America is operating with a new economic model which is contrary to anything one may have learned in the textbooks, or even in the history books!
By Stephen Cafaro
Some days, things appear to be slowly slipping away from me. I believe the problem is about a lack of security arising from my inability to understand the dynamics of a new system of economics. My government seems hell bent on promoting, supporting and legislating economic theories which are contrary to anything I have ever lived or learned. I admit I may be considered old fashioned because I am accustomed to certain fiscal disciplines that cause a county and its citizens to work towards shared and common goals. I confess I am not in agreement with the supposed benefits of globalism, the new world order and international trade agreements. And, I admit being totally mystified by the devastating economic conditions which are causing havoc in our daily lives, while simultaneously destroying many of our aged financial institutions. But, what totally flummoxes me is the casual, matter of fact acceptance of our economic decline by our leaders, our corporations and yes, by the American people who bear the heavy burden of this social and economic injustice.
I am a student of the economic, social and political condition of America and her citizens. I have been taught that supply and demand are the major drivers in an economy. The pinnacle of success in the marketplace is equilibrium, which occurs when the supply and demand of goods and services are essentially equal. In this idealistic state of equilibrium, the benefits of the economic system are maximized for all who participate. In recent decades, our government, acting under the influence of our corporations, has launched a new economic model which favors consumption over production. They have outsourced the task of supplying many of our needs to foreign countries. As a result, I have witnessed an exodus of American industries, factories and jobs to foreign shores. However, the greater loss is our country’s ability to be self sufficient. More importantly, that magical state of economic equilibrium which is the basis for financial prosperity is irreparably out of balance. The measureable net effect of our government’s decision to outsource is a trade deficit which is approximately 800 billion dollars a year. Not only do we import the pain at the gas pump, but we are dependent on foreigners for electronics, furniture, clothing, shoes, television, toys, machinery, cars, many food products and a long list of other products.
Equilibrium, the benchmark of financial prosperity, is now defined as demand equals supply plus 800 billion dollars a year. Many Americans have enjoyed this cozy relationship that encourages consumption over production, and spending over saving. The new economic model has made us lazy, complacent and frightfully naïve. However, this too must end. For many years, Americans have spent more than they earned by using homes, credit cards and revolving credit lines to supplement their declining incomes. In 2005, for the first time since the Great Depression, Americans had a negative savings rate. America is busted -- tapped out – broke! What used to be a vibrant and prosperous economy is now a fragile figment of our government’s erroneous fiscal policies.
Insane and bleak as this is, there is hope for the future. Americans must demand that their government regain its economic sanity. We must begin to produce for our own needs and restore an economic balance that works for the people of our country. We must force our government leaders to be financially responsible for trade deficits, budget deficits and the growing national debt. Finally, Americans must relearn the principles of spending within one’s income limits. These changes will be extremely difficult, but they are not impossible. We got ourselves into this mess, and we can deliver ourselves from the abyss. It is important to each of us, but it is critical to our children, our posterity and the continued viability of our country.
My novel, “The Road to the Third World”, explores the erroneous economic model in depth. The book, through its characters and plots, explores many of the financial issues that are devastating our country and our citizens. It is a tale about the political, economic and social consequences of the excesses of capitalism.