US Economy Faces Major Challenges

We can be optimistic that the very presence of president Trump in the White House is offering hope for the American economy. We are seeing record levels in the stock market and other improvements, including high economic confidence. But all is not well. Here are the major structural impediments to economic growth:

*The surging stock market is not necessarily a good sign. It shows that people are not investing their money in new ventures like local or regional businesses that provide new jobs.

Imagine that a prosperous doctor from your town puts all of his savings into Exxon Mobil stock. That is good for Exxon Mobil and for the doctor, but that money is not being kept in a local bank and lent out to buy houses or to start or expand local companies to create new jobs.

For 200 years Americans invested in their local economies in factories that made shoes, wool, furniture, food products, tools, paper, textiles, bicycles, even cars, etc. This is no longer happening on anywhere near the scale that it once did.

This shift to the stock market explains why the market soared under Obama, even with a stagnant economy. This is not necessarily a great sign. It is making the rich richer but the middle class and working class are getting poorer. We need to make these classes richer through investment in new companies and jobs, which often grow more rapidly than older and more established companies.

*Our national debt load is far too high. This is causing significant economic stagnation. America’s so-called Debt-to-GDP is a ratio of our national debt compared to our annual economic production, which is called Gross Domestic Product or GDP.

The United States currently has a $20 trillion accumulated national debt in an economy that produces $20 trillion per year. Thus the ratio is 100%.

60% is considered the highest ratio that allows for healthy economic growth. That number was 60% when George W. Bush left office but Obama pushed it through the roof and we conservatives protested every day. We now are seeing the results with a stagnant economy.

US taxpayers currently fork over $500 billion per year just to service this debt and not to pay off any of it. This is an obvious drag on the economy. Imagine hundreds of billions more dollars available for investment in new jobs every single year under a lower debt. That is not possible now.

This is why we must bring down the debt with lower spending, lower taxes and higher economic growth, which is what president Trump is trying to do, to “grow our way out of” our national debt.

*Automation and mechanization are becoming major threats to employment. Over the last 150 years we have seen widespread automation and mechanization, and we also have seen new American industries and tens of millions of jobs based on the efficiency of automation.

This is now changing since we have passed a critical point. We are in a brutally competitive global economy and we must be efficient to compete with lower-wage nations. This means more automation and robots and fewer workers, which will eliminate millions of jobs.

This is happening even at the entry level of employment. The Wendy’s hamburger chain recently introduced touch-screen ordering kiosks to eliminate minimum-wage order takers at the counter. McDonald’s is following. There are now robotic hamburger cookers and french-fry makers.

If the socialists continue to get the $15 minimum wage, as they are doing in some cities, these chains will go further into automation and robots in order to stay in business. Employment levels will plummet as a result. These levels already are falling where the minimum wage is going too high.

We must make up for this by creating millions more jobs that have left the country in the last 40 years. We must start manufacturing things here for our domestic market like furniture, shoes, kitchenware, appliances, etc. that now come from China, that once were made in American factories and can be again.

*South vs. North. The Northern Tier of the United States from Illinois to Massachusetts was the economic engine of our nation for 200 years. That now has moved to the better business climates in the lower-tax, lower-regulation South. The labor unions also destroyed the Northern economies through decades of strikes, labor actions, violence, outrageous wage demands, etc. Southern workers are voting against the unions because they see what unions have done.

The North now has to build again, from scratch in many cases. We can start to do this if president Trump’s economic policies are implemented, but it is going to take time. Meanwhile Democrats are doing everything in their power to obstruct the Trump agenda.

Tough Republican governors in northern states like Wisconsin, Michigan and Ohio have turned around states that once were considered lost. Let us hope that this progress continues. But if Democrats are elected those states will go backwards.

*Business taxes are too high. The US has the highest corporate tax rate in the world at 35% This is causing an exodus of companies. President Trump wants to reduce the rate significantly to lure companies back, along with their wealth and jobs. If the Democrats block him we will never get the growth we need.

General Electric even moved its headquarters out of Connecticut to Massachusetts after Connecticut Democrats hit the company with a huge tax increase. Ultra-liberal California is bleeding companies and jobs over its outrageous tax rates. A company called Intel, the “grandfather” of the Silicon Valley computer revolution, has not created a single job within California since the year 2000. Other major companies like Nestle and Toyota have left the Golden State.

*Too many bureaucrats: Manufacturing jobs “create” wealth while government jobs “consume” wealth. In 1960 we had major economic growth because we had 15 million Americans working in manufacturing and 8.7 million in government. American manufacturing jobs peaked at 19 million in 1979. It has been downhill since.

Today we have roughly 22 million Americans working in government combined on the local, county, state and federal level (excluding military) while we only have 12 million working in manufacturing. This must change. This is smothering the economy with far too much wealth “consumption” and far too little wealth “creation”.

Political leaders watched silently over decades as manufacturing jobs fled. This is why president Trump is rightly focusing on manufacturing. Already we have seen more than 60,000 new manufacturing jobs since Trump was elected while mining has increased by 47,000. That is a good start, but only is a start. Those are the most important jobs.

If we do not reduce government and increase manufacturing and mining, the economy will continue to suffer. This is going to take years.

*The ‘green’ movement has been waging a decades-long War on Jobs, particularly in rural areas. Everywhere you go in rural America wealthy ‘green’ groups funded by high-income people in the cities and suburbs, and in the universities, and allied with left-wing media, are legally obstructing every attempt to establish logging, ranching, mining, oil and natural gas drilling, and other forms of development, including resorts (ski areas, condo developments, vacation homes, etc.). This is killing millions of potential jobs. Fortunately president Trump is pushing back on this.

*Millions of jobs in rural America have been replaced by mechanization. Farming now requires just a fraction of the manpower that it once did. Mining is the same. Logging too. Our efficient freight railroads today only have about 10% of the number of employees that they had 100 years ago, but haul much more freight. Many of those employees were in small towns and rural areas.

This is another major economic problem for rural America, and explains why rural America is shrinking and its people are going to the cities and suburbs. This is why we need to bring back more manufacturing, logging, mining, and oil and natural gas drilling jobs to rural and small-town America.

*Our trade schools and vocational education system have been ignored. Young Americans have been led astray by the academic elite who have told us that “everyone has to go to college”.

Millions of young people now have worthless college degrees and huge debt loads. There are not enough jobs for the college-educated classes, particularly among students who learned spurious things like racial studies, gay studies, ‘green’ studies, art, filmmaking, sociology, etc. Meanwhile tradespeople like welders, electricians and carpenters are often earning much higher salaries than college graduates and have vastly better employment prospects.

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