Is it still 'the economy, stupid'?
"If things are so bad, why are the economic numbers lately looking so good?"
- Financial analyst Neil Cavuto
Either the critics and I are not reading the same reports, or they're not driving by packed parking lots and waiting 30-45 minutes in a restaurant line as I am. In the familiar words of Sen. Fritz Hollings, "there's a lot of consumin' going on out there."
Sadly, lost jobs and financial reverses are a fact of life, especially in times of war or changes in technology. With both of these events occurring today, it's easy to understand why many people believe the primary issue in the 2004 political campaign is the economy. Surprisingly, not many economists share that view, but voters who do are a veritable gold mine for candidates whose fairy-godmother promises are as unlikely to be kept as their constituents are to achieve wealth by government decree.
The statistics are voluminous. Higher prices than a generation ago? Based on a comparable rise in income, not on food, clothing, interest rates or housing - unless inflation has padded our wants or what we think we deserve.
But the job market is terrible. All the jobs are going overseas because all the corporations care about is cheap labor and high profits. Again, statistics don't make sense to the person who HAS lost a job, but the numbers don't support these complaints, either, no matter how often they are shouted from the campaign stump.
The only economy I know much about is my own, which is why I turned to American Express Financial Advisor Will Rogers in Evans for help. "The majority of jobs we are sending overseas today," he said, "are basic skills we don't do in the U.S. any more, and the jobs we are training the labor force to do now will be better than ever before. The job market for today's college graduates is phenomenal."
Columnist Rich Tucker put teeth in Rogers' remarks with some surprising numbers concerning the often-criticized 1994 North American Free Trade Agreement (NAFTA):
"Congressional Research Service estimates 200,000 workers have been displaced, but NAFTA exports now support 2.9 million American jobs and real hourly compensation is up 14 percent compared to a 6.5 percent increase the decade before."
Even with these reports, I wondered if they signaled a permanent change or only a temporary one. This time I turned to historian Alfred Chandler and his article on "America's Three Industrial Revolutions." In each case, although some jobs were altered or lost, new technologies not only affected the economy, but transformed it.
With the aid of the steam engine, fossil fuel and custom-tooled machinery, a young America soon lost her dependence on agriculture and moved her people - and many new jobs - from the farms to the cities. Then, following advances in transportation and communication, plus the dawn of electric power and the application of science to industry, America's second wave was greater than the first. And today's computer-driven, information revolution shows no sign of abating.
To illustrate the effect of creating new jobs for old, Chandler cites the 19th-century examples of John D. Rockefeller and Andrew Carnegie, whose efforts in oil and steel altered the American economy in ways that are still being felt today. For instance, Rockefeller reduced the cost of producing a gallon of kerosene (oil) from 5 cents to less than half a cent, and Carnegie reduced the price of steel from $67 a ton to $17. As costs went down, volume rose, profits soared, investment increased and thousands of new, better-paying jobs were born. Rogers, Tucker and a host of their peers agree that the Rockefeller-Carnegie pattern is recurring today.
Another plus in today's economy is the veritable explosion in the areas of small business and self-employment. The Labor Department estimates 2 million new jobs have been created in these categories alone, more than twice the number of losses from large business payrolls during the same period.
Recent polls reveal that those who believe the economy is the No. 1 issue in this election cycle place the war on terror at No. 3. Nothing is certain except death and taxes, we know, and another terrorist attack or catastrophic event could change the numbers in an instant. Then again, were such a terrible event to occur, perhaps voters would alter their priorities again, work harder at fixing their own economy, and put the still-very-real war on terror back on top where it belongs.
(Barbara Seaborn is a local freelance writer. E-mail comments to seabara@aol.com.)