Why I Don't Buy The Decline Argument

I just received an e-mail from a conservative about someone announcing the closing of their hedge fund firm because they say all markets and equities are unsafe and that unless Barack Obama is turned out of office she'll not start up business again. Good, I say. If we can purge the system of the speculators the sooner the better.

At best, President Obama will end his first term restoring the old economy in a solid, but tattered form. Our GDP has returned to what it was before the Recession and we are still, while no one will say it, the richest country on earth, even with our debt. Are there systemic problems, sure. How do you return to the previous level of wealth, yet have 9% unemployed and the continued tragedies of the housing market? In part the Occupy Wall Street Movement is a reaction to the very visible and obvious problems of our economic system.

Yet, there are other indicators that keep creeping into the picture that contradict the negativity of pundits and the whole Washington crowd. All I have been hearing for the last three years are the woes and cries of the wealthy, who have actually gained approximately 45% in their net worth from the day Obama took office. I understand the deep insecurities of the wealthy as the Pew poll indicated, but problems of self esteem are different from the needs of every day life. I agree it must be sorry when you have terrible taste in art and fashion and architecture and have to hire people to tell you about taste. But ,puh-leese, let's talk about the country at large for a minute.

The DOJ is negotiating with Americans a tax holiday for the repatriation of their overseas profits. I don't particularly like it but there is some reason to think that corporations are beginning to re-shore their operations after nearly twenty years of investing overseas. While the evidence is still anecdotal, corporations are saying that the raise in wages in China and other places and the transportation costs now make the United States more inviting. Despite the propaganda Mitt Romney and other Republicans spew, the IMF has found the United States the third most business-friendly country from a tax point of view. I grant you we should eliminate the loopholes and flatten the tax but major corporations in large part do not pay federal taxes.

The figures for our manufacturing continue to improve, bringing us up to the 1992 levels before the rapid slide through the 2000s. American worker productivity continues to rise and compare favorably with other developed countries. In fact, European companies with operations in the States worry about American's obsessive work habits and refusal to take time off. In part, I would suggest this is from fear of being laid off as American companies did in the past decade.

Evans-Pritchard wrote the article in the Daily Telegraph I quoted saying that the United States would be energy self-sufficient in five years. I talked to my friends in the oil industry in Texas and they thought it would be shorter than that. They briefed me on all the new finds around the country and said that the Tar Sands from Canada would be icing on the cake. Basically, by the end of Obama's first-term, we will be at 80%.

Which brings me to our Energy Secretary Steven Chu, who spent his week being grilled by Republicans over the Solyandra deal. When we are energy efficient, thank this man, who has hastened the development of both alternative energy and carbon-based energy sources. Today, in the United States there are more working rigs for oil and natural gas than at any time since people counted. We are now the number 1 producer of natural gas in the world. At the same time, Secretary Chu and President Obama have hastened the development of cost-efficient solar energy and escalated wind power plants. For example, Iowa now gets 25% of its energy from wind. And you can see this throughout the country if you travel by road.

Energy Secretary Chu has also been at the vanguard of real "clean" coal, a process that he began in partnership with China. As someone once quipped, we are the saudi Arabia of coal--and wind, and solar. Google has heavily invested in geothermal exploration, which will take about 15 years to totally come on line.

What we have is a mix of old energy sources,revamped old energy sources and alternative sources that will all be working together in a short time frame. This isn't the dreams of an old writer for Omni magazine. They are here.

President Obama's effort to save the auto industry has many beneficial off-shoots in terms of American manufacturing. During the last administration, there were initial experiments to revive our steel-making capacity. These were modestly successful and now might get a lift from the increase demand for cars from Detroit.

President Obama likes to emphasize that the United States has the best universities and colleges in the world and continues to attract great talent ,which oftens stays here. I have doubts about his educational reform projects but am inclined to support his massive effort to support community colleges and re-training of workers. If we don't cripple our educational system by all these cuts mandated by state governments, we can actually meet the challenges of the future.

Once upon a time, both parties believed that immigrants were good for this country. The momentary rash of nativism will have to give way to a more reasonable form of immigration reform. States such as Alabama and Georgia have lost hundreds of millions of dollars because their draconian laws hurt the agricultural sector.

As I have written many times, there is nothing wrong with Social Security that can't be fixed with a tweak. The problem we face is the constant rising cost of healthcare--both to the individual but also to the government. We are simply paying too much of our current GDP for healthcare compared to other developing countries.

The other problem we face is the desparate need to modernize our infrastructure so that it meets the requirements of the 21st Century. That's why I support the idea of the infrastrucrture bank, which also would attract foreign capital.

I also do not believe the GOP's strategy of suffocating the economy until everyone screams is going to pay off. It may politically for their short term interests this coming year. But there is too much pent up demand with American corporations sitting on $2 trillion. I think Warren Buffett got this right--he's investing heavily right now because he knows we are about to take off.

That's also why the Republicans are scrambling to win the White House because they know once the recovery starts roaring in 2014, they can claim credit and cruise for awhile.

So I don't really have much concern about China. I am not so sure they will equal our economy in the time frame people predict. Every Chinese worker supports 4 or 5 other members of their family and China has not experienced the pressures to stabilize a growing middle class. their own debt problem is enormous and the environment issues are catastrophic. And they are set for a recession.

With our energy independence, we can begin to ween ourselves away from the Middle East and engage that region in more creative ways than just military force.

The real issue for me is what kind of society do we want to become. The old economy is not viable for the long-term. That is the Finance, Insurance, Real Estate --FIRE economy. The proponents of the Service Economy have vanished. We will have a strong mix of everything. So what do we want for each other? What do we really believe is the common good?

We can make bad decisions. I see the prospects of that every day. People running to capture some mythical past. If we make the wrong decisions, then we open America up for the Final Looting. But the foundation is being laid for the continuation of a vibrant ,prosperous society. But we have to recover from the hangover of the past 10 years.