Economic progress resides in working less over time while gaining assets. It most certainly does not involve working more while not gaining and too often actually losing.
In this equation, a giant tragic scenario has played out in our economic history since World War II.
In 1948, George Kennan, the famous diplomat who decisively triggered the Cold War, said that the U.S. has about 5% of the global population but produces about half of global GDP. He strongly advocated maintaining that ratio.
As it turned out over the past several generations, the exact contrary evolved. The U.S. living standard continuously went through a relative decline in comparison to dozens of foreign economies. By 2017, U.S. GDP, as a percentage of global GDP, had dropped to less than half of Kennan’s unrealistic 50% expectation.
In the 1950s, it took only one breadwinner to maintain an acceptable family living standard. But gradually over decades, two breadwinners were partaking in the labor force, though it did not seem to benefit the overall well-being commensurate with labor input. Our relative GDP percentage slipped further. Working more while losing.
Moreover, in the ’50s, few graduated from college. Yet over decades, their number grew terrifically, generating the explosive growth in student debt, a debt which in the ’50s did not really make the radar. The question arises: Did the massive increase in college graduates raise the living standard or at least prevent its relative decline? It did not.
Meanwhile, Harvard Business School and lots of other universities cranked out more and more MBAs. In the ’70s, some 70,000 graduated p/y in contrast to a paltry 2,800 p/y for all of European Economic Community with roughly the same population. As is the case with the rising numbers of college grads, one wonders again if the MBAs aided the living standard or at least prevented its relative decline. They did not.
Above all, we spent trillions defending our liberties against a variety of perceived dangerous threats. Here, too, the question arises: Did that policy sustain our quality of life and were there really genuine or merely perceived threats, legitimizing the Pentagon?
After all is said and done, one must admit what one learns in every introductory Economics course. A gargantuan trade-off between butter and guns — no doubt by far the largest in modern history among advanced economies — was tragically and relentlessly enacted since World War II. Tens of trillions, which could have prevented slum houses and our rusty infrastructure, were spent on futile wars, Korea, Vietnam, Afghanistan, Iraq, etc. It was totally counterproductive, wasted, unnecessary and achieved only self-destruction.
Korea and Vietnam were based on a mind-set disastrously devoid of historic-mindedness. It believed that communism was static, unchanging and a constant global threat. That belief prevailed for Truman, Eisenhower, Kennedy, LBJ and Nixon. They did not grasp the fact that perennial and unavoidable dynamism characterizes history which causes everything, even communism, to reform, to evolve and to adjust. Essentially, that dynamism is out of anybody’s control and it can only be fully understood after events have transpired.
All of this meant that the U.S. was committing self-destruction through military spending which was massively expanded after WW II and even based, lo and behold, on the false notion that the military spending is beneficial and pulled us out of the Great Depression. A tragic and sad delusion was compounded by another.
Having won World War II and being for a while without foreign competitors, the U.S. seemed to fulfill Kennan’s view. Hollywood, the world’s foremost private propaganda machine, successfully sold to the world our unparalleled living standard. The magnificent multi-colored and chrome cluttered cars of the 1950s, which could be called the Decade of Designer Cars, corroborated our globally envied living standard. Economists and pundits assured us that the gap between the U.S. living standard and the rest of the globe would actually increase in favor of us.
As it turned out, it could not have evolved more ironically when dozens of foreign economies forged ahead and surpassed our revered living standard.
Lots of pundits explained the changes, but almost none pointed to the major cause residing in the gargantuan trade-off between butter and guns. Given the current conditions of a declining life expectancy and horrible gun and opioid deaths alongside a rusty infrastructure, backward train system and the highest rate of slum houses and trailer homes and working more hours and longer into old age while not gaining, a courageous and far-sighted policy of withdrawing from most foreign bases would be in order. It would help set in motion a needed 20-year-long economic miracle. ALL Americans would realize that economic progress is possible and beneficial.