Sunday, August 21, 2016

How Bad is the US Economy now

After 1945, the US economy boomed as the dominant manufacturing nation on the planet.  Housing boomed and babies boomed.  Moms left their defense jobs and became “homemakers”.  

The top tax rate moved from 84% in 1950 to 91% in 1960 to 71% in 1970 and 70% in 1980.

The corporate tax rate moved from 42% in 1950 to 50% in 1960 to 35% in 1993

In the 1950s and 1960s, high school and college age students were fully employed in part-time, after-school and summer jobs.  These were mostly minimum wage jobs in retail settings, but many were construction and manufacturing jobs where students filled in for regular manufacturing employees on vacation and added to the summer seasonal construction workforce. 

Upon graduation from high school or college, new grads were fully employed in jobs that allowed them to live on their own if they had roommates.  New grads who married were also able to live on their own if both continued to work.  High School grads earned about $3000 to $4000 per year to start and worked as office clerks, secretaries, dental assistants, retail clerks, restaurant workers, factory workers and custodial staff. If the high school grads attended and graduated from a 2 year trade school, they made more than college grads as electricians, plumbers, machinists and truck drivers. 

College grads earned about $5000 to $6000 per year as salaried employees and were given raises to more than keep up with inflation.  Some college grads went to Medical School and Law School, but most went to work as engineers, chemists, management trainees, accountants, sales reps, planners, analysts, teachers, nurses and administrators.  The leaders from these groups moved quickly to become managers.  Large employers wanted college grads to have a classical education in addition to their occupational specialization.  College tuition and books ran about $1000 a year and many of us worked and paid our own college expenses and had no loans to repay.

In 1966, we bought a 4 bedroom ranch with a basement on a 1 acre lot in a subdivision in Weldon Springs, St. Charles County Mo., a half hour commute to my work in St. Louis Mo.  We paid $700 down and assumed a $16,000 loan at 4%.  Our house payment was $150 per month.  It had well water, LP gas and a septic tank.  We up graded it and sold it in 1975 for $36,000.  New cars in 1966 were $2500 and good used cars were $750. To put our cost of living in perspective, you can add a zero to our costs from 1966 or subtract a zero from your costs in 2016.

In the 1960s, workers who were age 50 or older were discriminated against.  Labor unions held down productivity, but demanded higher wages and more benefits.  Computers beginning to be widely used for recordkeeping, inventories, accounting, payroll, planning and other functions.  Inflation averaged 7%, so many of us worked multiple jobs and changed companies to increase our pay and advance our careers.

In the 1970s, US automobile manufacturing had severe quality problems and began to lose market share to foreign imports.  Large companies did put some manufacturing operations to support foreign sales, but they did this sparingly.  The cost of everything doubled in 1978 and Moms went back to work.  The cost of healthcare and education began to rise because of government subsidies. The invention of the transistor kicked off the electronics industry revolution that brought us the PC and large productivity gains. US companies moved clothing and shoe manufacturing overseas.  US appliance manufacturers were going out of business due to unions.

In the 1980s, student jobs were less available and construction jobs were going to illegal immigrants. Public schools failed to teach math or science. Useless college majors had been added to all Universities.  The best students were still selecting real majors.  PCs were being used in companies and processing power had started to increase. Productivity began to increase and graduates could still find jobs in between recessions.  Foreign competitors entered more businesses including heavy equipment, steel, appliances and many other products.

In 1988, the US doubled the number of immigrants from 500 thousand to over 1 million a year and brought in 60 million immigrants to compete for the jobs we would be off-shoring after 1993.  The seeds of our destruction can be traced back to 1964.

In the 1990s, NAFTA allowed auto companies to off-shore manufacturing and this increased with WTO and other trade deals. Defense industries were consolidating and more manufacturing was moving overseas.

By 2000, our manufacturing based had been hollowed out and in 2008, bad mortgage loans defaulted and resulted in the Depression we haven’t recovered from as we come to 2017. We are approaching a $20 trillion national debt and we need to cut the corporate tax to 15% in 2017 and stop excessive immigration or it’s over.

The US economy is in the worst shape it has been since the Great Depression of the 1930s.  Its causes can be traced back to purposeful sabotage orchestrated by our own federal government.

Norb Leahy, Dunwoody GA Tea Party Leader


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