Under the title: “The underlying economic trends driving the
rise of Bernie Sanders and Donald Trump,” the New York Daily News has on
February 14, 2016 published the viewpoint of Mortimer B. Zuckerman on the
subject.
He discusses the latest statistics on the American economy,
painting a bleak picture of its current state. He then puts forth three
suggestions which he says will remedy the situation. They are to embark on a
program to repair the nation's infrastructure, to spur the housing activity and
to nudge those on public assistance toward work.
To be sure, that will help somewhat, but it is not the
durable solution that's needed to fix the complex problems facing the economy
at this time. To fashion a more permanent solution, we must understand more
fundamentally what is happening not only to the American economy but to all the
advanced industrial economies.
These are the economies that caught the Industrial
Revolution when it first started more than two centuries ago. They experienced
growth over a long period of time by inventing the products they made, by
designing and constantly improving the machines that made them, and by
modernizing the business models they were using. The entrepreneurs made those
models suitable for the changing times while at the same time allowing the
economies to develop organically in response to market forces.
As to the economies that did not start their industrial
development until well after World War Two, they did not need to innovate
because they did not have to reinvent the wheel every step of the way ... so to
speak. All they had to do was methodically plan for and copy what was done
before them. Called emerging economies, they are still using that same business
model, though some of the nations have advanced enough to start doing leading
edge research and development of their own.
Because it takes more time and money to invent a product and
produce it than to copy what someone else has done, the emerging economies are
saving time and money. They are therefore able to score high rates of growth,
and able to hire large numbers of new workers. These would be highly
disciplined individuals who are eager to learn new skills, and happy to work
for a small paycheck.
In fact, the emerging economies don't even have to
administer all that alone. It's because the entrepreneurs of the advanced
economies find it highly profitable to close their operations at home and move
the business to those nations. This is why America and the other advanced
economies are experiencing the conditions that Mortimer Zuckerman is
describing. It's that – for now at least – the growth and the jobs are hard to
come by in the old economies, and easier to have in the emerging ones.
Because the emerging nations must plan the development of
their economies at the same time as they partner with the capitalist
entrepreneurs of the advanced economies, they follow a business model that is
essentially a public-private partnership. But unlike the planned economies that
never got off the ground during the Soviet era, the partnerships of today's
emerging economies are succeeding nicely.
Now this question: Is there a lesson in all of this for America and the
other advanced economies? Happily, the answer is yes. In fact, a suitable
business model has already been tested inside an economy that is advanced, and
was proven to work flawlessly for nearly half a century.
Recall that the auto companies in America and all the businesses that
fed them almost died when the American economy came to near collapse in 2009.
The problem was that the companies stood alone, having to provide pension and
health coverage for their workers. The difficulties surfaced only in America and not in Canada where branches of the same
auto companies did not have to provide health coverage for their workers.
That was the case because Canada has a system of universal
health coverage that's administered by the Federal and Provincial Governments.
It proved to be the public-private partnership that kept the Canadian branches
of the American auto companies economically healthy during the worst crisis.