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(Un)Happy Birthday, America – There’s a Hole in your Bucket

By Shlomo Maital

   Happy birthday, America; you are 244 years old today. But it’s an unhappy birthday.   Here is why.

    “New America” is falling behind “Old Europe”. The term Old Europe was used by Secretary of Defense Donald Rumsfeld in January 2003. It was used in scorn. President Trump continues to mock Europe, and even mock even its brilliant German leader Angela Merkel.

     But guess what? Experts believe, as in this New York Times article, that “Europe may bounce back first” (July 3) – long before the US.   But why? America spent relatively far more on relief measures – a staggering $2.7 trillion, or 13% of its GDP!, on economic relief to individuals, firms and states. And more will come soon.

   What went wrong?

   The US spent vast sums on those who did not need it – like big corporations. (Sound Republican to you? Remember the Trump tax cut?). Much money was thrown away through incompetence – thousands of dead people got checks in the mail.   A lot of money went toward unemployment payments – companies laid off people so the government could save them money. So expanding unemployment caused layoffs, rather than prevent them.  America has a terrible leaky bucket – a near-non-existent social safety net. Just when the pandemic really really needed one with no holes in it.

   Europe? Unemployment rose relatively little. The German government reintroduced kurzarbeit– used after the 2008 crisis, in which work hours are shortened and spread around over workers rather than fire or lay off people. Most of Europe simply used its existing safety nets to help those in need, and the safety net expanded nearly automatically. Most people kept their jobs — which means you don’t have to rehire them, something US firms will be hesitant to do.

   In the US, with Trump boasting about 11% unemployment (yes, it’s down from 14%), consumers are highly uncertain about their future. And they are just not spending. With consumption at 70% of GDP, no US recovery is possible without consumer confidence. And it is lacking, especially with an election looming on Nov. 3.  

   America’s bucket is leaky. Somehow it has not managed to create a waterproof bucket for its poor, its ill, its uneducated, its immigrants, etc., in 244 years. So it IS an unhappy birthday.  And the specter of that terrible day in 1619, when the first African slaves landed in America, continues to haunt this troubled nation.

   Now, a strong US leader could look across the ocean and figure out why Europe, old Europe, crusty old Europe, has done so well, and try to copy its social safety net.

   But that would take vision and humility. Those qualities, too, seem to have leaked out of the bucket.

Blog entries written by Prof. Shlomo Maital

Shlomo Maital

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