldn't feed 300 million Americans for very long.

    The Occupy Wall Street movement is more a self-indulgent temper tantrum of underachievers than a realistic economic alternative. Wall Street is only the symbol of their animus. Capitalism is the real target, and their imagined remedy is some vaguely understood nation of socialism.

    Among them are many unemployed college grads, including one (or perhaps a counterdemonstrator making a sardonic point) who was holding a sign: "$96,000 for a BA in Hispanic, Transgender, Gay and Lesbian Studies, and I can't find a job." The unemployment rate for college grads is a mere 4 percent, less than half the overall rate.

    But all degrees aren't created equal. Graduates with degrees in science, technology, engineering and math are in high demand. That's called market feedback. Unless daddy can foot the bill and support you afterwards, it may not be wise these days to go in hock for a degree in theater. Oh wait; Occupy Wall Street also wants the government to forgive their college loans.