Scenario One: A Pessimistic Forecast for the United States


This is the first in a two part series exploring a pessimistic and an optimistic future for the United States. Part Two will appear tomorrow.

I’m an old (76) 1950s type liberal, and have lived to see the election on the nation’s first mixed-race president, as well as some remarkable social change in the general status of women and ethnic minorities. The United States has a remarkable heritage of entrepreneurship and resilience in its democratic institutions. Yet there are cogent reasons to be fearful and pessimistic about our capacity to maintain our preeminence, at least in the medium run (10-15 years). I obviously hope I’m wrong, and look forward to attempts to undermine my thesis – including, tomorrow, my own.

Consider the numbers 17, 49 and 60. Seventeen is the real unemployment rate, not the “official” ten, when we take into account those dropping out of the labor force, or giving up. Forty-nine is the real percentage of home ownership, in our “ownership” society, not the 68 percent from the census. For mighty Los Angeles, the real number is 44 percent. The difference is the stupendous number of households whose equity in the house is less than they owe on the mortgage. This house of cards has increasingly been the engine of national growth. Sixty is the number of votes in the US Senate needed to stop a filibuster, and together with inept leadership, is responsible for the absurd failure of Congress and the effective collapse of collegial democracy.

Economists say we are in a recovery. What recovery? The small increase in house sales is due to temporary incentives, but including speculators buying up homes, many foreclosed, for yet greater inequality. The main gains in jobs, not fully offsetting wider losses, are in temporary construction tied to government-funded projects. The growth in jobs and the economy in the last 20 years has been in services, stuff we do for each other, and the main fuel has been the pyramiding of house values. That is over. How can we restore growth through more consumption if the majority of the population no longer has the resources to invest or spend?

By far the most destructive accomplishment of almost 30 years of restructuring has been the reestablishment of extreme inequality, the emergence and power of the ultra-rich, both “progressive” and conservative in orientation, to levels last seen before the Great Depression.

But perhaps the greater root of our malaise, and perhaps the downfall of the American Empire, lies in excessive globalization and the loss of our capacity to make stuff, the outsourcing of, first, manufacturing and now even of services. It is instructive that this is the same story of imperial Rome, although long dependent on its empire, by the time of its collapse it imported virtually everything from its tributary states. Its finances could no longer pay the Army which was largely made up of people from outside Italy.

I’d agree that the main hope in the economic arena is via the small entrepreneur, but they face the immense monopolistic power of ever-larger global capital. I’m proud to live in Seattle, which at least dared to fight back, as in the one and only US general strike, in 1919, and in the WTO protests in 1999. Perhaps this is not so surprising since Seattle still makes things: planes (Boeing), ships (Todd) and trucks (PACCAR).

The saddest irony is that even as maybe half of us celebrate a Black president, we have utterly failed to follow up on the political civil rights gains on the 1960s to incorporate Black Americans into the mainstream economy. The status of the Black male is, relatively, worse in 2009 than it was in 1969. I would not be surprised to see a reprise of the 1960s race riots. But it is also relevant to reflect on the declining state of the white male, suffering increased drop-out rates from high school, declining enrollments in college, all in the face of reduced job opportunities for the less skilled and educated, plus competition from immigrants, legal and illegal. Is it any wonder that both nativism and populism is rising anew?

One might dare to believe that large Democratic majorities in Congress would give us hope for effective responses to this national malaise. But I’d say the current Congress rivals the infamous 80th congress that Harry Truman excoriated, for its “do nothingness”. On the surface we can correctly observe that the Republican party, increasingly conservative, is more than willing to wreck the country in order to regain power.

But part of the problem is that we no longer have a conservative and a liberal party, in an economic sense. We have two bourgeois parties, with the “new” Democratic Party increasingly dependent on the wealthy educated elite as well as well-paid public workers, it long ago abandoned the working class and did nothing to constrain globalization and the rise of the toxic financial practices. Thus we should not be surprised that the populist know-nothing uprising could bring to power large numbers of proudly uneducated folks.

In the final analysis for this pessimistic scenario, the underlying culprit is the inexcusable failure of the US educational establishment, the astounding incapacity of our public and private schools to teach people to think and reason. And part of the reason for this incapacity is the excessive power of religion, which values belief over reason, in our culture. And this is why decadent Europe – aging and tax-burdened – could come out of this recession and malaise better than the United States. Perhaps we’ll see a reverse migration of surplus underemployed young Americans returning to their aging historic motherlands!

Richard Morrill is Professor Emeritus of Geography and Environmental Studies, University of Washington. His research interests include: political geography (voting behavior, redistricting, local governance), population/demography/settlement/migration, urban geography and planning, urban transportation (i.e., old fashioned generalist).

Photo: hz536n

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Its interesting to note the

Its interesting to note the reactions of the public when articles outlining the economy arise. And while comments bear some reason, one of the most noteable attributes I have noticed in this recession is pure denial. The iniability to accept that a nation such as ours has fallen into a cyclic struggle initiated by greed.

When looking at Mr. Morrill's view of current happenings, I think one of the most accurate words used throughout his analysis is "inequality". I must refer back to denial, and this concept seems more inept with older generations, that entire current system and structural makeup of our society is no longer working efficently. Those that refuse to accept the shift that is occuring in our world often fail to point out a sensable solution, and draw the less fortunate as the lazy leechs of our economies.

I must blame our current struggle on the baby boomer generation. Here we have a large bottle neck in the overall population structure of this country. This large population boom created the expansion of many sectors of our national infrastructure: roads, schools, macro and micro economies as well as much more. A ballon, in mere terms that was falsely inflated that shortly after its creation began a slow leak that leads us to today's crisis. In short, we are living in a national structure designed for a far larger population base that we currently, have, and attempting to support adjacent employees working this system. Not only this, but we are asking our residents to maintain impossible financial standars to obtain material goods in society in which no one has the resources to make payments. So as the desparity grows between the have and have not's, no one is expecting understanding from the more fortunate's side. I do see younger generations giving up on America, and returning to their roots outside of this country. Our system has been broken for many years, the ramifications of its neglagence however is just becomming apparent.

Denial, Greed, Inequality, Boomer generation

First, let me start by saying that A2, you have nailed it with respect to the boomer generation. [And please everyone, of course I am generalizing, there are specific exceptions.] You have a class of people that have felt special from the beginning, have lived beyond their means and piled up personal debt and are about to move into the "taking" stage of their lives. We have created a massive over capacity of production that is going to suffer from lower demand going forward. It is just demographic math. We are approaching (and it is worse in Europe and Japan) generational warfare where the people at the "taking" stage of their life are greater than people at the productive stage of their life. And there will be a ugly reckoning soon with respect to social security, medicare, public pensions, and union pensions. There will simply be no money to pay for it. Look at the riots in Greece today.

Right now the country is BORROWING money every year [the Deficit] to pay for everything. And if the government is the tool to redistribute wealth to reduce the difference between the "haves" and the "have nots", then this debt situation will get worse and we will all be have nots. Government should not be in the business of "solving" inequality, it should be in the business of creating opportunity for people to solve this on their own. There is nothing at all wrong with income inequality. There will always be inequality of ability, effort, and talent and that will result sometimes in income inequality. But that will always exist in free societies. Attempts to correct this throughout history have always resulted in equality of misery and less free societies.

I don't understand what "greed" has to do with anything. People and companies respond to incentives and the government set up perverse incentives for private banks to lend to people that should not have been borrowers. Government imposed this policy and subsidized it with Fannie Mae and Freddie Mac and created the incentives to motivate the banks to do it. This is not greed, this is bad public policy distorting the normal market signals regarding risk.