Could This Be the United States?

 

As I watched the President’s State of the Union address, I had to ask myself if there is alternative United States where everything is coming up roses. Trump’s vision. Was I missing something? More Americans working than ever before? OK, could organic population growth that has made that statement true for many other presidents be at least partially responsible? And why just talk about wage growth without commenting on the more-than-offsetting rise in the cost of living: healthcare, housing, food, transportation, durables, etc. That precious middle-class has not had a genuine increase in buying power in about four decades.

Lots of talk about China robbing us of jobs, why tariffs are a good thing, without noting that tariffs are nothing more than a tax on American consumers. Technology theft is a legitimate aim of the China negotiations, but the notion of fixing the balance of payments with tariffs just means Americans will pay a lot more for stuff… the “stuff” actually has economic value! 

MS-13 pouring across our border? They were born and raised in the United States. Drugs pouring across an unmanned border? Almost all the drug trafficking that does take place crosses at traditional checkpoints. It is too difficult for individuals to carry heavy parcels of drugs across vast expanses of desert when a truck, boat or plane and a bribe are vastly more efficient.

Nothing about rich folks who own the artificial intelligence-driven automation that is slowly pushing high-pay, blue-collar jobs out the door. Nothing about a tax reform act that generated virtually no new investment capital but made a lot of rich people a whole lot richer with stock buybacks while imposing a massive deficit that will burden all Americans for decades of unnecessary principal and interest payments. Nothing about the burdens we will all pay by ignoring climate change – natural disasters, agricultural losses, coastal erosion and spreading diseases – and that the cost of living in the future could skyrocket as a result.

Nothing about the historically unconscionable level of student debt, now well-above $1.5 trillion (eclipsing our aggregate credit card debt). 1 in 4 Americans (44.7 million people) have student loan debt, averaging $37,172 each and requiring an average monthly payment of $393.Comet.com. Those job reports don’t tell you how entry-level jobs – except at the highest level – do not generate enough income to allow younger workers to participate in the economy remotely at the level their parents once did. Marriages are delayed. Fewer cars sold. Many still live with parents or have multiple roommates because housing in job centers is so expensive.

Indeed, younger generations are raised with the realistic expectation of a lifetime with multiple job changes, perhaps stints (permanent?) in the self-employment gig economy without any fringe benefits (like retirement, vacation pay, sick pay and healthcare). Will government replace what used to be part of any permanent job? Or is that contrary to the litigation promulgated by 20 GOP Attorneys General to kill the Affordable Care Act once and for all? After all, they got a Texas federal judge to rule in their favor. Not to mention that job security has been relegated to the history books. What’s more, the once-prevalent union voice protecting private sector wages, hours and working conditions now covers a feeble 6.4% of that work force. What will artificial intelligence do to their future prospects?

Trump spoke about fixing our infrastructure, a noble and necessary bipartisan goal. But the President’s solution, in significant part, is to transfer large chunks of that infrastructure to the private sector to fix and expand, allowing companies to charge users tolls and other charges, thus adding an expensive profit add-on to our already overburdened cost of living. Such higher costs are effectively a regressive tax that hurts the lowest earners the most. 

Looking at the genuine state of our union, I am reminded of another country where exceptionally high educational standards are the norm, where its sophisticated automotive and marine manufacturing are legendary, where its entertainment output is all the rage throughout most of Asia and where the standard of living is among the best in the region: South Korea. Just looking at a nation where job security is slowly disappearing, where a “job for life” mantra once was a national boast, those just entering the workforce there no longer believe in that private sector growth. They see the same robots and artificial intelligence changing the job landscape at warp speed. 

“The most sought-after careers among teenagers and young adults in South Korea, Asia’s fourth-largest economy, are government jobs they can count on to get them to their golden years, not jobs innovating and helping companies grow in the private sector.

“Analysts say it’s a symptom of the nation’s slowing economic growth and competition from China in export-driven industries that young South Koreans, about a fifth of the 51 million population, are flocking to what they consider risk-free government jobs not vulnerable to the vicissitudes of the economy. The situation is particularly concerning because it was private companies in sectors like electronics, autos and shipbuilding that fueled South Korea’s rapid growth from one of the world’s poorest nations in the 1960s into an economic powerhouse, analysts say.

“Many young people in South Korea say they don’t expect nongovernment job prospects to improve anytime soon despite a host of measures announced by South Korean President Moon Jae-in nearly a year ago to boost employment, including government stipends to companies.

“Unemployment among those ages 15 to 29 reached 11.6% last spring — a level Moon called catastrophic, compared with a jobless rate that hovered between 3% and 4% for the rest of the country’s workforce. Taking into account young adults who are working part-time jobs or studying for an employment exam like Kim, nearly 1 in 4 are out of a job. By comparison, in the U.S., unemployment among those ages 15 to 24 fluctuated between 8% and 9% in 2018. South Korea uses a different age bracket to calculate its youth unemployment because of mandatory two-year military service.

“The desire for stability and security starts so young that 1 in 4 middle school students say they dream of one day becoming not a K-pop star or the next Steve Jobs, but a public sector bureaucrat, according to a government survey from 2017.

“Many South Koreans worry far more about jobs and the economy than they do about the nuclear threat from North Korea. Conservatives in South Korea who are critical of Moon’s efforts at detente with North Korea point to the economy, saying his focus should be on bettering lives in South Korea, not on engaging with the North.

“Competition for South Korea’s 1.07 million government jobs is fierce. In one round of exams Kim took last year, more than 200,000 people applied, and the 4,953 highest-scoring candidates were hired for open positions — an acceptance rate of 2.4%. By comparison, Harvard’s 2018 acceptance rate was 4.59%...

“Applicants to civil service exams tripled from 1995 to 2016, according to a report by the Seoul Youth Guarantee Center. One online bookseller said it saw a 73.5% increase in sales of civil service exam prep books in 2016 compared with the previous year… South Korea’s high education level is part of the problem — although 70% of those ages 24 to 35 have college degrees, the economy hasn’t kept pace by creating enough quality jobs to meet the increased expectations of those graduates.” Los Angeles Times, February 6^th. 

Think this couldn’t happen here? Think again. Just as we are trying to cut government spending, because something has to pay for that massive tax giveback to the rich that clearly isn’t paying for itself as promised, the job picture is tilting the wrong way. How would you like to be applying for an entry-level job today with a heavy student loan? The government is simply going to have to step in, sooner or later, and take care of what might otherwise be a lost generation overburdened by debt facing rolling obsolescence in the workforce.

According to CNN, 76% of Americans favor a higher marginal tax rate (70%) for incomes above $10 million a year. That is definitely not Trump’s vision for America. The world is changing. Yet Trump is trying to return the entire United States to yesteryear. It’s just not going to happen that way. Welcome to the real world. It’s certainly not Mar-a-Lago or Trump Tower.

              I’m Peter Dekom, and we have been relying on the investments from past generations for too long without paying the current cost of entering the modern age.