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Dr Peter Morici: Occupy Wall Street may be out of Zuccotti Park but Americans ignore its
message only at their peril.
Dispossessed by police from prominent venues around the country, the forces
that inspired mass, albeit unseemly demonstrations have not abated. America is
rapidly fracturing into two nations—affluent players in the global economy and a
growing mass facing diminished circumstances for themselves and their children.
If forces marginalizingms are not addressed, America is headed for much worse
than tent cities and baths in parks. Economic bifurcation into the super
affluent and the poor will erode the institutions and values that bound together
immigrants from many heritages, faiths and tongues into a single nation.
The Census Bureau reports about 100m Americans—one in three—live in or
perilously close to poverty. Many are working but rely on food stamps,
government agencies and charity to feed, clothe and provide medical care to
their children. Most have too few resources to see a dentist regularly or even
subscribe to a daily newspaper. They rely on cars, often because decent housing
is much too costly near their work, and are forced to live too inconveniently
from grocery stores, other services and multiple jobs to practically rely on
Hardly all marginalized Americans are recent immigrants with poor English
proficiency. Many are high school graduates or have been to college but can’t
land a decent, permanent job that permits skills building and initiates the
climb to middle class affluence. Many are older workers, whose positions
permanently disappeared during the Great Recession.
The economy has changed and simply no longer needs these workers, and that is
nothing new. Stagnant wages, declining living standards and a shrinking middle
have been in the headlines for more than a decade.
Globalization—transcontinental commerce and high-speed communications—and labor
saving technologies that displace even well-educated professionals in
traditional industries are creating only limited numbers of new opportunities in
knowledge-based and creative activities—industrial design and software,
high-tech manufacturing, sophisticated finance, national media, health care, and
the like. Getting a first opportunity for a rewarding career often requires
focused skills acquired at elite universities, and to progress and stay on the
ladder, sophisticated career management and some good luck.
For the rest of America, global competition, communications technologies and
essentially unchecked immigration have hammered down wages and winnowed
opportunities in once decent paying occupations—for example, ordinary line work
in manufacturing, middle management and sales, and writing for a daily
newspaper. So much more can now be outsourced and accomplished on the internet
with inexpensive software or performed by semi-skilled immigrant workers.
Sending more Americans to college is not the answer—degrees in the liberal arts
are simply not as valuable today as 25 years ago, and many students are not
suited to engineering and other technical disciplines. The workforce is well
overstocked with business school graduates. The problem is not too few educated
Americans but too few good jobs for most of them to do.
Heavier taxes on the wealthy to redistribute income won’t help. Many will take
their work and income offshore but more importantly, the US. economy is
shrinking. Not only is income increasingly less equally distributed, but per
capita income is falling at an alarming pace. Simply, the pie the government can
carve up is shrinking.
Germany and China, two of America’s toughest competitors, recognize the
challenges posed by globalization and manage them. They engage in mercantilist
policies—undervalued currencies and industrial policies that seek out high
paying jobs for ordinary people through exports. And those jobs are frequently
mined from America’s Heartland.
Certainly, America doesn’t want a protectionist world, but the United States
can’t always dictate the terms of competition and continue to stand idle without
more effective responses than bailouts for General Motors, subsidies for
Solyndra and Social Security tax holidays, all paid by borrowing from China.
The United States must force open foreign markets or protect its own, or it will
It is a tough world beyond the water’s edge. Either Americans learn to compete
in the world as they find it or America will be no more.
Professor, Robert H. Smith School of Business, University of Maryland,