Newt Gingrich was wrong: This isn't the most consequential election since 1860

Neither presidential candidate has much control over the forces that'll be shaping the economy for the foreseeable future.

So here we are, heading into another presidential election in which the candidates over promise and then spend the next four years predictably disappointing us.

I’m not sure there’s much anybody can do about this dreary cycle. Although, to my newspaper understanding of these things, the forces that’ll have the greatest impact on our life prospects for the foreseeable future are largely beyond the control of even the leader of the free world, candidates can’t expect to bring their voters out with confessions of impotence. So they make their ritual grandiose promises. Then we excoriate them, while they’re in office, for failing to deliver the undeliverable goods.

Here’s how the cycle is working out this go round.

Governor Romney is promising to free up the “job creators” by reducing the tax and regulatory burden on them while promoting self-reliance among the rest of us. He’ll inspire us to pull up our socks by shrinking the government safety net so that, in the words of his team mate, Paul Ryan, it doesn’t turn into a "hammock that lulls able-bodied people into lives of complacency and dependency."

President Obama, on the other hand, while recognizing that the federal debt has to be contained, is proposing enough revenue enhancements, aka tax hikes, to preserve the social safety net, and boost the country’s investment in infrastructure, education and other things he thinks we need to compete in the global economy.

There’s no denying that both visions assume robust domestic job growth. If, as Romney and Ryan propose, we’re all going to have to get out of the hammock, pull up our socks and make our own way, the private sector is going to have to generate the resources we’ll need to live this more bracing life. 

But exactly the same thing is true of the Obama world. While I might be paying less to private enterprises for the services I’ll need, I’ll be paying more to the government. So, here again, the economy is going to have to be strong enough to enable me to contribute to the government revenue stream that funds the services I’ll want from it.

But now here’s the thing. Businesses in a market economy aren’t charities that exist for the purpose of providing jobs for people. They exist for the purpose of producing, at the lowest cost, goods and services they can sell at the highest price buyers will pay.

And the two most powerful headwinds against domestic job growth are globalization and the exploding role of technology. As Catherine Rampell reports summarizing in the New York Times a new study by the National Employment Law Project, “Over the last few decades, the number of mid-wage, mid-skill jobs has stagnated or declined as employers chose to automate routine tasks or to move them offshore.”

Although Romney and Ryan are counting on you to believe that it’s domestic jobs the “job creators” will create when their taxes are sharply reduced and their regulatory chains are shattered, they have to know better because in a global economy, capital flows toward the lowest cost labor, other things being equal. That’s why your iPhone is designed in California but manufactured in China. And that’s why Romney reported on his 2010 tax return $2.73 million in gross foreign income, which his accounting wizzards whittled down to $392,000 in U.S. taxable income.

But when President Obama inveighs against companies that ship jobs overseas and promises to repatriate those jobs, he has to know better, too. Businesses don’t outsource because their owners are evil and greedy. They do it because it’s suicidal for a business to accept production costs that’ll enable its competitors to undersell it. So it’s not greed that motivates Apple to make your iPhone in China. It’s the harsh discipline of the market that sentences businesses to death for being outcompeted.

Nor is it greed that motivates businesses to shed human labor altogether where a machine can do the work for less. We’re seeing that trend play out right before our eyes at the ports of Savannah and Brunswick, where the dock workers are threatening to strike. Their complaint? Says International Longshoremen’s Association President Harold Daggett: the shipping lines and terminal operators want “to effectively eliminate the workforce through automation.”

Without being inside the heads of the shippers and terminal operators, I’m betting that Daggett is right. Shedding workers in favor of machines that you can depreciate instead of pay and that you don’t have to negotiate contracts with is the holy grail of businesses in a market economy. So it’s absolutely no surprise, as Jason Lange of Reuters reports, that, “Since 1999, business investment in equipment and software has surged 33 percent while the total number of people employed by private firms changed little.”

The trouble, of course, is that computers and other technological marvels don’t pay taxes and buy stuff. Only people do that.

So whoever we elect, jobs are going to continue to migrate overseas until there’s some economic reason for a reverse migration. Some reverse migration is already occurring, not because of this or that government policy, but because, for example, energy costs are making long supply chains more expensive, and domestic and off-shore labor costs are converging.

And technology will continue to displace workers, not because of government policy, but because the competitive pressure on businesses to minimize costs makes it imperative.   

I don’t conclude from any of this, as some do, that there isn’t a dime’s worth of difference between the two candidates. I have my preference. But it’s tempered by the realization that the most powerful forces shaping our world for the next several decades aren’t under the control of either candidate. If more of us could get our heads around that, maybe our political culture would be less feverish.

I can dream, can’t I?

This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.


More »
Got a question? Something on your mind? Talk to your community, directly.
Note Article
Just a short thought to get the word out quickly about anything in your neighborhood.
Share something with your neighbors.What's on your mind?What's on your mind?Make an announcement, speak your mind, or sell somethingPost something
See more »