Amidst the continuing economic malaise, politics and economics are now inextricably linked, which has profound social implications. Nowadays, many proponents of income and wealth redistribution constantly demonize the upper echelon to induce class warfare. While opponents point out that high-income earners statistically possess more collegiate and advanced degrees, and work longer hours than the general population, these facts alone do not alleviate the genuine plight of the middle class.
It is important to note that income inequality is not inherently bad. If every strata of the income distribution experiences real income growth, with the top decile growing faster, income inequality would increase but the entire population would experience a higher standard of living than before.
However, the situation we currently face is different, and involves the middle class getting squeezed and hollowed out. Globalization has challenged American industry to improve and innovate, but a great deal of low- to moderate-skilled labor has been outsourced. The United States still offers tremendous opportunities for highly skilled workers, and those employees can command premium salaries. Because of increased global competition for other jobs, however, wage growth has flatlined in many sectors.
With most workers experiencing stagnant wages, living standards are determinant on expenditures. Unfortunately, living costs have increased relative to income for most workers, thereby making most people feel poorer. This effect is increased exponentially, of course, for the tens of millions of unemployed and underemployed.
Globalization is not going away, and American society needs to adjust to this reality. To preserve and enhance living standards, we must take a multifaceted approach to boost income and reduce expenditures. Robust economic growth is also the country’s only chance in tackling the ungodly amount of debt that has incurred and will incur in the future.
With these considerations in mind, it is imperative to rethink certain educational priorities. The modern economy revolves around a workforce that is adaptable to new systems and technologies, and places a premium on critical thinking skills. These traits, rather than rote memorization, should be emphasized as much as possible in many disciplines. Moreover, students who would be unlikely to pursue a college education should gain more exposure at an early age to mechanical trades and vocational skills that are not outsourceable. By age 22, many of these individuals could have 4-5 years of tangible, marketable work experience under their belts, and not incur the suffocating student loan debt that college may entail.
As part of a holistic solution, immigration policy also must be examined more closely. While the labor market within different industries varies, generally speaking, illegal immigration has helped undercut wages and reduce employment for a significant portion of the U.S. citizens. Conversely, there is a shortage of visas for highly skilled foreign workers whose contributions would greatly benefit the American economy. The United States is a land of opportunity that attracts people from all over the world, and better harnessing this quality would yield benefits for all of us.
Living standards can also be enhanced by gradually, but steadfastly, reducing the scope of government in our economy. This is not an ad hominem attack on regulation; instead, it is an acknowledgment that through intended and unintended consequences, the government has aggrandized its own power by fostering a culture of dependency from businesses and individuals. Every pay stub reminds you of the taxes withheld from your paycheck by the federal, state, and perhaps local government. Recognize also that owning a home, driving to work, watching television, dining out, calling a friend, heating your home, and shopping for groceries are all activities where the government depletes your wealth through taxation, surcharges, and fees. In light of the staggering $3,819 billion the federal government alone spent last year, extricating it from certain areas of the economy would lead to more efficiency and self-reliance, and less confusion, dependency, and crony capitalism.
As just one example, the fact that gasoline costs well over $3 per gallon during the winter amidst a struggling economy is an absurdity. Through government policies, the United States is handicapping itself by not tapping more domestic oil and natural gas resources. Developing economical energy alternatives can remain a priority, but utilizing more of our own resources would help buy time for the discovery and implementation of any energy breakthroughs. We could be less dependent on foreign oil and thereby funnel less money to countries who are hardly our allies.
Overall, increasing domestic energy production would not only reduce energy costs but also spur economic and job growth. With more disposable income, consumers would pare down debt and increase discretionary spending. In addition, because energy prices are fundamentally tied to costs associated with production and transportation, a more sensible energy policy would boost living standards as goods and services would become less expensive.
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