In the wake of recent controversies in Ferguson, many Americans are bewildered. This is because not only is it hard to determine actual facts of the Michael Brown case in the flurry of conflicting reports and opinions, it’s difficult to separate one’s political affiliations from how one looks at the situation. However, no matter what one thinks of Ferguson personally, it’s clear the tragedy there is somewhat a reflection of questionable economic policies. As many know, crime rates and social discontent are often higher in poor areas such as Ferguson. Also, by being part of the metropolitan area of Greater St. Louis, suburban Ferguson exemplifies many features of America’s densely populated areas.
Sadly, America’s current political-economic dogma can create a cancel-out effect on issues like Ferguson. As we’ve seen, some party faithful on the left and right treat the issue like a political football thrown back and forth rhetorically from one side to the other. Ironically, this intense political rhetoric can sometimes serve to reinforce a status quo that can sacrifice truth to party dogma.
As many know, the poverty that leads to much discontent was not eliminated 50 years ago when “The War on Poverty” was declared. To some, things are maybe worse today. Why many ask, is it so hard to eliminate poverty and the social ills that go along with it?
One of the main social ills of poverty is both high unemployment and high underemployment. As economists have pointed out recently, America’s unemployment figure is actually higher than officially reported since those who’ve given up on work are no longer counted. When this is coupled with how many are underemployed, it’s clear we have many idle poor. In parts of densely populated areas like Greater St. Louis, unemployment and underemployment is high.
On a common sense level, there’s probably not a single American who doesn’t recognize the value of hard work. As many know intuitively, the sense of accomplishment that being employed can do for someone is incredible. Therefore, why is it in America that we have far too few jobs to go around?
Part of the problem with having too few jobs is that political dogmas on both sides reinforce somewhat outmoded economic theories. This is shown through political rhetoric. For instance, Democratic leaders still make overtures to the base of their party that wants more Socialism. Therefore, some Democratic leaders will employ rhetoric derisive of business and corporations to bolster support. This rhetoric serves to keep the base in line by keeping alive the hope that someday a more Socialist utopia can be realized. On the right, the Republicans try very hard to appeal to a base that’s very much interested in a total Free-Market theory that sounds great on paper, but isn’t really practiced anymore.
As we all know, not only has Communism been discredited, but also true Socialism has faded in strength since the 1980s. Along with both of those factors, totally unregulated Free-Markets are not really in vogue. Therefore, if both political parties are adhering to rhetoric espousing economic theories that aren’t totally accurate, what are we to do?
For starters, the main thing we can do as informed citizens is encourage politicians to be more honest about the fact our economy now is more reflective of Corporatism. Basically, Corporatism blends Free-Market and Socialist ideals while being neither. Therefore, Corporatism offers different challenges and opportunities. After all, major economists like Joseph Schumpeter predicted Corporatism clear back in the 1940’s. Although some view Corporatism as only a controversial theory, there’s adequate proof from a purely business model perspective, that corporations have validity. The main problem many of us have with corporations is the amount of power some corporate sectors have over the political process and government.
Regarding high unemployment and underemployment, there are pragmatic solutions to both that can be addressed if both parties become more honest about Corporatism and less rigid about adhering to older concepts. Practical solutions to high unemployment come in many forms.
One unemployment solution is to follow the lead some economists advocate and increase spending on America’s crumbling infrastructure. The increased spending could add employment. Obviously, simply applying fiscal policy will have a multiplier effect that’ll create more jobs. However, other ways to achieve this would be to actually create jobs, some temporary, and some permanent through the government for infrastructure. These jobs could target the unemployed and be used to not only provide employment, but also reduce some welfare payments. Therefore, by tying employment to ways to partially reduce welfare dependency, infrastructure spending could be done in a way that doesn’t add tremendously to debt.
If unemployment is successfully reduced, the Federal Reserve may then be tempted to allow interest rates to rise so the poor and middle class could begin saving money again through banks. As many know, interest rates are kept low to stimulate employment.
All of these factors could improve social stability by reinforcing the concept of work and responsibility, as well as saving.
Other ways to increase employment would be to streamline the byzantine and confusing regulations, taxes, and zoning laws setup in large Metropolitan areas. This process would have the net effect of promoting small business growth. In turn, this would lead to greater employment, serve to naturally stimulate the economy, and improve social stability by providing incentive for upward mobility.
All of the above are practical ideas that have been advocated by many on the right and left for years to help create more meaningful jobs. The problem with implementing these ideas has mainly been the dogma of both political parties. However…now that the threat of large-scale Socialism and Communism is largely gone for the right-wing, and now that the threat of a totally unregulated Free-Market is gone for the left, we can look at realistic economic solutions for today.
Although Corporatism offers many challenges and problems, admitting that this is today’s economic system may actually give us a starting point to make things better. Once we understand our new economic system and how it differs from the old, we can maybe start to identify how to cure systemic issues such as high unemployment and underemployment.
Hopefully, the Ferguson tragedy can mark a turning point away from problems promoted by lack of opportunity, instead of being a harbinger of things to come.
Politics and Economics 
Well done ,I hope that we do look to future, leaving old failed economic dogmas behind. It would be a shame if the economic reasons for Ferguson led to more Nixonlike calls for Law and Order. Be nice to break that cycle and mind set and address the actual reasons and solutions.
Thx very much for the positive comment! Yes, although it’s very hard to try out newer ideas in regards to these issues, it’s important that we try to combine proven theories into something a little new so we can reduce unemployment-underemployment.
Perry Castillo for president. These are very sound and insightful concepts that if applied by our congress would be embraced by a majority of our nation.
Thx so much for your comment Tammy! Although I’m not really interested in a career in politics, I’m glad that some of my ideas resonate + reverberate.
In past posts, I thought I detected a streak of Libertarian sympathies in your perspective. Now, I am not so sure. While I certainly agree that national investment in infrastructure is topically a good idea and doing so will create jobs, the notion of government creating jobs will, I think, inevitably lead to cries of “tax and spend, tax and spend” on the one hand and “pork!, pork!” on the other. I very much doubt your thesis that “the threat of large-scale Socialism is largely gone for the right wing, and…the threat of totally unregulated Free-Market is gone for the left.” Just look at the flap caused by Obama’s stated intention to begin political rapprochement with Cuba. Rallying cries for true believers need have little to do with some objective reality. Increasing spending on infrastructure…and we must needs define just what we mean by infrastructure…will inevitably entail taxation. But, first, we have make make the world safe for democracy…by propping up any number of illiberal regimes around the planet, mainly to the end of making the world safe for American corporations.
It might seem that corporatism is a blend of free-market and socialist ideals, but I think inspection does not support that. Markets are not and have never been “free” in the sense that economic forces and agencies did not strive to affect governmental policy in their favor, whether those governments were monarchies, totalitarian states, or purported democracies. Nobody actually wants a level playing field, and noise made in favor of a level playing field merely indicates that the noise maker perceives himself in a disadvantageous position. Indeed, the problem with corporations is the amount of power they make have over the political process and government. The problem with corporations is that they do act just as though they are living organisms, but they have no natural lifespan, and they have no conscience. Quite clearly, corporations are successful business models in the same manner that multicellular animals are successful life models, except they exist only to do more business, and they don’t just naturally die and make way for something else.
Early on you ask, “why…is it so hard to eliminate poverty and the social ills that go along with it?” You don’t get around to actually addressing that question, though. As you note, many have suggested the various remedies you propose. You suggest that political dogmatism is the main obstruction. A question, then, arises as to why we have the political dogmatism? Why is it so hard to eliminate poverty and its socials ills? The reason is that is not our chief goal as individuals or as a society! Oh, sure, it would be nice if we had an egalitarian society, but, first…
Hey Charlton, good to hear from you again. You put a lot of ideas here + I’ll try to address most of them as best I can.
First off, bear in mind the main idea I wrote about was that high unemployment-underemployment + it’s social costs come into play regarding situations like Ferguson. I’m not the first to mention this issue. Economists from the right + the left talk of this frequently.
What makes my ideas a little different is I attempt to actually combine ideas to lessen unemployment from both left + right. Regarding increased infrastructure spending, Democratic-leaning economists such as Larry Summers have called for this. From the right-wing Libertarian thinkers I read going back to Hayek + Von Mises, I agree with the notion that over-regulation of small business can hamper employment.
Also, in the ideas I put forth, I never once mentioned I’d like to create an egalitarian society. This is not only impossible; it’s highly inefficient economically. I merely mentioned, since metropolitan areas have astronomically high unemployment + crime, we combine ideas from the right + left to promote a society of people that work + are productive. Are you okay with that?
As you may know, being idle creates many problems for all people.
Charlton, from the nature of your comments, I assume you’re someone with advanced education. Therefore, I assume you work in a responsible job + have much to be proud of.
Wouldn’t it be nice if more people were able to work and become less dependent on the government for assistance that’s not related to work? I’d dare say that a “Workfare-type” infrastructure job that reduces welfare-dependency is a radical idea. After all, in the 90’s Clinton worked with the Republican Gingrich on this.
Regarding Corporatism being in reality the dominant economic idea of today, I’m echoing the thoughts of economists who recognize that structurally-speaking, we’re probably now in that phase. I’m not saying I necessarily endorse it, I recognize what many economists have noted.
Yes, corporations, like government, can seem to live on for long periods of time + can seem to have allegiances mainly to themselves. And yes, corporations can create many problems. Therefore, I encourage you to continue adding to the dialogue on corporations. We definitely need it.
Regarding how there may be on an economic-level, little realistic fear of a reversion to Communism-heavy Socialism, this is true. Although Corporatism has many problems, Communism + heavy Socialism relied too little on markets to be long-term successes.
Likewise, a totally unfettered free-market is probably not in the cards politically. However, I do personally feel that we all can learn much from Libertarian thinkers.
Of course people are mad about Cuba. However. this has much to do with the Cuban emigres situation. As for economics technically, one only has to look at how China, which has many corporations that are merged with the state, actually gives support to Corporatism being a norm. After all, anyone with a copy of Mao’s “Little Red Book,” today probably looks at it more for historical value than a way of life.
And yes…markets do exist. And yes…many market players attempt to gain advantage. But markets have been with mankind forever + will always be so to a degree. For proof, just visit a Farmers Market on the weekend or read about how the Soviet Union actually relied on the “Black Markets” to provide many goods the bureaucracy couldn’t provide.
And yes…you’re right. I didn’t totally answer the Poverty question. The good news for you is that you answered it for yourself. And that’s important for you.
In doing this little blog, I limit myself to 1,000 words. I want to mostly look at economic-political topics + get ideas flowing + help encourage thinking + dialogue with people such as yourself.
In my opinion, Poverty, can never totally be eradicated. My little article was aimed mostly at the unemployment-underemployment issue. Since we’re 50 years into the ‘War on Poverty,” I thought I’d mention it.
Thx a lot for the dialogue.
It is still true that the Democrats want socialism. Obama’s time in office produced nothing but an insurance that continues to rise in cost. Can’t wait to see what disaster Biden comes up with.
Hey GP…thx for stopping by! I sure learn a lot from your blog about WW2. 🙂
Yeah…the amount of socialism with Biden will grow a healthy amount – and with it’s growth we’ll find that the middle class will be impacted. Ironically, the Democrats talk a lot about the middle class + historically have done many good things for it. However, the party has changed much the past 30 years. Although their rhetoric about the middle class continues unabated, many note that the party is increasingly influenced by, + quite comfortable with, the super-rich.
As you correctly note – The Affordable Care Act has become quite expensive for many of us.
Hopefully, through time, many will realize that the mild socialism of the Social Democracy type, is the type that seems to work the best. As you allude to, the modern Democrats have moved beyond this.
Take Care!