As the November election approaches, a familiar cry is heard: the result of this vote “will change America forever.” The implication is that voting the wrong way will bring a catastrophe.
Certainly America’s political establishment is running on fumes at this point and giving those actors another few years in power could, indeed, lead to unspeakable disaster. I do not deny there are real threats to civil rights, national security and the people’s ability to earn a living.
Yet when we look at the mechanisms behind the rising chaos in America we can see common aspects of the business cycle, a repeat of past mistakes regarding trade and immigration and the perennial wish among politicians and the public for a smooth road leading to unlimited goodies for all.
I believe much of the curious behavior of America’s political and economic elite grew from a dream gone awry, that of the “New Economy.”
The development of personal computers (PCs) beginning in the mid-1970s had a revolutionary effect on businesses and life in general. Legions of file clerks and other back office personnel were retrained as humming PCs took over mundane paper-shuffling tasks. The internet provided an explosive boost to the computer coup.
The computer revolution seemed benign: despite fears that unemployment would rise, the efficiencies produced by computers grew business so much that job openings became plentiful.
Presidents Reagan, Bush I and Clinton reaped credit for a technological revolution that they had done little to cause. They soon found ways to spend the computer windfall: tax cuts by Reagan and “investments” in more government programs by Clinton.
Leaders of tech companies, particularly internet companies, became modern-day sages. They provided beautiful office campuses far from grimy old-time industrial plants. Wages in their businesses were good. If you were really smart, you could do really well in the booming computer and tech fields. People wanted to know what the computer leaders thought about everything, and from that came the idea of the New Economy.
The New Economy would be a meritocracy, it would be global, and it would lead America from triumph to triumph as efficiency and speed ruled business and personal affairs.
Conservatives embraced the New Economy: it was a shining example of free enterprise in action. Liberals found much to praise as well; tech would be the goose that produced golden eggs to finance bigger welfare programs, grow higher education, expand health care and make big government bigger still.
Since America was ascendant it seemed reasonable to loosen trade barriers, because America had what the world wanted. We would be sellers. The tech revolution became a world-wide goal that was eagerly joined by bright minds almost everywhere. Since the industry needed more workers, what would be wrong with farming some of the work out to engineers and software writers in other countries, or bringing them here? Americans would still call the shots and there would be employment for all.
Without really thinking about it, the American establishment had signed on to a quite pure form of free trade and practically unlimited immigration no matter the consequences.
Consequences were not long in appearing: a tech stock crash in 2000 showed that the tech industry might not climb higher forever. Innovation was being replaced by consolidation, then cost-cutting.
American employees found themselves to be the expensive nail that corporate finance people were trying to hammer down. Old-line manufacturers by the hundreds took advantage of free trade to uproot entire factories and move to low-wage countries.
Tech leaders became less revered. Their strong free enterprise and free trade positions drew fire from liberals and unemployed workers. Their leanings toward “anything goes” in moral values annoyed people with traditional religious beliefs. Conservatives resented the millions of dollars that computer people were dropping into political and public relations campaigns, often in support of unsound ideas such as drastic remedies for global warming.
The tech donations looked pretty good to politicians in Washington D.C., and they didn’t seem to detect that the money was no longer coming from a good American industry employing Americans.
Instead the tech money was buying influence in every way possible for more H1B immigration, more trade deals, even social issues dear to techies but unpopular and believed unwise by millions.
The New Economy was a mirage: like radio and automobiles, personal computers were a good technical advance that lead to a boom, then a bust.
Unfortunately our country has overextended itself with big government and excessive immigration while counting on tech prosperity that has come and gone.
So America comes to the 2016 election with a level of rancor I have not seen since the Vietnam War.
It may help to realize America has been through booms and busts before and has allowed too much immigration at times in the past — and we have survived.
Reality has checkmated the New Economy in the eyes of the public though believers remain among the elite.
No matter who is elected President in 2016 and which party controls Congress, some disappointment is inevitable. If this election serves to wake Washington D.C. and Wall Street from their New Economy dreams, it will have accomplished enough.