I Am Part of the Problem

Unfortunately, I am part of the problem. In the near future I hope to retire. I am one of the few remaining Americans who still possess the three legged stool for retirement that was once a near guarantee to any working American. The first leg was Social Security, a guarantee of a minimal standard of living provided to the elderly by those still in their productive years. It was sold to us as an investment wrapped in a form of insurance. We were told it was not a tax. It was our money. It would be invested in Government securities and in time our principal would be returned with interest. In those days, not so very long ago, most Americans had a job in a wealth creating segment of the economy, construction, farming, fishing, forestry, manufacturing, mining, and utilities. The assumption, the social covenant, promised the good employee more or less lifetime employment interrupted by a few inevitable layoffs during recessions and a pension in their old age. This pension combined with social security would allow the average American the ability to maintain their lifestyle into their golden years. Finally, for those who were diligent or favored by fortune, the addition of the third leg, savings and investments, would allow for occasional luxuries like cruises and travel to interesting places. All of these assumptions were based on an American economy that produced a huge surplus of wealth mostly from a manufacturing base that was the envy of the world.

That has changed. According to a recent article in the Wall Street Journal, more Americans work for all levels of government than work in construction, farming, fishing, forestry, manufacturing, mining, and utilities combined. Government, by its nature does not create wealth. It can encourage or discourage the creation of wealth by the private sector, but it does not create wealth. Attempts by governments to seize the means of production have inevitability ended in financial failure, slave states, or both.

Today there are 22.5 million Americans working for all levels of government compared to 11.5 million Americans working in manufacturing. Combine this with the fact that there are currently over 20 million unemployed or underemployed Americans and you have to ask who will generate the wealth to pay government employees, pensioners, and those collecting Social Security or provide the funds for other forms of entitlement, most notably Medicare.

The problem is monstrously complex. The article notes that the average American farmer is three times more productive than in 1950. Automation, robotics, computers have reduced the need for semiskilled employees not only on the factory floor but in the offices that order materials, schedule the machinery, perform accounting, and billing procedures. Due to differences in environmental regulations and wage arbitrage between the developed and developing world, our manufacturing base has gone to Mexico, China, and other developing nations.

One of the tipping points that indicate that a nation is in decline occurs when more individuals benefit from government payments than make those payments. We are approaching that number and will undoubtedly surpass that number as the baby-boom moves into retirement. I can only hope that we find a way to once again create the surplus of wealth necessary to provide for the social contract that we have promised to ourselves and to our children.

May God have mercy on our nation.