Written by Frank Li
People are opportunists: they will take advantage of any free stuff and they often, if not always, think they are inadequately compensated for their jobs, if they work at all. If there is an opportunity to enjoy life without work, they will eagerly seize it.
People are envious: they want the best for themselves, as well as for their families. If there is a way to make life better, even if it means hard work, they will do it.
People are different, in two major ways, at least:
Some people are very creative: one man can create enormous wealth not only for himself, but also for many people. Three examples: Thomas Edison, Henry Ford, and Steve Jobs!
Some people are jealous whiners (Inequality, Productivity, and WhatsApp), always wanting a “fair” share of the wealth created by the other people. They are socialists at best, and communists at worst!
Consider what’s necessary for a country to thrive … With a sound economic system (capitalism!) and a sound political system, you get the best out of people and you are prosperous. With neither, you get the worst out of people and you are poor.
Any doubt? Look at China! From 1949 to 1976, China changed from poor to dirt poor, thanks to communism. On the other hand, largely because of [state] capitalism since 1978, China has been growing at an average rate of 10% a year in GDP. As a result, China is becoming increasingly prosperous and is even well on her way to becoming the #1 economy on earth by 2030! Why such a huge difference in China’s prosperity? It’s the economic system and the political system, stupid! For more, read: America: What is China, Anyway?
Still doubtful? Look at America! Politically, America was founded as a republic, with a Constitution written specifically to exclude democracy (one person, one vote). Economically, America was a champion and huge beneficiary of a free enterprise system and was a proud nation of self-made men (America: A Nation of Self-Made Men!). Because of that, America became the richest nation in the world. Unfortunately, especially after WWII, America has progressively morphed itself into a democracy, all the while transforming the “Land of Opportunity” into the “Land of Entitlement”. As a result, America is deeply in trouble today, with stubborn high unemployment and huge national debt being the biggest problems.
Why such a huge difference in direction between the U.S. and China? It’s the political system, stupid! Specifically, three points:
We live in a global economy and we must compete globally to maintain our prosperity.
We must work (i.e. produce) to live.
We must trade to live better.
Next, let me elaborate on each.
1. We live in a global economy
America is no longer an economic monopoly as it once was after WWII. With the emerging economies waking up to claim their own “inalienable rights of life, liberty and the pursuit of happiness”, America must learn to compete globally in the new norm, from ideas to productivity, or fade into history! For more, read: Three New Kingdoms.
2. We must work to live
This applies not only to individuals, but also to a country as a whole. Here are three big “productivity” problems in America today:
There are close to 50M people receiving food stamps. That is more than 15% of the population! Furthermore, with about half the wage earners paying no income tax, they benefit from the taxes others pay while contributing nothing to the country.
One key reason the unemployment rate has come down recently is because the labor participation rate has dropped to the 1978 level! Here is a chart.
Big government: Read: Government Employees and Manufacturing Jobs: Takers and Makers? Here is an excerpt:
In 2011, there are nearly twice as many people working for the government (22.5 million) than in all of the manufacturing (11.5 million). This is almost exact reversal of the situation in 1960, when there were 15 million workers in manufacturing and 8.8 million collecting a paycheck from the government … More Americans work for the government than work in construction, farming, fishing, manufacturing, mining, and utilities combined. We have moved decisively from a nation of makers to a nation of takers.”
3. We must trade to live better
Human history can be viewed as a history of trade, for which money was invented. Unfortunately, trade is a zero sum game, with one party’s gain being another party’s loss. Therefore, it’s important that we, as a country, balance the trade with the rest of the world. After WWII, as the last man standing, the U.S. invented and made virtually every new thing and was able to name the prices. As a result, the U.S. thrived through massive trade surpluses. As the rest of the world improved, the U.S. started running into trade deficits. Today, the U.S. has trade deficits with more than 90 countries, amounting to almost $500 billion in 2013 – We are selling our future! Nevertheless, thanks to the US Dollar as the major reserve currency in the world, the U.S. has managed to “get by” by printing a massive amount of money. This has simply postponed the pain, with the fundamentals getting worse only. Now, as China’s RMB is emerging as a major alternative reserve currency, the U.S. is simply running out of tricks! For more, read: Money and America.
In short, the U.S., as a country, is no longer productive! That is the main reason we are deeply in trouble today! Worse yet, read: CBO: Obamacare will reduce incentives to work.
Here are two ways for the U.S. to get out of trouble:
Initiate WWIII! The U.S. not only is the only country capable of doing so, but also has the incentives to do so. While an obviously ridiculous cure, the US has thrived in previous world conflicts, most notably WWII (America: A Culture of War)!
Political reforms! There is only one real cure for the U.S.: to compete globally by producing better products to sell to the rest of the world (e.g. Apple’s iPhone). The job of the government is to nurture and support a business-friendly culture and environment. Unfortunately, the U.S. government has been doing the exact opposite: taking from producers and giving it to less or none producers in exchange for their votes! We must reform our political system before our free enterprise system is destroyed by both career politicians and career welfare recipients!
Why is America so deeply in trouble? Because America has been working less and less, thanks to democracy, as we practice it today (Paul Ryan’s Invoking Of Work In Culture Is No Crime)! America must work more, starting by fixing the political system. For more, read my book: “The GOP Bible for 2016”.