Middle Class, Luck, and American Power

George Friedman, writing for Stratfor (he’s also their Founder and CEO), has an article out concerning the American middle class and American global power.  The whole article is well worth reading, but for now, the relevant remark comes near the end:

It would seem to me that unless the United States gets lucky again, its global dominance is in jeopardy.  Considering its history, the United States can expect to get lucky again….

The luck to which Friedman refers concerns some fortuitous unintended consequences, and he offers three examples:

The GI Bill was designed to limit unemployment among returning serviceman; it inadvertently created a professional class of college graduates. The VA loan was designed to stimulate the construction industry; it created the basis for suburban home ownership. The Interstate Highway System was meant to move troops rapidly in the event of war; it created a new pattern of land use that was suburbia.

The threat to our status as a global power—and by extension to our freedom of action as a nation—stems from a generation of the failure of a long-standing belief in American culture—the faith in the availability of economic upward mobility.  For instance, median household income in 2011 was $49,000, just below the level in 1989 in real terms; it seems that upward mobility has stagnated.

Luck matters, but to a very large extent, we make our own luck.

Underlying this making is individual responsibility, individual initiative, and individual risk-taking.  In all of our past booms, including those in which fortune played a role through those unintended consequences, the freedom to exercise those individual characteristics was both broadly present and not very much circumscribed by government intervention.

Here’s a present example of the role played by fortune, this time negatively: those individual characteristics, and parallel ones in business, are severely circumscribed by government regulation in all aspects of our lives.  We’re restricted in what we’re permitted or required to buy or to throw away (see Obamacare and CFL bulbs), in the decisions businesses are permitted to make in their own interests rather than government’s (see Obamacare and Dodd-Frank with its CFPB abomination), in what businesses are permitted to release as by-products of production or sales.

Our ability to make our own luck, today, is severely limited by government.  Fortuitous unintended consequences are a lot less likely in an environment of rapidly increasing government control over the economic environment which underlies the making of that luck.

There’s another factor at play, too: those government restrictions also have the unintended consequence of restricting upward mobility.  The poor become trapped in their stratum and cannot move up into the middle class due to those restrictions’ effect on job creation and hiring.  This not only works to the detriment of those poor, it shrivels the remaining middle class.

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