The Washington Outsider

Public policy: Less free trade, more innovation

5/15/2015

Comments

 
When “that didn’t work before” is constantly the response to all options on the table, it is time to find a different approach.  The first place to start is where others have been successful.  It is, however, more important to understand why an idea may have been successful and when it might fail.  This is especially true when it comes to building an economy and community.

In response to the so-called Freddie Gray riots, narratives pointing to Baltimore’s longtime struggling economy have started to emerge as a means of explaining the massive civil unrest.  It is argued that Baltimore needs more upper Middle Class individuals to build to a self-sustaining economic revival.  Where New York is a hub for international commerce and Washington, DC feeds off government spending, Baltimore lacks an economic base capable of supporting a strong consumer economy.
For many communities ailing from economic woes, whether small or large, it is easy to see this same need exists.  Where efforts to attract upper Middle Class individuals may work for a Baltimore or Pittsburg, as well as a number of smaller communities that offer some cultural benefit to more affluent individuals, it is not a plan that can work for every struggling community, especially when affluent individual do not spend enough money in their host communities. 

Meanwhile, most Middle Class jobs do not follow workers.  The workers tend to follow the jobs.  Quite frankly, there are not enough upper Middle Class jobs Americans to revive most communities in the country, even ones that have been successful in the past.  As such, the real task for Baltimore and all other struggling communities, including those in underdeveloped nations, is creating new Middle Class industries. 

Ultimately, the lesson learned from Baltimore is that strong consumer spending drives a healthy populous economy sustained by a vibrant Middle Class.  That said, it is not just consumer spending that keeps an economy healthy.  It is the ability of the economy to return wealth to consumers, so they can sustain their consumption.  In other words, a viable consumer economy must also support Middle Class jobs.

Policies like free trade help boost consumption by making goods cheaper and creating overseas markets for exporters.  Unfortunately, they also undermine sustained consumer spending when free trade agreements lead to increased importing of goods and the outsourcing of jobs.  

Wall Street may see greater profits from policies like free trade and the temporary boost it can give corporate profits, but those profits are only a share of the wealth being exported.  To boot, the global economy is a lowest bidder economy, which means those living in underdeveloped countries will be undermined by the same forces that drive down the cost of labor and job destruction. 

Similarly, deregulating industries and finding other ways to reduce costs will only delay the harmful effects of our lower bidder economy while further undermining worker rights, causing health concerns, exasperating environmental issues, and displacing others costs onto communities.  Reducing tax rates for the rich also puts a greater burden on the Middle Class and allows them to profit more from the economy while spending more government dollars alleviating poverty is not a sustainable solution. 

Furthermore, it is also important to recognize many African, Middle Eastern, and South American countries are very wealthy.  Unfortunately, they also face massive poverty despite their wealth of natural resources.  In other words, they face the same economic disparity that the United States struggles to reverse.

Historically, America businesses were successful, because businesses were providing for the needs of Americans while competing over quality and innovation, not the lowest price.  Instead of embracing policies that drive wealth into the pockets of the few, the world needs to embrace policies that drive wealth into the pockets of innovators, so their innovations can create the Middle Class jobs all the economies of the world need.

With free trade, policymakers and economists assumed America would develop an economy fueled by the service sector and intellectual property.  Clearly, this model does not provide for the interests of most Americans as most do not own significantly valuable intellectual property and service industry jobs are often low paying, but policy shifts can help better spur the good paying jobs people need.

Steering too much money into the financial sector via the capital gains tax deduction may well have hurt the economy, because doing so diverts money away from job creating investments.  Coupled with improved patent laws, offering a tax discount on par with Bush-era capital gains tax deductions for royalty payments on novel technologies and other innovations would make them far more valuable.  By making patents and other intellectual property more valuable, financial capital would be steered toward innovation, thus ultimately accelerating the creation of new industries and jobs.

Finally, employers also must do more to tap the human resources available to them.  Unfortunately, employers seek hires with degrees to fulfill specific positions while many academic institutions offer courses that unnecessarily force students to pursue formal lifelong learning.  Instead, they need to focus on hiring employees with broad base, dynamic skill sets that allow them to continually learn new skills in their work environment and seek out innovate ideas.  They also need to give the freedom to explore innovative ideas.

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      • Retooling the Grand Strategy of the International Community >
        • Recalibrating Our Foreign Policy Vision for a New Middle East
        • How the US Should Engage Political Revolt in the Middle East
      • The Fundamentals of Proper Government in the Middle East and North Africa
      • Implementation of Public Policy: Issues of Theory and Practice >
        • What Are Commonsense Regulations?
        • Should Public Health Be a Priority to the Governments of the World?
        • Dealing with the Ill-effects of Climate Change
        • Is National Security More Important Than Civil Rights?
        • Should the Government's First Priority Be to Protect Secrets or to Proactively Give Citizens Information?
      • The Sequestered US Government Needs a Therapist
    • Democracy >
      • An Essay on the Role of Government: Why Each Generation Must Define Democracy for Itself
      • Democracy and the Narrowing Power Elite
      • Assessing the Limits of Democracy
      • Do Americans value freedom?
      • Belittling Our Political Leaders
      • Defining "Liberal" and "Conservative"
      • Framing Issues Properly is an Important Political Tool >
        • Assessing US Elections Part I: Framing Issues Properly is an Important Political Tool
        • Assessing US Elections Part II: Focusing on the Economic Frame
        • Assessing US Elections Part III: Looking at the National Security and Military Frame
        • Assessing US Elections Part IV: Focusing on the Foreign Policy Frame
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        • The Bipolar Nature of US Politics: Pros and Cons
      • Voting in Mid-term Elections: The Importance of the Congressional Vote
      • The Role of the Media in Politics >
        • Should the Government Control Talk Radio to Make it More "balanced"?
      • How the People Are Lost in the Extremes of 'Right' and 'Left' in Politics
      • Should One's Faith Influence a Citizen's Vote?
      • Should the U.S. Government Help Fund Election Campaigns?
      • On Defunding Political Science Research
    • Worldview >
      • Justice for All: The Case for Legal, Social, Economic, and Personal Justice
      • Why Hardliner Thinking in the NSA and CIA is Doing Damage
      • On the Baby Boomer’s Self-Centeredness
      • The Case for Personal Responsibility
      • What Modern Day Revolutionaries Need to Learn from Leader's like Mandela
      • Rising Western Acceptance of LGBT Primes Culture Clash
      • The Need for Wisdom Beyond the Numbers
      • Perceptions of the United States
      • How Honesty Relates to the Great Recession
      • Why the Middle Class and Rich Need to Support Their Long-term Interests
      • The Aristocratic Republic of the United States of America
      • Discussing the Need for Community Support
      • Why New Forms of Capitalism and Socialism Will Compliment Each Other
      • The Reason We Need to Understand What it is to Be Poor in America
      • Why the World Needs to Reinvest in America
      • Why Are We Against Terrorism?
      • Why Does Terrorism Exist?
      • US Influence: The Value of American Citizenship Around the World
      • Responding to "the Soldier as Sacrficial Victim"
    • Human Nature >
      • How comfort defines us as people >
        • Is Suicide a Cowardly Way Out?
      • Defense Against the Dark Arts of Manipulators
      • Defining Abuse >
        • On the Willing Victim of Abuse
        • How to Understand Abuse Victims
        • Recognizing Abuse
      • The Role of Substitution in Decision Making
      • Trying to Understand PTSD and Other Trauma-induced Mental Health Issues
      • Exploring Human Emotion >
        • Mental Illness is Not the Cause of Anger and Violence >
          • Trying to Understand the Boston Marathon Bombing and Other Violent Crimes
          • Getting into the Twisted Mind of the Tucson Murder
      • Describing the Mind as Modes of Thought >
        • It’s Just Sex?
      • Relationships, or Arrangement
      • Understanding the Effects of Groupthink in the Workplace
      • Relating Circular, Inductive, and Deductive Reasoning to the Scientific Method and Religion
      • What is a Redneck? Understanding Different Cultures and Thinking
    • Economics >
      • The Need for Greater Economic Leverage >
        • Evaluating NAFTA and TPP
        • Undercutting Logistics with the Underpaid Independent Contractor
        • Unions: Hindrance or Essential to Free Markets
        • Eminent Domain Used Against Banks
        • Haitians Sue the UN for Failure to Help With Cholera
        • Looking at How Corn-based Ethanol and Other Alternative Energy Subsidies Stack Up
      • Empowering the Sovereign Nation-State by Rethinking Trade Policy >
        • Irish Sovereignty Lost Before Bailout
        • Why Sudan's Greatest Long-Term Hurdle is Our Lowest-bidder Economy
        • Reduce US Imports by Buying American Made Products
      • Ending the need for government support and tackling poverty
      • Income inequality: understanding the limitations and psychology of disadvantage
      • Looking at the Future of American Jobs >
        • On Questioning the Need to Address Economic Disparity
        • Minimum Wage is Not the Problem
        • Responding to the "Blip"
        • Why Education Is Not The Civil Rights Issue Of The Twenty-First Century
      • Considering the Impact of the Capital Gains Tax Deduction
      • Embracing a Capitalist Mindset >
        • Capitalism Versus Socialism
        • The Negatives of Socialism
      • Stealing Intellectual Property
      • Changing Business Models: From Enduring Entities to Cash Cows
      • Consumer and Investor Evolution in the Great Recession of 2008-09
      • Dealing with the Issues Surrounding the Patenting of Self-replicating Technologies
      • Is Technology Threatening Jobs?
    • Education >
      • The Role of Education in Creating a More Dynamic Workforce
      • Primary Education in America and the Changing Needs of Society
      • The Greatness of the American Education System
      • Ideas for Improving the United States Education System
      • Are Teachers Treated as Professionals?
      • Is Engaging Parents in Their Children's Education a Major Factor in Turning Around Low-performing Schools?
      • Should Grants Be Awarded to School Districts that Try Innovative Methods to Improve Student Achievement?
    • US Constitution >
      • On Reading the US Constitution
      • The Senate should not do more to limit the powers of the Judicial Branch
      • On the DOJ Justifying the “targeted Killings” of US Citizens
      • Corporations Do Not Have the Same Rights as US Citizens >
        • Corporate America Pleads the First
      • Discussing the Constitutionality of Per Capita Taxes
      • Was the California Supreme Court Right in Legalizing Gay Marriage?
      • Should the Bible Continue to Be Used for Swearing-in Ceremonies and in Courtrooms?
      • Should Religious Student Clubs Be Allowed in Public Schools?
      • Should the Government Control Talk Radio to Make it More "balanced"?
      • The Second Amendment: Not Outdated >
        • Are We Losing Our Second Amendment Rights
      • Eminent Domain Used Against Banks
      • Should a Woman Have the Right to Choose Abortion? >
        • Should Fathers Be Able to Opt Out of Parenthood?
      • Should Smoking Be Allowed in Public Places?
      • Is Teen Driving a Right or a Privilege?
      • Should US Companies Be Required to Provide Equal Pay to Women and Men?
      • Is eighteen too young to vote?
      • First Amendment Rights: The Priviledge of The Press
      • Do Mandatory Seat Belt Laws Violate Individual Rights?
      • Should cell phone use be banned while driving?
      • Dealing with the link between video game violence and children's behavior
      • Should police have to submit to routine drug and alcohol testing?
      • Public schools should not impose mandatory drug testing on students
      • Are High Taxes on Cigarettes Proper?
      • Should pharmacists be required to violate their religious beliefs and dispense the "Morning After Pill?"
      • Should school counselors uphold patient privacy or report students who become unstable?
  • For the record
    • Ongoing Issues >
      • Red Dawn in Ukraine: Understanding the Actions of Russia >
        • On Russia’s Coercion of Ukraine
        • The Russian Annexation of Crimea in the Eyes of the World
        • Putin Has Overplayed His Hand With Crimea
        • Ukraine in Terms of Resovereignization
        • Avoiding a Conflict Between America and Russia Over Ukraine
        • What Drives the World’s Interest in Russia’s Actions in Ukraine
      • China’s Aggressive Pursuit of Interests Demands a Global Response
      • Iran Makes a Deal: A Start to a Long-term Diplomatic Effort to Denuclearize Iran >
        • On the Future of a Nuclear Negotiations with Iran
      • America's Sphere of Influence: Retaking South-East Asia >
        • Power in Asia: Looking at the Power Shift in Japan
        • The China Paradox: Why America is Worried About China
      • Assessing US Support of Israel >
        • Tread Softly Israel for a Heavy Step May Be Your Undoing
      • Understanding the Dysfunctional Nature of the US-Pakistani Relationship
      • Recognizing the True Threat Behind the Current Unrest in the Middle East >
        • Reacting to the Escalating Crackdown in Syria
      • Assessing the Threat of North Korea >
        • Answering North Korea's Call for Food Aid: Breaking the Vicious Cycle Forced Upon Us by a Warring Nation
        • Dealing with the Restarting of the Korean War
        • North Korea Attacks South Korea
      • Dealing with the Ill-effects of Climate Change
      • Racial Inequality and Oppression Do Truly Exist in Today's Society
      • Should energy independence be a high priority in the US?
      • An overview of world wide Human Rights violations
      • Nuclear Threat from Pakistan
      • Return of The Cold War?
    • World >
      • Coverage of FIFA World Cup is a Chance to Focus on Poverty >
        • The FIFA World Cup Offers Benefits for More Than Brazilian Soccer Fans
        • FIFA Can Bring Brazilians Together as a Nation
      • Being Prepared for Any Potential Dangers at the FIFA World Cup Games
      • Treading Softly on the Politicizing of the 2014 Sochi Olympics Over Gay Rights
      • Why NATO Operations in Libya Lack a Well-defined Mission
      • China Hijacks the Web
      • Lessons from the Great Japanese Earthquake of 2011
      • A Modernizing Cuba Offers an Opportunity for Capitalists
      • The Seeds of Democracy Take Root in the Middle East
      • The Rebirth of Democracy in Tunisia
      • What May Come from the Hurt Revolution in Libya
      • Responding to the Violence of Qaddafi and Other Besieged Leaders
      • Embracing the Rise of a Democratic Egypt
      • Protests in Afghanistan Turn Deadly for Coalition Forces and UN Personnel
      • Haiti: Another Failing Humanitarian Investment
      • What Karzai Can Learn from Calderon
      • START II: A Necessary, Easy Success that Nearly Failed
      • Why Does the U.S. Government Support Independence for the Breakaway Serb Territory of Kosovo but Oppose Independence for the Breakaway Georgian Territories of Abkhazia and South Ossetia?
      • Iraq's Electric Issues: When Human Wants Trump Economic Sense
      • The International Community Reacts to Wikileaks: We May Be Moving Toward a Third World War in Cyberspace
      • On Climate Gate
      • Assessing Obama's Afghanistan War strategy
      • 2009 Iranian Presidential Election: The Fallout
      • Resolving Sri Lankan Conflict through Free Media
      • What are the Global Consequences of Russia's Invasion of Georgia
      • The War in Iraq: an assessment of President Bush's surge strategy
      • Drug War: Actions of Venezuela, Columbia, Ecuador in terms of Resovereignization
      • Is the Iraq Refugee Crisis America's Responsibility?
      • US support for a united Kosovo, Abkhazia, and South Ossetia: why?
      • Should the US withdraw from Iraq?
      • Setting a Timetable for Troop Withdrawal from Iraq is a Terrible Mistake
      • War on Terrorism is needed
    • Law and Order >
      • Rape in the US Military
      • Ethics of Force-feeding Guantanamo Bay Detainees
      • Reacting to the Aftermath of the Tucson Massacre
    • Economy >
      • Affordability Drives Fear of Obamacare and the Individual Mandate
      • Is the Economy Built for a Job's Recovery?
      • Gutting Healthcare Reform of the Individual Mandate
      • Arizona Budget Cuts Lead to Lethal Healthcare Rationing:
      • Shameful Collection Practices of American Banks
      • The Fed Reveals it Actually Undertook an International Bailout
      • Thoughts on French Budgetary Reforms
      • Seniors Start Businesses
      • The Case for Slimming Down the US Military to Make it Better
      • Looking at the Obama Administration's New Approach to Economic Policy
      • Should the Government Regulate the Credit Card Industry?
      • The Big Three's Big Chance
      • The Unhealthy Tone of the Healthcare Reform Debate
      • Should the federal government offer a bailout for home owners?
      • Environmentalists: Do They Do More Good Than More Harm?
      • Responding to Scott Walker's Contribution to the War on Unions
    • US Government >
      • America Needs to Focus on the Impending Fiscal Crisis
      • Reacting to the Bush Era-tax Cut Extension Deal
      • Quitting the Obama Revolution: The Fickle Nature of American Politics
      • John Boehner's Circus
      • Is the Fed Putting Itself in Jeopardy?
      • Wikileaks Goes After the US State Department
      • Discussing the Political Environment Surrounding the 2011 Budget Debate
      • What the Democrats Can Do to Ensure a GOP Year in 2012
      • What the 2010 Midterm Actually Said
      • Congresswoman Kathy Dahlkemper
      • Democrats Minus Nancy Pelosi Equals Opportunity
      • Terrorists Go Postal: The Terrorism Threat Reexamined
      • Victory in the 2008 Election: Reaction to Barack Obama'a Win >
        • Expectations for Barack Obama
      • President Obama's first one hundred days
      • John McCain's Negative Campaign
      • Reasons People did not Elect John Mccain
      • History judges the George W. Bush Administration
      • Should the next US President focus on domestic issues?
      • President Bush, should he resign or be impeached
      • Should the Ban on Government Sponsored Assassinations be Repealed
    • Off Topic >
      • A Face of America’s Greatest Generation
      • A Story About a Man Who Made the World a Better Place
      • Making the World a Better Place
      • The Bipolar Ethical Nature of Google
      • Learning Computer Plays Jeopardy
      • Verifying Medicine is the Real Thing
      • Taking a Practical Step Forward in Optical Computing Using Slow Light
      • Scientists Take a Closer Look at How Lithium Batteries Work
      • Remarking on the First Blizzard of the 2010-2011 Winter Season
      • Driving in the Snow: Acceleration is the Key
      • How People in Northwest PA Are Coping with the Increasing Cost of Oil
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