With low wages, high unemployment and a long-term decline of manufacturing and now with the long-term economic effects of COVID-19.
One way or another, this has to change. And the only way to do so is to increase production and productivity, and to ensure that wages reflect those improvements. In many Western countries, that means higher income taxes on the wealthy, a higher minimum wage, and unionization.
These are among the ideas that have been put forward under the “A Fair Shot Act” to bring higher wages and benefits to those in the U.S. who do not yet earn them. In my opinion, we need more of this.
But this kind of reform alone will not do the trick. A new generation has to be created, with their own ideas, not the inherited ones of their parents and grandparents. They’re the ones who must create the economy that will deliver both higher real wages and living standards for all.
The second step is to strengthen the middle class by making it better funded. As a column by economist John Kay suggests, this is a task made more complicated by the fact that many of the benefits of the financialization of the U.S. economy are going to the very rich. As long as this phenomenon exists, financialization will continue to distort the economy and keep our middle class weak.
How do we get there? One way is to make the stock market more transparent, as well as the bond market. It has to become much more transparent, because the government shouldn’t be financing investment by taking part in the bond market, because that would be a form of government meddling in the market, and that’s not what a free market is about.
Another way is to increase exporting and reduce what we import if it can be made here at home. Many American made products are now made in China, Mexico and other low-cost labor countries, and then these products are imported back into America and sold to the American people. This makes no sense what so ever, other than cheap labor. Its not only the giant companies who are doing this. Smaller new-business ideas that start in the US are also moving their manufacturing to other countries for the sole reason of cheaper labor.
This is thanks to the internet with sites like Alibaba. The only way to stop these companies from doing this, is to only buy local and send them a message. Yes, we want your product but not at the cost of the middle-class American household.