Wednesday, September 2, 2015

Let's Stop All the Gloom and Doom Talk About a Lower Standard of Living for Future Americans .... 'Ain't Gonna Happen'

{NOTE: Keenan's post today is about improving the 'climate' of our system of education in America. The reason is simple: improvements in education will lead to greater knowledge, which in turn will result in widespread prosperity, a better informed electorate, and a higher standard of living for all Americans. What's not to like about that?

Politics is the straightforward reason we aren't seriously pursuing a broad based improvement in educational outcomes while reducing the cost thereof at the same time. The powerful public sector teachers' unions, other public sector unions, their Democratic Party allies, and even the White House are more interested in their own financial and political futures than the future well being of Americans, and especially today's kids. Politics sucks.

See Nevada's Voucher Breakout which is subtitled 'Unions and the ACLU fight universal statewide school choice.'

After reading this article, ask yourself the following question: Is this the right time for Americans to speak up and support free choice, or will we choose to remain seated and allow the teachers' unions and their 'progressively' political allies to prevent American families from pursuing a solid education for their kids?

The cost to taxpayers to do the right thing is nothing ---- and the cost of doing nothing is extremely harmful to America's future. It's also immoral, extravagant and needlessly wasteful.}
But today let's put on a happy face and talk instead about what's right about America and what's potentially ahead for future American generations. The fact is that we hear far too much gloom and doom talk these days about how future generations will have things worse than we did and that our best days are behind us. Happily, that pessimistic and even gloomy prediction is simply not true.

Why our children aren't doomed to being poorer than we are is subtitled 'Even with slower growth, the next generation will have a higher standard of living:'

"Robert Gordon of Northwestern University (offers a) gloomy assessment of America’s growth prospects. . . . But is it right?
Gordon argues that the major technological changes that raised the standard of living in the past are much more important than anything that can happen in the future. He points to examples such as indoor plumbing, automobiles, electricity, telephones, and central heating, and argues that all of them were much more important for living standards than recent innovations like the Internet and mobile phones.

I agree with Gordon that I would rather give up my mobile phone and even the Internet than go without indoor plumbing and electricity. But that just means that we are lucky to be living now rather than a century ago (and even luckier to be living now than two centuries ago or in the middle ages). The fact that these major innovations happened in the past is not a reason to be pessimistic about the future.

Gordon also points to the recent slowdown in real (inflation-adjusted) gross domestic product growth. According to official U.S. statistics, real GDP per worker grew at an average annual rate of 2.3% from 1891 to 1972, but by only 1.5% since then.

But the official statistics on GDP growth fail to capture most of the gains in our standard of living that come from new and improved goods and services.

That means that the official growth rate does not reflect the rise in real incomes that came with air conditioning, anti-cancer drugs, new surgical procedures, and the many more mundane innovations. Moreover, because the U.S. government does not count anything in GDP unless it is sold in the market, the vast expansion of television entertainment and the introduction of services like Google and Facebook have been completely excluded from the national account.

This means that the true rise in real incomes was actually faster than the official statistics imply — possibly much faster. . . . we are enjoying the higher level of real incomes inherited from the past. So will future generations. Indeed, there is simply no reason for the view . . . that the children of today’s generation will not enjoy a standard of living as high as their parents’. . . .

Think about a 30-year-old new parent at the middle of the income distribution. Thirty years from now, the child will be as old as her median-income parent is now. If real incomes grow at just 1.5% a year, the median income 30 years from now will be nearly 60% higher than the income of today’s median-income individual.

Even if the child earns 30% less than the median at that time, her income would still be higher than today’s median income. And if product innovations and improvements imply that per capita real incomes grow at 3% a year, the median income of someone 30 years from now would be more than twice today’s median income.

So Americans are lucky that they have inherited the innovations of the past, and that real incomes will continue to grow in the future.

But that is not a reason for complacency. The U.S. can increase its future growth rate by improving its education system, raising its rates of saving and investment to where they were in the past, and fixing the features of its tax and transfer systems that reduce employment and earnings. . . . America’s economy — and those of many other countries — could grow faster in the future if policy makers adopt the appropriate reforms."

Summing Up

To grow faster, we need more people employed and to be more productive as a nation.

To be more productive as a nation, we need a better and less expensive system of education from K through graduate school.

A more highly educated citizenry will demand less government interference and encourage entrepreneurialism and private sector investment.

To encourage entrepreneurialism and greater private sector investment, we need to stop taxing our companies at the highest rate in the developed world and burdening them with excessive government regulations.  And we need to stop spending so much taxpayer money to support political favorites such as Ethanol and companies like Solyndra and Tesla of the green energy movement.

It's past time to build the Keystone pipeline, stop preventing the export of oil, and eliminate countless other senseless government programs. It's time to encourage investment in the energy patch, and for that we simply need government to stop discouraging domestic energy exploration, distribution, fracking, and exports.

And while we're at it, we need to stop pretending that debt is free for both individuals and our nation as a whole.

All these things are simple and doable. But with today's sad and sick politics, they're also doubtful.

As is the case with education, politics sucks and keeps Americans from getting richer at the same time.

That's my take.

Thanks. Bob.

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