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I wrote this essay in the summer of 2008 (the finish date on it was 7/28/2008) as the state of the economy was starting to weigh on me. I've always been an advocate of doing the research instead of just relying in the news to tell me what is going on in the world, and the trends I was seeing disturbed me greatly.
I never published it on my personal website, as I thought it was a bit academic and perhaps overly harsh in it's criticism. Over the years, I'd forgotten about it until I found it tonight in my archives. Now, 5 years later, it seems oddly fitting, so I thought I'd share it now.
This is bigger than just a recession
Lonnie R. West - 7/23/2008
Everyone reading this has grown up with the security that America is one of the most powerful nations on earth. The assumptions commonly made are that we are secure, safe, educated, make good money, and basically are free to do what we want to.
But what we are seeing now is not just a recession, it is a fall from dominance in the world economy. To the generation that is just starting out on your lives: I am sorry. My generation of tree huggers, no child left behind, politically correct, revisionist, feel-good assholes has sold you out completely.
I am proud to say that I am not one of them, but I am ashamed to be part of that group because in 20 years we will be the generation that is blamed for killing America.
What happened? Here is the quick list of reasons:
1. We skimped on education.
2. We outsourced too many good jobs.
3. We've sold off most of our major corporations to foreign companies.
4. We outlawed free speech. (Bet you didn't even noticed, did you?)
5. We stopped holding anyone accountable for their actions
6. We created a system of handouts that made people think they were entitled
As much as we all hate to hear grandpa talk about the old days, where people worked hard and earned everything they had, he was right.
50 years ago, America was lean and hungry. That generation came out of the great depression fighting to make a better life for themselves. They took whatever work there was available, they said it like it was, they were intolerant of laziness, and kids knew that had no rights at all until they earned them.
When on hard times they supported their own, but expected to be paid back in full when the people they helped were back on their feet.
In all respects, it was a very cut and dried world.
Today America is fat and lazy; the old king that expects everything to stay as it is without requiring any effort. The problem is that everyone in the kingdom is expecting the same free ride as the king, and no-one is working for it anymore.
Let's take a look at the issues:
Somewhere along the way we went from having a "we are doing what needs to be done" attitude about funding schools, to a "how cheaply can we do this" business model.
While expecting more knowledge and technical know-how from our kids, we simultaneously cut funding year after year. Where schools used to be able to provide materials, parents now supply the classrooms with everything that is needed. Where schools used to have a well-rounded education that wasn't just bookwork and was varied enough to keep kids interested in learning, we now have cut physical education, music, art and other "non-essentials" from the curriculum.
The worst part of this approach: lack of quality teachers. There are a ton of kids that want to be teachers when they grow up, only to find that they can't afford to be.
Sadly, you can make more money managing the flunkies working at McDonalds than you can make teaching students the skills needed so they don't have to work at McDonalds.
Also, the politics of being a teacher sucks away the joy of the job. We've crafted an environment that actually discourages those great teachers we hope for, the ones that really care about the education our kids are getting and are willing to take the time to make sure they get there.
Then there is the "No Child Left Behind" gauntlet. The intent of this program was to make sure we didn't leave anyone behind in the educational system. How this is accomplished would be humorous if it were in a Tim Dorsey novel, but it's just sad to see in practice: We slowed down the entire group so even the the slowest, laziest kid out there can pass without trying.
While lowering to bar far enough enabled anyone with a pulse to pass, it had unexpected side effects: Kids sleep in class now. The ones that used to try hard to excel don't need to, and are bored. There are no rewards for trying, because everyone passes.
Worst of all, you can entirely fail a grade, and they will still pass you because all you need to do is re-take those classes sometime in the future.
Instead of teaching a well rounded (and interesting) curriculum, public schools in America only teach to pass the FCAT. If it's not on the FCAT, you aren't going to learn about it. Our schools aren't teaching anymore: they are just cramming students to pass a federal exam so the school can get funding.
Don't believe me? Ask your high school kids who Betsy Ross was: the answers will surprise you.
The net result: The dropout ratio nationally is approaching 50%. Mainly because kids are bored with school, and there is no incentive to continue. The education our kids are getting is now considered one of the poorest in the world. The only kids getting a worse education right now are those living in third world nations.
The ironic thing: All these dropouts expect jobs that pay well, and let them work according to their schedule.
Which brings me to point #2.
In 2004, President Bush's Council of Economic Advisers said that "outsourcing is good for the economy," and sited all kinds of statistics about how businesses can be more profitable, thus helping the local economy.
4 years later, we've let the genie out of the bottle.
Currently, there are no reliable statistics to quote from regarding how many jobs are being outsourced to foreign companies. The trend is moving like wildfire through corporations nationwide, and it's moving too fast to track.
However, the sobering reality is that almost all professionals today work for companies that outsource work overseas. A majority of call centers are now outsourced to companies in India, and we've all had the experience of talking to someone with a difficult-to-understand accent who says their name is "Kelly" or "Buddy".
Although outsourcing is cheaper (Indian workers make less than 25% of what an American worker would be paid) and offers a great way to remain profitable, these are jobs that are now lost to Americans.
Aside from incentives to outsource to foreign nations, why would American companies knowingly shoot themselves in the foot like that? As an extreme example: anyone can see that if we were to move ALL the jobs overseas, there would be nothing to do here.
Why do we do it? Point #3
Ah... Here is another little statistic that we'd prefer to keep quiet: A very large percentage of companies in the United States are foreign owned. The actual percentage is not published, and is hard to track due to the the nature of business ownership. Often foreign ownership is hidden by two or three layers of parent corporations before you arrive at the true business owner.
Here are a few prominent American icons under foreign ownership:
- Budweiser, whose slogan is "The Great American Beer" owned by InBev (Belgium)
- Good Humor and Ben & Jerry's ice cream, owned by Unilever (Britain-Dutch)
- Citgo, owned by government of Venezuela
- French's mustard, owned by Reckitt Benckiser (Britain)
- Frigidaire, owned by AB Electrolux (Sweden)
- Plaza Hotel in NY, owned by El-Ad Group (Isreal)
- The Chrysler Building, owned by Abu Dhabi Investment Council (Arab)
- 7-Eleven, owned by Seven and I (Japan)
- Holiday Inn, owned by InterContinental Hotels (Britain)
- Shell, owned by KNPM (Dutch)
- T-Mobile, owned by Deutsche Telekom (Germany)
- Firestone Tires, owned by Bridgestone (Japan)
- Indiana Toll Road (Route 80), owned by Cintra-Macquarie (Spain - Australia)
- Chicago Skyway, owned by Cintra-Macquarie (Spain - Australia)
- Chicago Midway Airport? 6 parties are bidding for it, 5 are foreign
While a true locally owned business would rather not outsource work and prefer to employ people locally, this is not necessarily true for companies under foreign ownership. Corporations owned by foreign entities have a vested interest in outsourcing: It's more profitable for them. The bottom line: the outsourced jobs go overseas, and the profit goes overseas too.
Basically, we are being bled to death.
Even more sobering: in 2005 more than HALF of America's national debt is owned by foreign banks. This is the first time in history that we have allowed foreign banks to hold a majority of our debt; prior to that our debt was always held by private banks, investment firms, and citizens.
I could write an entire article on this fiasco, but we all know what happens when a lender decides to collect on their debt when it comes to personal loans for real estate or cars.
What happens when America's lenders decide it's time to collect on their debt because they do not feel confident that they are going to be repaid?
I'll wait while you consider that one.
Yes, we still have free speech. Kind of. I can write this article and not be hauled off to jail.
However, I can no longer make comments that specifically target any particular groups, sects, religions, races, corporations, or individuals. Doing so today is considered insensitive or slanderous, and is rapidly followed up with a rash of defamation lawsuits.
Countless times during the last 20 years we have redefined the proper terms to use when referring to difference ethnic or religious groups. We have accumulated books worth of words, phrases, and concepts are have been blacklisted because they were deemed offensive.
Hell, we can't even say "Merry Christmas" anymore, even though this country was founded by Christians. (And they were open minded enough state that you did not have to be a Christian to live here!)
We've become a nation of carefully worded speech where the real meaning is hidden under veils of obscurity.
Alan Greenspan had a word for the language that the Fed uses when issuing reports: he called it "FedSpeak." The reason for this is that the market will panic if a report is worded plainly, so it is wrapped in such vague wording that the average person doesn't understand it.
We use our own version of FedSpeak when we talk to, or about, job candidates. We use it when talking about religion, racial, or any topics of a personal nature. We use it when talking about anything with people that we do not know well.
We rely on the fact that someone intelligent will be able to understand what we are really saying, and that we've covered our ass well enough that there isn't anything directly offensive in the words we use.
So my question is this: If we can't talk straight about an issue, how do we expect people to understand us?
Particularly when over half of them are not graduating high school anymore?
Today everyone is told they are special. We all get gold stars. We all have rights from the moment we are born. If someone offends us, they are offending our civil rights.
We can't spank our kids because they are taught in kindergarten to report anyone that hits them, and parents are cross-examined whenever they bring a child into the hospital with an injury.
When my daughter was going through elementary school a few years ago, I was shocked to learn that there are no winners or losers in contests anymore, because everyone in the contest is a winner.
In short, not only has negative reinforcement been abolished, but positive reinforcement has been taken away too.
How does anyone learn without this?
As a child you learn from both positive and negative reinforcement. If you grab something hot, you get burned. You'll not do it again without checking first.
If you win a contest, you get a medal and/or recognition for your efforts. You'll try even harder next time, because you know the ones who did NOT win will be trying harder to beat you.
That is how life works, and has worked since the beginning of time, yet today we are raising a generation that is learning to live without consequences or rewards. Why excel at something if you are not recognized for it? Why try, if the answers will be given to you?
This generation expects that everything will be there as it always has, confident in the fact that they don't need to do anything for it. Because everyone wins, even if they don't bother trying to.
How did this change? How did we go, in a few short decades, from a "school of hard knocks" society to this?
This can be traced back to our society's reaction to equal rights, and affirmative action.
For generations life in this country was very one-sided. White males ruled everything. If you were female, or you were of any other race, you were a second-class citizen in the United States.
As we matured as a society, we realized that we were not practicing what we preached: that all men were created equal. While laws limiting the rights of women and minorities were removed, other laws were enacted to help encourage society to move toward truly treating everyone as equals.
Discrimination was outlawed, and affirmative action was put in place to ensure that the racial distribution within schools and companies matched the racial distribution in the area. Agencies were put in place to help educate and assist those who needed it, and other agencies were create to allow people to report discrimination privately.
While these steps were taken with the right goals in mind, they only address the symptoms --not the cause-- of the underlying problem: prejudice. We should have spent more time re-educating people and tearing down old ways of thinking instead of forcing people to act.
It's just like when you get two boys fighting in the playground. You can force them to shake hands, smile, and go through the motions that everything is OK, but that only fuels the fire. If you can get them to actually understand the other, then you are moving toward solving the problem.
We chose to force the two parties to shake hands and smile at each other.
Unfortunately, the side effects were arguably worse than the solution. Minorities were brought into positions that they were truly not qualified for because the affirmative action ratios needed to be met.
Qualified applicants were understandably upset: why try to work hard to succeed when someone with less qualifications can get the job just because of their nationality?
A generation later, it became accepted that this is how things are.
People adjusted to the new rules, and used them to the best advantage. Some used them in the way they were intended: as a means to improve their lives and become a productive members of society. Others just used the system, and learned they could get by with little or no effort: they never tried to improve their lives, instead they built a lifestyle that centered around loopholes in the law.
Over the next 20 years those using the system came to feel that they were entitled to these benefits as their right.
When states started voting in 1995 (starting with California) to repeal affirmative action, groups from across the nation marched and protested saying that minorities were owed these rights, as reparation for decades of oppression.
In 2008 almost every workplace has at least one example of a minority who is abusing the system. This person works less, gets away with more, and bends all the company rules to the furthest limits because they know how to work the "discrimination" game. They feel they are untouchable, and react with outrage when anyone tries to tell them what they can and cannot do.
While this is a small percentage of minorities in the country, they are the most vocal.
Unfortunately, they alone are propagating an entirely new form of racial prejudice.
The prejudice that existed 40 years ago was based on ignorance: people believed that minorities were less intelligent, less skillful, and unable to do anything beyond the most menial of tasks.
Today our most valued doctors, musicians, artists, athletes, and actors are of all races. The 1950's-era racial prejudices about minorities being inferior has been mostly been eradicated. However, the prejudice that exists today is based on false entitlement created by that extremely vocal minority who feel they are owed special treatment and compensation for oppression they have never personally suffered.
Throughout this process we have tried to find a way to pull these divided groups together, and in so doing had to throw away the old rules. As under-educated and under-qualified people came into schools and the workforce, the old rules didn't apply.
You could not fail these students, or fire those employees, because they were coming into the game with a distinct disadvantage. As a society, we agreed that these people needed a path to become productive and successful citizens, so consequences for failure were scaled back so they may learn to succeed.
As a result, the rewards for others who were trying hard to succeed became less meaningful.
This is the setup that led to the downfall of accountability. We took away negative reinforcement so a select few could learn the rules of the game, while expecting the rest of the players to keep playing by the old rules and keep striving for their best where the reward for doing so was meaningless.
Of course that never works. Everyone that felt shortchanged by over-corrective affirmative action reacted adversely. People that used to pride themselves on their abilities felt that their efforts were no longer appreciated, and worse, their skills only served to help the very people that took their place in school and the workplace.
In a few short decades the "can do" hard-working attitude of the 50's died off, to be replaced with a dull apathy as people refused to do anything more than was strictly necessary.
NOW AND THE FUTURE
Now that we've taken a good look at how we got here, what's next? The answer isn't pretty.
We have grandly set ourselves up for failure as a nation. Just like a chess game gone badly, we can look at the board and see all the moves that were made to bring us to where we are now. But we are seeing it way too late to change the inevitable repercussions of a poorly played game.
Today we are a nation of lazy, poorly educated, arrogant, spoiled people who feel entitled something better than what we have.
Meanwhile, developing countries are very hungry and eager to improve their own standards of living, much like America was in the 50's. They've developed superior electronics, automobiles, and manufactured goods, and find America to be a country with deep pockets and an insatiable appetite.
Most of the manufactured goods we buy today come from outside the country, and our main source of our income is in transition. We used to be a nation based on manufacturing, but now have become a society that makes money from financial services and information technology.
We are dependent on the rest of the world, while they are becoming less and less dependent on us.
This is not just a recession we are seeing; this is the beginning of America's fall from dominance. For decades, our economy was largest and most important in the world. We were the big dog on the block, and other nations depended on our stability and resources.
But that is changing, a new economic order is establishing itself as we speak. The recent rise in the price of oil is just one indicator. Until recently America was by far the largest oil consumer, and we used that leverage to enjoy the lowest oil prices in the world. Without America, there were no profits.
Increasing demand from other countries (particularly China, who is on track to eclipse America as the dominant global economy in less than 10 years) has now given oil producers the upper hand: they are no longer dependent on America.
We have also shot ourselves in the foot again by voting down, a decade ago, the option of drilling for our own oil in protected forestlands. Although a great victory for the tree-huggers of our generation, it also took away our ability to be self-reliant.
So while we set ourselves up for the fall, it is the rocketing cost of oil that was the final push that sent us toppling over the edge. Fuel costs not only made transportation more expensive, it made everything more expensive. As a nation, we built our entire infrastructure on cheap transportation, so when fuel prices doubled in only 3 short years, the price of everything shot up as well.
Except for individual incomes. They stayed flat because companies were already posting losses, and giving out huge raises during a downturn is not something businesses do.
In hindsight, this setup is so perfect it almost looks planned.
WHAT THIS MEANS TO THE INDIVIDUAL (NEXT 5 YEARS)
The short version: everything is going to get a LOT more expensive. Many of the luxuries that we take for granted will fall by the side as families concentrate on the basics of keeping the mortgage paid and food on the table.
Employers will take advantage of the economic downturn to cut out the dead weight in the workforces. A revival of the "lean business" phenomenon will re-emerge as companies focus on getting the most efficient use of their dollar.
As unemployment continues to rise, spending will decrease, throwing borderline companies and shady investment firms into the red and shutting down a large number of businesses.
The government will focus more effort on creation of jobs and improving education than implementing assistance packages for the unemployed.
The unemployment pool will see a larger than average percentage of people with ineffective job skills, due to employers laying off employees who make no real contribution to the company. Due to high unemployment, these people will have the most difficult time finding jobs. The lack of funding for assistance programs will force these people to either turn to crime to survive, or learn to work hard to improve their conditions.
WHAT THIS MEANS TO THE INDIVIDUAL (5-10 YEARS)
We will eventually reach a point of stability where it will become cost efficient for businesses to hire from the large pool of unemployed (who will at that point be very eager to work hard doing any job they can get) than it is to outsource.
Due to transportation costs and relatively inexpensive local labor, it will once again become economical to manufacture and sell products locally, as compared to the cost of purchasing overseas.
People will transition their lifestyles to live closer to work, a radical change for most people living outside of major cities.
Public transportation initiatives will gain a lot of momentum. Fuel costs will increase dramatically once China becomes the dominant global oil consumer. That, coupled with employees living closer to their workplace, means the conditions will be ripe to establish a reliable and sustainable public transportation system.
Outsourcing will likely experience a decline during this period as companies start to realize its long-term costs and liabilities. Aside from the obvious loss in quality as compared to using local workers and increased management overhead, consumer pushback will become apparent. While outsourcing will remain part of the business world, it will relegated to less visible and less critical facets of the enterprise.
Banking will see a change in landscape. Credit Unions have long been a fringe player in the financial markets, but as people transition to a more local lifestyle, the benefits of banking with a local firm will begin to assert an influence.
TURNING THE PAGE
The next few years are going to be tumultuous. Change is never easy, and we are going to see almost a decade of financial, business, and social upheaval. It will get ugly. But, we will get through this.
To you, the generation just starting your lives, I think if you look at this time as my grandparents did coming through the Great Depression, you will be better people than this generation was.
You will be self-supporting and sustainable, where we were not. You will be honorable, hard-working, and know the value of investing your effort. You will become what our generation wanted to be, before we got lost.
Remember that change always opens doors of opportunity. If you keep facing forward, be willing to jump when opportunity knocks, then great things will come out of this time of restructuring.
Peace be with you.