State of the Union: “Winning the Future” or Embracing the Status Quo?

Obama’s thrown in the towel.  Swept into office two years ago with pledges to tackle the tough issues confronting the nation, he as much as threw up his hands Tuesday night and admitted that he’s willing to muddle along with compromise on trivial issues that, at best, will sustain the status quo.  It was a speech long on platitudes about past American greatness and talk of out-educating and out-innovating other nations to restore the American dream, but woefully short on any details about how we’ll get there.  It was more a patchwork of catchy slogans cobbled together from any and every state of the union speech that preceded it.  There was little worthy of comment, but there are a few things that I thought needed addressing.

At stake right now is not who wins the next election — after all, we just had an election. At stake is whether new jobs and industries take root in this country, or somewhere else.

Translation:  we won’t even try to bring back the jobs of our existing industries.  That would involve a change in trade policy that Obama doesn’t have the courage to make.  Yet, somehow, “new jobs and industries” will be unaffected by the same trade policies that devastated the old ones.

In a single generation, revolutions in technology have transformed the way we live, work and do business. Steel mills that once needed 1,000 workers can now do the same work with 100. Today, just about any company can set up shop, hire workers, and sell their products wherever there’s an Internet connection.

Meanwhile, nations like China and India realized that with some changes of their own, they could compete in this new world. And so they started educating their children earlier and longer, with greater emphasis on math and science. They’re investing in research and new technologies. Just recently, China became the home to the world’s largest private solar research facility, and the world’s fastest computer.

Bull.  China owes their rise to global economic super-power status to one thing:  America foolishly granting them MFN status and not insisting that trade between the two nations be balanced.  He’s blaming technology and productivity for our economic decline instead of stupid trade policy, while at the same time promoting technology and productivity as our future salvation.

So, yes, the world has changed. The competition for jobs is real.  But this shouldn’t discourage us. It should challenge us. Remember — for all the hits we’ve taken these last few years, for all the naysayers predicting our decline, America still has the largest, most prosperous economy in the world.  No workers — no workers are more productive than ours. No country has more successful companies, or grants more patents to inventors and entrepreneurs.  We’re the home to the world’s best colleges and universities, where more students come to study than any place on Earth.

Wait a minute, isn’t the whole premise of this speech that we’ve fallen behind the rest of the world in terms of competitiveness and an educated work force?  So now you’re saying that, although we’re the best, we have to be better in order to compete with less productive nations and less educated work forces?  Something doesn’t add up.

The first step in winning the future is encouraging American innovation. None of us can predict with certainty what the next big industry will be or where the new jobs will come from. Thirty years ago, we couldn’t know that something called the Internet would lead to an economic revolution. What we can do — what America does better than anyone else — is spark the creativity and imagination of our people. We’re the nation that put cars in driveways and computers in offices; the nation of Edison and the Wright brothers; of Google and Facebook. In America, innovation doesn’t just change our lives. It is how we make our living.

That’s not true.  A very small fraction of our work force made its living by inventing things.  The vast majority of Americans have always made their living by manufacturing those things, by farming and mining natural resources, and by providing the services we all need.  It’s impossible to build an entire economy out of “innovating.” 

This is our generation’s Sputnik moment. Two years ago, I said that we needed to reach a level of research and development we haven’t seen since the height of the Space Race. And in a few weeks, I will be sending a budget to Congress that helps us meet that goal. We’ll invest in biomedical research, information technology, and especially clean energy technology, an investment that will strengthen our security, protect our planet, and create countless new jobs for our people.

“Biomedical research?”  Aren’t we trying to cut medical costs?  You can’t build an economy around a sector you’re trying to shrink.  “Information technology?”  Wasn’t that the “new economy” of the ’90s, the one whose manufacturing was quickly outsourced to China and others?  “Clean energy technology?”  That’s fine, but we pretty much already know how to build nuclear plants, wind turbines and solar farms.  The question is what change you’re going to make to trade policy to stop the outsourcing of that equipment as well.

We’re telling America’s scientists and engineers that if they assemble teams of the best minds in their fields, and focus on the hardest problems in clean energy, we’ll fund the Apollo projects of our time.

The Apollo project was funded back in the ’60s, before our financial resources were completely drained by a three-decades-plus trade deficit.  Now there’s no more source for such funding. 

At the California Institute of Technology, they’re developing a way to turn sunlight and water into fuel for our cars. At Oak Ridge National Laboratory, they’re using supercomputers to get a lot more power out of our nuclear facilities. With more research and incentives, we can break our dependence on oil with biofuels, and become the first country to have a million electric vehicles on the road by 2015.

Get serious.  Breaking the hydrogen-oxygen bond in water requires more energy than burning hydrogen could ever deliver.  It was a pipe-dream that serious scientists gave up on long ago.  It’s the very reason that fuel cell technology has stalled.  The only viable source of hydrogen is stripping it from hydrocarbons.  Might as well just burn the damn stuff in an internal combustion engine and get it over with.  And more power from our nuclear facilities by using “supercomputers” to run them hotter?  Oh, boy, can’t wait for that one.

Now, clean energy breakthroughs will only translate into clean energy jobs if businesses know there will be a market for what they’re selling. So tonight, I challenge you to join me in setting a new goal: By 2035, 80 percent of America’s electricity will come from clean energy sources.

That goal was set two years ago.  Have we made any progress?  I wonder how long this goal will be repeated before folks realize that, to get there, we needed to start making progress twenty years ago?  And, oh, by the way, wouldn’t it help if we just stopped importing an additional 1.1 million oil consumers each year?

Over the next 10 years, nearly half of all new jobs will require education that goes beyond a high school education. And yet, as many as a quarter of our students aren’t even finishing high school. The quality of our math and science education lags behind many other nations. America has fallen to ninth in the proportion of
young people with a college degree. And so the question is whether all of us — as citizens, and as parents — are willing to do what’s necessary to give every child a chance to succeed.

The ranks of the unemployed are loaded with college graduates, even those with advanced degrees, who can’t find work.  We have no shortage of educated workers.  We already give them the education they need to succeed.  What we don’t have are jobs.  Where are all these mythical jobs that are going unfilled due to a shortage of educated workers?  Obama’s been listening to too many lobbyists eager to import cheap labor through the H-1B visa program.

That responsibility begins not in our classrooms, but in our homes and communities. It’s family that first instills the love of learning in a child. Only parents can make sure the TV is turned off and homework gets done. We need to teach our kids that it’s not just the winner of the Super Bowl who deserves to be celebrated, but the winner of the science fair.  We need to teach them that success is not a function of fame or PR, but of hard work and discipline.

There’s a hell of a lot of young graduates out there who have been taught these things all their lives and still have a hard time finding work.  We need jobs, not just for the kids who win the science fairs, but for every other kid too, even the ones who came in dead last. 

Because people need to be able to train for new jobs and careers in today’s fast-changing economy, we’re also revitalizing America’s community colleges. Last month, I saw the promise of these schools at Forsyth Tech in North Carolina. Many of the students there used to work in the surrounding factories that have since left town. One mother of two, a woman named Kathy Proctor, had worked in the furniture industry since she was 18 years old. And she told me she’s earning her degree in biotechnology now, at 55 years old, not just because the furniture jobs are gone, but because she wants to inspire her children to pursue their dreams, too. As Kathy said, “I hope it tells them to never give up.”

It would be interesting to follow this story to find out if Kathy has retrained herself to be an unemployed biotechnologist instead of an unemployed furniture-maker.  There’s plenty of biotechnologists out there who can’t find work either.  Trade policy has shipped most of those jobs overseas, just like manufacturing jobs. 

One last point about education. Today, there are hundreds of thousands of students excelling in our schools who are not American citizens. Some are the children of undocumented workers, who had nothing to do with the actions of their parents. They grew up as Americans and pledge allegiance to our flag, and yet they live every day with the threat of deportation. Others come here from abroad to study in our colleges and universities. But as soon as they obtain advanced degrees, we send them back home to compete against us. It makes no sense.

I agree.  We shouldn’t bring them here and educate them in the first place.  Let’s save those seats at the universities for American students and save the jobs for American graduates. 

 And let’s stop expelling talented, responsible young people who could be staffing our research labs or starting a new business, who could be further enriching this nation.

Is he actually saying that American students are too stupid to staff labs and start businesses?

Our infrastructure used to be the best, but our lead has slipped. South Korean homes now have greater Internet access than we do.

Could that be because their population is so dense that one wi-fi connection serves a lot more people than one connection does here?

Countries in Europe and Russia invest more in their roads and railways than we do.

They’re also even more bankrupt than we are.

China is building faster trains and newer airports.

That’s because they have a huge stockpile of trade surplus money to work with.

Within 25 years, our goal is to give 80 percent of Americans access to high-speed rail.  This could allow you to go places in half the time it takes to travel by car.

It will also cut the per capita consumption of cars, putting thousands more out of work.

To help businesses sell more products abroad, we set a goal of doubling our exports by 2014 — because the more we export, the more jobs we create here at home. Already, our exports are up. Recently, we signed agreements with India and China that will support more than 250,000 jobs here in the United States. And last month, we finalized a trade agreement with South Korea that will support at least 70,000 American jobs.

Exports are up, but not at a pace that will double them in five years.  And imports are up even more.  The result is a net loss of jobs.  And notice that the president says that his trade deal will support X number of jobs.  That’s because these exports are already baked into the existing capacity of manufacturers like Boeing.  No new jobs will be created.  We don’t just need orders for a few more planes.  We need for entire industries to return to our shores.

Now, before I took office, I made it clear that we would enforce our trade agreements, and that I would only sign deals that keep faith with American workers and promote American jobs. That’s what we did with Korea, …

Oh, really?  Signing a trade deal that caps U.S. auto exports at 75,000 while leaving South Korean imports unlimited is your idea of promoting American jobs?  Only a fool would enter into such an agreement.  This was the most disturbing portion of the speech – Obama’s willingness to sign more destructive free trade deals, not to help American workers, but out of desperation to show bipartisanship with Republicans, perhaps giving him a small boost in the polls.

We are living with a legacy of deficit spending that began almost a decade ago. And in the wake of the financial crisis, some of that was necessary to keep credit flowing, save jobs, and put money in people’s pockets.

… So tonight, I am proposing that starting this year, we freeze annual domestic spending for the next five years.  Now, this would reduce the deficit by more than $400 billion over the next decade, and will bring discretionary spending to the lowest share of our economy since Dwight Eisenhower was President.

First of all, a 5-year freeze in domestic spending is chump change relative to the size of our fiscal mess.  Secondly, it’s completely bogus to state spending as a fraction of the economy.  GDP has grown many times over since the Eisenhower administration while the population – the people who have to pick up the tab – has only doubled, while their incomes have barely grown.  In per capita terms, the spending has skyrocketed. 

Let me take this one step further. We shouldn’t just give our people a government that’s more affordable. We should give them a government that’s more competent and more efficient. We can’t win the future with a government of the past.

We live and do business in the Information Age, but the last major reorganization of the government happened in the age of black-and-white TV.

Yeah, that’s bad.  But, hell, that’s nothing.  Our constitution hasn’t been amended in any meaningful way since passage of the 19th amendment, giving women the right to vote in 1920.  Our consitution and the bill of rights pre-date the discovery of electricity and the entire field of economics.  Land west of the Mississippi was unexplored. 

Our founding fathers couldn’t conceive of a day when speech would be controlled by the media and sold to the highest bidder, or that something like pornography would ever be considered “speech.”  They couldn’t envision global corporations or imagine that they would ever be interpreted to be “the people.”  Since no trade theories had yet been formulated, they couldn’t imagine spending any more on imports than we’d earned for our exports.  Surely no one would be dumb enough to do such a thing on a consistent basis.  Nor could they imagine spending more than revenues taken in, year-in and year-out.  That our population could ever grow to the point where it would outstrip the resources of this seemingly infinite new land was unfathomable.  The constitution was meant to be a statement of high principles, not a mundane laundry list of common sense approaches that should go without even saying.  Yet it seems that that’s exactly what we need, since a dearth of common sense has us in the fast lane on the road to ruin.  It’s high time for a constitutional convention to define the kind of country we want to have in the future.  The executive and legislative branches will never take us in that direction without it. 

To be fair, the Republican response was little better.  There was more emphasis on cutting the debt, but in the belief that smaller government will somehow grow our economy.  I’m always amazed at logic that hasn’t been tested at its limits.  If this were true, then the most prosperous nations on earth would be those without central governments at all – nations existing in a state of anarchy.  I don’t think Tunisia will be taking the title of World’s Most Prosperous Nation any time soon. 

Conversely, the nation with the most rapid growth, China, is also arguably the one with the most central control of its economy.  I’m not arguing for bigger central government.  The fact is that it isn’t so much the size of the government that’s important, but whether it’s acting in the best interest of its people.  Ours does not, placing the principle of free trade – a failed 18th century economic theory – ahead of the interest of the American people.

So the president has abandoned his vision of tackling the tough issues and rewriting trade deals to benefit U.S. workers in favor of a new agenda:  tinkering at the margins.  Cut a little spending here and move it over there.  Eliminate a few tax loopholes while enacting some new ones.  Build a few token clean energy plants.  Create a few new jobs and pretend we don’t notice others that are being eliminated.  Boost exports and ignore imports.  Use more immigration to stoke “economic” growth.  When we run out of rugs under which we can sweep our problems, simply install wall-to-wall carpeting. 

I’ve heard it all before, year after year, decade after decade.  Each president puts in his time, puts out a few fires, and writes his memoirs congratulating himself on a job well-done.  Just what we need – another care-taker president maintaining the status quo.  Another opportunity lost and another 4-8 years wasted.  America is a rudderless ship adrift amidst a school of sharks.

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2 Responses to State of the Union: “Winning the Future” or Embracing the Status Quo?

  1. […] the article here: State of the Union: “Winning the Future” or Embracing the Status … Share and […]

  2. Mark Hall says:

    Pete,

    Great Analysis and Rebuttal.

    Japan had its “lost decade” and is presently working on its 2nd lost decade.

    Apparently the U.S. intends to out do the Japanese by making our economic regression and depression generational.

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