The New World
Yes, the market expected modest jobs growth of 50,000 in the first reporting of the new year, and the number fell short by 1,000 with non-farm job growth of 49,000, but unemployment, which was expected to stay at about 6.7% at least fell to 6.3%. Overall, I suspect the markets and economists will take that as good news for the economy. Jobs growth is one of the common measures that everyone agrees needs to be a priority as we claw our way out of this pandemic-led recession we find ourselves wallowing in. With the passage of time, the Biden presidency is being compared more and more with the FDR presidency that lifted the country out of The Great Depression in 1933 and beyond. That FDR presidency is getting more and more play these days as a reminder of the economic value and importance of fiscal policy and what it not only can do for people at ground level, but also for what it can do for the overall health of the economy.
I believe there is a chance that we are entering an important turning point in world history. I am not a proper historian, but I feel like the Industrial Revolution, which economic historians split into the first round, which concentrated on Great Britain and things like weaving and textiles (1760 – 1840), and the second round which was concentrated in the United States and things like steel, electricity and manufactured items from the assembly line (1870 – 1920), all led up to the excesses and crash of the Depression. I know that is a grand simplification, but it is safe to say that the Industrial Revolution did more to lift the general conditions of a broad swath of the world than anything else before or since. That all happened when the world population was between one and two billion people. We are now between seven and eight billion people. The UN has estimated that the full capacity of the world is for a population of eight billion, so we have a very different contextual basis for looking at the economic conditions that prevail today versus those that existed during the Industrial Revolution.
The way I read this is that since growth is the common marker for success in economic activity, we have to find ways to grow without growing population concomitantly. Almost all economists will say it can’t be done and I myself have argued that even countries beset with population problems like China have recognized the constraints on growth that a population-limiting policy like the one-child policy overlay on the economy are too harsh to bear. That is why China has eased up on its population policies and that grand and effective experiment is being left in the dust. I would argue that we must think differently about economic growth if we are to advance as a civilization and leave a functional world for future generations.
The most common measure of growth that is captured for virtually every country or area on Earth is GDP. We have seen steady gains in GDP and the measure of development of most economies is stated in their GDP growth statistics. Of course, what really matters when you get right down to it is GDP per capita and that has been on a much less impressive trajectory for the past sixty years, trending slowly down in most places in the world, driven by the simple fact that even in slow population growth countries like the U.S., the population is growing faster than the GDP. Therefore, the first shift that seems important is the same shift that occurred naturally during the first Industrial Revolution and that is that GDP per capita must go through a meaningful upward shift. This may seem like a Socialist sentiment, but I don’t think it is. Thinking in very simplistic terms, if we are at an approximate population capping point, the only way to see growth in GDP is for GDP per capita to go up. It’s pretty simple math, not radical socioeconomic manipulation.
In 1933, FDR saw a nation in pain with breadlines and people living in Hoovervilles all across the country. His solution was to invoke the power of fiscal economic stimulus and employment programs designed to help build the fabric of our country in a proactive and positive way through infrastructure. People were put to work to jump start the movement through the CCC (Civilian Conservation Corps), CWA (Civil Works Administration), FSA (Farm Security Administration), NIRA (National Industrial Recovery Act) and the SSA (Social Security Administration). The immediate impact was to get people back to work and getting a paycheck to feel better about themselves and begin to support their families without direct welfare or assistance. When I think of the way these programs made people feel and how that helped the soul of the country, I think of the movies Cinderella Man and Seabiscuit. Both of these movies use calming narration to tell the tale of the harshness of the economic times and the uplifting aspect of the collective programs undertaken by the government.
We seem to many of us to be back in those times when the national psyche needs another boost to make everyone feel that they can get enough help to get off the mat and improve their personal per capita income. The thing that seems to be weighing on us disproportionately now are the double barrel of Climate Change and COVID Pandemic, both of which are overriding forces not directly caused by the people who are suffering the most. We all bear the responsibility of Climate Change and COVID Pandemic, but I think its fair to say that they are more external variables than not. They may even be characterized as impacts brought on specifically by those who have been the largest winners in the wealth accumulation race of the past fifty years. But they certainly are more put upon the masses rather than caused by the masses.
It is not a coincidence that people are comparing Joe Biden to FDR. He has a formidable and selfless task before him and that stands in stark contrast to the manner of the prior regime of Donald Trump, not at all unlike the conditions inherited by FDR from the one-term presidency of Herbert Hoover. One can argue that neither Hoover nor Trump caused the prevailing issue of their days with the Depression and Pandemic being handed to them each as external factors, but the other view could equally be that neither embraced the problem from the perspective of the population at large and sought solutions for the betterment of the common man.
It is emblematic that President Biden’s first name is Joe. He is as much a regular Joe as any President we have had since perhaps Johnson or Truman. While not a simple country boy like Truman or LBJ, Joe Biden had humble beginnings and neither went to a big-name University nor held impressive and lucrative jobs. He, like Johnson and Truman both, worked his way up the political ladder and machinery and spent years in the U.S. Senate learning about the inner working of politics and government as well as the fine arts of advocacy and compromise. All three men set in motion plans to address the problems of the world of the day. Truman launched the Marshal Plan, LBJ saw through the Great Society and Civil Rights initiatives. Regular Joe Biden faces a combination of what all of FDR, Truman and Johnson faced. He has a worldwide crisis in Climate Change, not unlike the post-war trauma faced by Truman. He has a civil right and inequality issue that has blossomed into a crisis very similar to the uprising in the inner cities of 1960’s America, and he faces an economic crisis of massive proportions not unlike FDR and The Great Depression.
As Michael Douglas says in The American President, these are serious problems and it takes serious (and selfless) people to solve them. We are lucky to have such a man on point for us, a man who is prepared to leave partisan squabbling to others and to steer clear of the necessary retribution steps being taken to address the Trumpian and Republican missteps. We only occasionally get the opportunity to create a new world order and this seems to be one such time. I could argue that to do so requires a Jack Kennedy to create a bold vision and drive us to the next level, but I’m more inclined to think that we are better served this time following the lead of a regular Joe into a complicated new world.