A House Divided Cannot Stand

March 3, 2020

Trump’s base thinks they can make America great by kicking out people they don’t like, people with different heritage, faith or color. Yet the evidence is that there are more and better jobs available in communities with more recent immigrants. A larger economy creates jobs and opportunities. It needs more goods and services. By contrast the effort to get rid of people is what economists call a deadweight loss. Deadweight because it is costly but produces nothing. We accomplish more working together than working against each other.

America’s great accomplishments have all come from making it easier to work together. Even before the Constitution, the states gave each other’s citizens all the “privileges and immunities” they gave their own. Sadly, they left most African-Americans in slavery, but they created a common economy to take advantage of America’s size and scale. The Constitution tightened and enlarged those promises. A single economy gave us the resources to do what a great nation must do and do well.

Before we could adopt what were called internal improvements like roads and canals, we had to learn that jealousy beggars us all. Projects wouldn’t pass without spreading the benefits to the vast majority of us. The Washington Administration designed the first American financial system. The Jefferson Administration purchased the Louisiana territory from the French and built what they called “the national road,” connecting the seaboard with the Ohio River valley. Steps like that laid the foundation for America to connect the oceans and stave off the European powers that still kept land and garrisons to our north, west and south.

The Civil War threatened everything but for the fact that Lincoln kept the British from intervening on behalf of Confederate cotton, and he kept the Union together.

American power solidified after the Civil War made ours one country, ended slavery, and Lincoln signed, in 1862 alone, the transcontinental Railroad Act, the Homestead Act and the act that built the great land grant universities, which together laid the agricultural, commercial, industrial and intellectual basis for America as the dominant twentieth century power.

We can’t have a great nation by fighting among ourselves. We can’t maintain national infrastructure by jealously keeping others from the benefits. We can’t maintain a great educational system by fighting over whom to keep out. We can’t continue to grow and prosper by jealously excluding each other from important national institutions. As Lincoln told us, “A house divided cannot stand.”

Armed ethnic, religious and racial animosities threaten American power and success. We’re all threatened by domestic terrorists who target people because of the color of their skin, the words and language they use to pray, or where they came from.

America’s strength has always been Americans’ ability to work together. Our major institutions understood the importance of cross-cultural cooperation. The U.S. Army worked to unify soldiers with different heritage, faith or color and who spoke different languages so that all could work as a team. Corporations unified their workforces, capped with ceremonies in which new Americans stepped out of what were labeled melting pots. Major sports leagues learned to take advantage of talent regardless of where it came from. Schools taught each new wave of Americans about democracy and gave them the skills to participate in our government and our economy.

It’s time that all Americans get with the program for the greater good of all of us – including any orange-Americans.

—This commentary was scheduled for broadcast on WAMC Northeast Report, March 3, 2020.

 

 


Labor Economics

February 14, 2017

The White House isn’t explaining what’s happening to jobs. I once taught labor economics, an issue close to my heart. To some extent, labor is like any other commodity and that’s the problem. Jobs go wherever business can find all the things it needs – the land, transportation, materials, markets, reliable legal relations, at the right prices. And it keeps changing.

We talk about the rust belt as if we did something wrong. Actually we had about a century-long run on the best factory jobs in the country – a ribbon through this state after New York’s government built the Erie Canal and made New York City gateway to the west, turning every city along the Hudson, Mohawk, Erie Canal, and then the great Grand Central Railway into a powerhouse. This area long dominated clothing, technology, science, heavy industry and spawned radio and television networks. Each industry provided resources for newer ones.

But New York’s advantages couldn’t be permanent. For bigger plants with newer methods, business looked for virgin land. Other governments built ports, the Interstates and St. Lawrence Canal, while the aging infrastructure of older cities led firms elsewhere. It couldn’t be permanent. Economic fundamentals inevitably dominate jawboning and presidential rhetoric.

Workers get cast aside unceremoniously. One of my law students was also a human resources specialist at GE, missing class whenever GE announced layoffs. They had long since let the weakest workers go. Now she had to fire the best and it hurt. But big corporations aren’t sentimental.

What’s a city or region supposed to do? The market doesn’t automatically find the next big thing and put it where former employees can get jobs like those they lost. The market didn’t build America automatically. Government changed British rules. Government built a banking system with resources to fund business, and smooth their cash flow – if you read or saw Hamilton, that’s what he was about, government providing what companies couldn’t. Government built ports, canals, highways, and had the railroads built. Government provided public health facilities, water, sanitation, disease control – which became crucial for business. Government invested in schools, and President Lincoln laid the foundation for the modern state university system. President Wilson sparked the country’s first broadcasting system for the war effort. Almost everything in your hands today has government fingerprints on it – the research and development in fundamental physics that led to the lasers, transistors and chips that run almost everything today.

Yes, governments make mistakes. You think private industry doesn’t? Most businesses fail. But only government can provide the fundamentals, the things that all the businesses in the country, region or route need. Only governments are motivated to look beyond individual companies and work for the region.

Governments have been investing in new forms of power. If governments in coal producing states had the sense to invest in emerging industries instead of dying ones, the coal miners might face a much better transition to good jobs than anything presidential jawboning can produce. But government cannot do it if it is afraid to fail.

Governments need to be thinking about what the emerging industries are, what resources will support growth. Not individual businesses that any group of investors could build on their own, but the underlying fundamentals that make broad development possible. And we may only know which ideas work when we try them.

If government thinks small, we all shrink.

— This commentary was broadcast on WAMC Northeast Report, February 14, 2017.


Sources of American Strength

February 21, 2012

Let’s talk about some basics – the sources of American economic power.

  • We were always an immigrant society, peopled with those who had the drive and courage to leave where they were, cross the ocean and begin again with nothing.
  • Initially we were agricultural. One innovation was small, “republican,” landownership by independent farmers. Their efficiency made everything else possible.
  • We were among the leaders in the banking revolution which simplified and facilitated commerce.
  • The transportation revolution began in England but it had an enormous impact on the American economy because of the sheer size of the country.
  • Our system of democratic schooling  – education for all, rich and poor, boys and girls, immigrants and natives – was revolutionary and made us an international leader.
  • England pioneered the scientific revolution. But America took advantage of the land grant colleges, and with the appreciation for learning that came with both the Christian and Jewish communities that relocated here, America became a major source of invention.
  • Americans led the revolution in manufacturing – inventing and perfecting the assembly line.

Now what? Everything we achieved is out there. Read the rest of this entry »


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