The Happy Truth About The Economy

Some Simple and Perhaps Unpalatable Truths

Since Rick Santorum’s dropping out today makes it certain it will be a Romney-Obama choice election, with the economy playing a major role in the campaign, it may be time to take our collective heads out of the sand when it comes to what is really going on with the economy.

For over thirty years now, I have been talking about basic structural changes in our economic structure as we move from a manufacturing economy to an information/high tech economy. I have not been alone in discussing this, but the politicians and a majority of the population have not been listening, which is exactly why we seem to be in an economic mess right now. I say “seem to be” because the mess is largely illusory, fostered by politicians in the opposition, whichever party that happens to be.

In Moneylove Seminars in the 1980s, I talked about the best opportunity for prosperity being one that involves leaving the job market. I stressed that in order for a company to pay an employee a certain salary, they had to be able to make five times that salary as the result of the employees work production. This constituted, I suggested, a lot of wasted energy on the part of the employee, and was not a very fair arrangement. It has gotten even less so as technological breakthroughs have made companies more efficient and workers even more productive, so that many firms lighten their load by getting rid of employees, thus contributing to the joblessness problem. But it’s not really a problem of joblessness, it’s a problem of no one figuring out how to effectively use the increased productivity of workers to the advantage of those workers.

In 2007, according to a report just yesterday by The Wall St. Journal, the revenue per employee at Standard and Poor’s 500 companies was $378,000–and in 2011 it had increased to $420,000 per employee. For an employee making $42,000 a year, this means the company is making ten times what they are paying that person on that individual’s work output.

This is not economic catastrophe, it is unfair distribution of wealth–and confirms many of the complaints of the Occupy Movements. As David Brooks wrote yesterday in the New York Times,  two years ago President Obama promised to double U.S. exports in five years. It now looks like we will reach that goal even sooner. America’s export revenues are expected to surge for the foreseeable future.

Another positive factor in my optimistic economic outlook is one that means outsourcing will slow down and we will be much more competitive in the global economy. We lead the world in the development, design, and production of robots and super smart software. This means factories with workers on very low wages crowded together will not longer be able to compete with our manufacturing companies, operating with fewer, more productive, and a lot better paid workers.

Of course, the more efficiently American companies are run, the more workers need to get away from the old paradigms, need better education and training to be available to the many higher tech jobs that are now screaming for applicants, and will continue to do so for years to come. And need to have more support, encouragement, and training programs that will allow them to follow the true American Dream: being in business for one’s self.

The export boom alone guarantees America is not in economic decline, but more productive companies needing less actual bodies to do the producing has created a major challenge. It is the candidate who talks about education, training programs, green energy, infrastructure and programs to develop more entrepreneurs who will be in synch with what we actually need. Not the candidate who talks about lowering corporate tax rates for companies already making record high profits, and lowering taxes on millionaires and billionaires. They’re doing just fine–they’re not the Americans needing retraining for the new economy. I will leave it up to you to decide which candidate and political party has the best policies for our changing economic reality.

Jerry