America’s 60-year transformation from economic juggernaut to credit junkie
That bang you heard this week was the starter gun in the race for the presidency. Common to each campaign is that each candidate promises he or she will make America great again. It is foolish talk from the onset because over the past century it was not presidents or politicians who alone made the United States the greatest empire the world has ever known. It was millions of everyday Americans who worked hard and had morals and were unencumbered by government.
This is not to deny that America has had some great presidents especially when they lived up to the mandate of the medical doctor’s Hippocratic Oath, “First do no harm.”
Unfortunately there have been presidents who have done great harm. With the 2016 election I believe we cannot afford to have such men or women attempt to straighten our listing ship which through their wrongheaded attempts may capsize.
In 1980 Ronald Reagan said, “America is a shining city upon a hill whose beacon light guides freedom-loving people everywhere.” And so it was 35 years ago.
Fortunately, America has proven until now to be too resilient for any one president to permanently dim our expectations. But the president we elect this year may be in a position to do that.
Over the past 100 years, America can be broken down into two halves. The first half was unmitigated growth, an abundant number of jobs and innovation which engineered a lifestyle that royalty could not have dreamed of in the early 19th Century.
From hooves to horsepower
My father was born in 1912 in a barn on the family homestead. At its height it would span two sections of prime farmland and 1,000 head of cattle. He and my grandparents traveled over virgin grasses that had lain before the Plains Indians for eons.
For my dad and his parents, survival meant suffering, as they lived in a 12 X 12 square-foot cottage that had to stand up to minus 40 degree winters and sometimes winds that gusted to more than 60 mph.
As a youngster my father was very independent. What he didn’t know as a child, what he couldn’t know, is that he was standing at the edge of greatness that would last for the next 50 years.
My dad’s only transportation growing up was his pony that he rode to school, the family’s buggy, and a heavy big wagon which was pulled by a team of six Percheron horses that traveled 20 miles along a dirt road to the town of Vulcan to either pick up supplies or bring produce and goods to eager buyers. Only later did conveniences like the radio and the telephone come along. Not until my dad left for college did the larger, second farmhouse have electricity and indoor plumbing.
At age 12 my dad was determined old enough to make the all-day trek with his team of horses to arrive in town at dusk. Then one day he saw the future. The Nories family lived a half mile to the east, and one morning when my dad was straightening out the hitchings, he heard a buzzing sound. He turned, and there it was, a brand new Reo truck with the Nories kid driving.
In the time it took my dad to make one trip into town, the Nories kid had made six trips and was done for the day. That night my dad slept at the Vulcan Hotel, resting for his return wagon trip home early in the morning.
I was born in my parent’s 45th year. I learned the story about my dad’s glimpse of the future at age 12 as he threw me the keys to our work truck, a green 1964 International Harvester pickup. It was a straight six with 94 horsepower, but the best of it had been chewed up on the big farm my dad and uncle worked. It had three-on-the-tree gearshift on the steering column and a clutch that tended to slip out. The chassis frame on it must have been bent because at 55 mph the entire truck would shake and shimmy.
I told my father about these problems and he was not one bit sympathetic. Instead, he told me of how he might have to coax a sick horse up the infamously steep Reid Hill. This was his world a generation before. But everything had changed because of confluence of vast natural resources, new inventions and a less intrusive government.
Coming out of World War II, America had an overabundance of resources, especially fresh water, land, petroleum and minerals along with great minds in science and business. All told they made the United States an economic juggernaut. The Marshall Plan scripted in Washington set forth for the reconstruction of Western Europe. It was capped at $13 billion ($130 billion in today’s money), but it was a bonanza because much of it was used to buy American goods and natural resources.
Backed by gold between nations, the United States held the world’s reserve currency along with a vast trade and budget surplus. The rate of inflation in the 1950s was typically less than 3 percent annually. America was dominating in industry and science. In 1950 one out of every two cars sold in the world was engineered and built in America.
By the late 1960s, other nations were beginning to catch up to America’s economic preeminence. Japan was gaining ground in many sectors, particularly electronics and automobile,s while the nations of the Middle East began to usurp the United States as the world’s largest and cheapest supplier of petroleum.
For decades Americans had the best of all worlds. But by the late 1970s low cost foreign manufacturers were undercutting U.S. producers. Good paying jobs in everything from oil exploration to car manufacturing to steel smelting were beginning to become harder to come by. Overseas producers faced neither the salary demands nor over-regulations that American corporations had to deal with.
For American consumers who refused to trim back their lifestyles, their futures were financed by the bank. As you can see in the chart above, it was during the 1980s that Americans began taking on unprecedented debt. This helped make banking a lucrative business. The two exceptions were the banking crisis of 1987 and economic depression of 2008. Both times the federal government bailed the banks out, but not the lenders.
The American dream has become the American nightmare.
My expectation is that economic conditions will deteriorate until we get past the current carbon-based economy. And that depends on a technological revolution whose applications will be far beyond the personal computer, the cell phone and the plethora of electronic devices that provide information but not knowledge and silicon-based games that entertain but do not enlighten.
Fortunately, the United States still has the world’s greatest universities as well as many of the world’s keenest thinkers and aspiring entrepreneurs.
This is not to say that the President of the United States cannot do further harm to the U.S. economy. Furthermore, the President alone will not restore greatness to America. The people must do that, and can only do that if so are not hindered by the next president and the Congress of 2016.
Yours in good times and bad,