The Coming American Diaspora?

Posted on 06. Apr, 2011 by Administrator in Social/Cultural

In Amity Shlaes’ recent book, “The Forgotten Man,” the Great Depression (which led to the first American economic Diaspora) is discussed in equally depressing detail. It’s preceded by many scholarly works and novels like John Steinbeck’s “Grapes of Wrath.” Both should be recommended reading for everybody today lest we forget what our parents and grandparents endured and the fact that economies have predictable cycles. Those cycles are only visible when we look back and try to relate the actions taken to the outcomes and apply them to the events of today. To be a good economist, you need to know history, sociology, psychology and political science. Economics reveals the light and dark sides of human nature and tells us more about ourselves than we care to admit.

We were hedonists in the 20s, celebrating the victory of WWI and realizing how exciting it was to make money in the stock market without really trying. America was split into two halves then, too: the haves and the have nots. There were vast numbers of Americans who worked hard in ordinary jobs, and then there were those who felt it acceptable (even advisable) to profit from someone else’s labor by using their investments. Those were days of vast concentrations of power and widespread abuse of the law. In September 1929, the Dow Jones Industrial Average reached a high of 381.2 only to see it erode on October 24th (Black Thursday) to 299.5 (a 21% decline).

A selling frenzy took place and the market fell to 199 by November 13th. The Great Depression ensued, and three years later, stocks had lost nearly 90% of their value. Ironically, the Great Depression, which wiped out the fortunes of many of the rich and the hopes of nearly every average man, has given rise to an new industry today… research of the Great Depression. We are seeing a resurgence of interest in the subject, perhaps because it’s camped right on our front lawn. Anyone who has some training and understands the principle of cause and effect is dropping their two cents into the tin cup of the media.

There is more to fear than fear itself

One of my greatest fears is that we have been riding the crest of a wave to nowhere (or worse) instead of the path towards economic clarity and certainty. Having the faith of our fathers in an economic system that has continued to disproportionately reward risk rather than hard work has made us a bit schizophrenic. Investments made for the purpose of earning maximum return regardless of the consequences elsewhere is never a good strategy, because today everything is connected, but we keep on doing it! If we are to avoid the mistakes that split up businesses, families, caused crime and suicides in the 30s, we’re going to need a national dialogue on what economic system we want for the USA.

Obviously, the one we have isn’t working well enough. I would submit that any new one must be global in its ambitions (a continuation of some investment overseas) but more local in its design (rewarding companies for repatriating as much profit and jobs as possible from that investment). It must respect the rights of workers to earn a good living, but make them stakeholders in the company’s success. It must provide benefits, but those benefits must not lead companies to move American jobs offshore to pay for the benefits of their American workforce. We must also reach a consensus on an energy policy and thereto a foreign policy towards energy-producing countries that offers our companies and citizens carrots not sticks in our eye.

We have a short window of opportunity to figure out what system we want and how we will build it, before the next big shoe drops, and that could be the BIG shoe… the second great American economic Diaspora. Imagine the disruption if Americans were forced to pull up roots and leave their homes, schools and communities because they can’t afford to stay where they are. The impact on relationships would be disastrous. In the past, Americans moved households every six years. That was for upward mobility. The next time will be for pure survival. If that happens, we must hope the moves are made within their communities and that they are temporary in nature. We can’t afford to weave the new American Dream out of a whole new cloth.

Stephan Helgesen is former Director of the New Mexico Office of Science and Technology and retired U.S. Foreign Commercial Service Officer who served in twenty foreign countries. He is the Honorary Consul for Germany and CEO of 2nd Opinion Marketing, an Albuquerque-based international high-technology consultancy company.

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