What Drives Economic Growth

     The primary driver of the American economy is consumer spending.  Historically, the people of the U.S. have worked hard, earned wages, and spent money.  Now as in the past, Americans spend for housing and energy, furniture and appliances, food and beverages, clothes, personal hygiene and health care, transportation, recreation and entertainment, education, etc.  Ever since the 1600s, whenever consumer spending increases, the national economy grows, and vice versa.
     We think of the American economy as a free market, with individuals and businesses offering their services and products while consumers freely pick what they do and do not want.  As long as consumers have choices, they can make or break businesses.  

     In 1932, at the peak of the Great Depression, consumer spending accounted for 83% of the GDP in the U.S.  It hit a low of 49.5% in 1944 during the Second World War.  From 1946 to 1980, consumer spending averaged 63% of the GDP.  It rose to 67% in 1981-2011 and over 70% since 2003.  
     In 2016, the American GDP was about $18.5 trillion in current dollars.  Of this amount, 70%-71% was consumer spending, 11%-12% was business investment, and roughly 20% was government spending.  Net imports may have been -4%, as the U.S. imports more than it exports, with the net coming off the GDP.
     Historically neither business investments nor government spending has sustained economic growth as strongly as consumer spending.  Yet, some pro-business economists and politicians have argued that the Federal government could stimulate further economic growth by giving benefits and incentives for businesses to invest more, as if the principal driver of business investments were government policies and taxes rather than consumer spending. 
     Since the presidency of George Washington, Federal government spending, barrowing, and taxing have impacted the people and national economics.  It has always been a matter of how the government benefits some interests more than others.
     You can lower Federal taxes on businesses, from small enterprises to large corporations, but they may use the extra cash to buy back their stock, give executives bonuses, buy out competitors, or just hold on to it, as corporations have since 2008 held an unusually large amount of cash (perhaps $2 trillion).  Or they can invest in further process improvements, meaning more automation, which will require still fewer employees.  Where is the assurance that if businesses had more cash because they paid less taxes that they would necessarily invest more money in new product and service offerings that consumers will want, hire more workers and pay higher wages in the face of consumer apathy, and pass the savings of process improvements on to consumers with lower prices? 

© 2017 Stephen M. Millett (All rights reserved)                             

The Party of Know Nothings

     In the 1840s and 1850s, several secret societies arose in reaction to the heavy immigration of poor Irish, southern Germans, and Central Europeans into the U.S. due to the potato famines in Ireland and the suppressed revolutions of 1848 across Europe.  These societies became openly political in the forms of the American Republican Party in New York, then the regional Native American Party, and finally the national American Party by 1855.  When asked about their organizations, one member answered “I know nothing.”  From that point, these people became the Know Nothings.    
     The Know Nothings were extremely anti-immigrant and anti-Catholic.  Many believed that Pope Pius IX, who was widely accused of being anti-democratic, had hatched a plot for millions of Catholics to immigrate into and then take over the U.S. by force of arms if not by ballots.  Conspiracy theories ran rampant.  The Know Nothing story was particularly popular among the American lower middle and skilled working classes, especially Protestants of English, Welsh, Scottish, Scotch-Irish, Dutch, and northern German ancestry.  They saw the new immigrants as slovenly, stupid, criminal, and unwitting tools of unpatriotic Catholic bishops and corrupt city machine politicians.  The Know Nothings argued that immigrants posed serious threats to traditional (their) American ways and therefore should be denied the rights to vote, run for public offices, and American citizenship when residency was less than 21 years.      
     The Know Nothings varied on points of emphasis in different parts of the country.  In addition to anti-immigration and anti-Catholic sentiments, in some areas they were also anti-elitist and anti-intellectual.  In other areas, they advocated social and political reforms that anticipated future popular causes, especially temperance and Progressive political reforms.
     The Native American Party (with “Native” meaning white and older generational Americans, not Indians) swept elections in Massachusetts in 1854.  The Know Nothings also exercised major political strength in Pennsylvania, Ohio, Indiana, Illinois, Maryland, and California (where the anti-immigration hatred was directed at the Chinese).  They successfully elected mayors in Boston, Philadelphia, Chicago, and San Francisco.  The movement hit a high point of popularity in 1855, and then began to decline after a serious Know Nothing riot killed 22 people and wounded many others in Louisville.  The American Party ran candidates for President and Vice President in 1856, but then virtually disappeared by 1860.
     It was another issue that eclipsed the anti-immigration movement:  slavery.  Northern Know Nothings migrated to the Republican Party, even though Abraham Lincoln of Illinois disapproved of them.  (The Irish and German immigrants, by the way, became furiously loyal to the Union and supplied numerous troops for Lincoln's army.)  In the South, the Know Nothings bitterly opposed Lincoln and supported secession when racial proved stronger than ethnic prejudice.
     Periodically, nativist groups have gained popularity in American politics because they reflected deep fears and biases concerning generation-after-generation of newcomers to the U.S.  Once each immigrant group took hold in America, they tended to object to new immigrant groups, which were seen as threats on several levels.  Having worked so hard to win social respect and middle-class lifestyles, Americans have jealously guarded their advantages against foreign-born intruders.  There have always been Know Nothings.  They may even exist today.

© 2017 Stephen M. Millett (all rights reserved)                   

Personal Health as Public Health

     If an individual becomes sick, does he or she pose a threat to others?  When the sickness is due to transmittable viruses and bacteria, you bet!  Personal health can become public health.
     As discussed in my previous blog posting, the concept of public health in the U.S. dates back to at least the 1640s.  Local and state governments routinely regulate individual behavior that impacts the health of other individuals.  They also provide public health services, such as sanitation, public water, garbage collection, and contagious disease controls.  Public health has always included disease prevention as well as epidemic management. 
     In Jacobson v. Massachusetts, the U.S. Supreme Court ruled in 1905 that states have the power to require individual vaccinations to prevent epidemics (in this instance, smallpox).  The ruling also went far to justify state powers to impose individual isolation and mass quarantines.
     At the national level, the Federal government regulates public health and provides services under the war powers, the taxing powers, and the commerce clause of the Constitution.  The Public Health Service Act of 1944, subsequently amended and enlarged by numerous acts of Congress, created the Public Health Service and the Center for Disease Control (CDC) to prevent the spread of illnesses into the U.S. from abroad and among the states.  Congress further provided health care services to individuals through Social Security and Medicare.
     In 1985, during the Presidency of Ronald Reagan, Congress passed the Consolidated Omnibus Budget Reconciliation Act (COBRA).  Among many provisions, the act prohibited hospitals (but not necessarily physicians) from the practice of “patient dumping” because people could not pay.  Hospitals are required to provide full services in cases of individual health emergencies caused by sicknesses, disabilities, injuries, and assaults regardless of the individual’s ability to pay for such services.  Hospitals often recover their losses by charging other patients and their insurance companies higher prices, so that those who can pay end up indirectly paying for those who cannot.
     If the government requires people to do certain things for their own individual healthiness in the interest of public health and if the government requires hospitals to serve people in medical emergencies, then cannot the government also require patients to pay for such services?  In 2010 Congress passed the Affordable Care Act (ACA), also popularly known as “Obamacare,” mandating that people had to have healthcare insurance to pay hospitals (and physicians) for medical services.  It was a way to balance the obligation to provide medical assistance with the obligation to pay for it.  The constitutionality of Obamacare was twice upheld by the U.S. Supreme Court. 
     The requirement that everybody must have healthcare insurance, including checkups and disease prevention as well as cures and recoveries, is in the public interest.  Requiring individuals to take responsibility for pursuing and paying for their own well-being and healthcare in addition to preventing and managing epidemics is a legitimate government power in the pursuit of public health.  In matters of health, the government is protecting me from you, and maybe you from me.

© 2017 Stephen M. Millett (All rights reserved)

Public Health Protects Individuals

     In an attempt to save the colony from its own self-indulgences, the stern governor of the Dutch settlement of New Amsterdam in 1648 ended the common practices of allowing hogs and other animals to free-range across both public and private property, throwing household garbage into the streets, and allowing private outhouses to overflow.  The alleged tyrant was the colorful Petrus Stuyvesant and the nascent colony survived and prospered to become New York City.
     Dutch libertarians in 1648 might have protested that nothing was more private than a privy.  They might have decried regulatory intrusions into personal matters.  The governor, however, would not tolerate libertarian excrement.  He took the stand that no individual enjoyed the freedom to do things that infringed upon the freedoms of other individuals or compromised the well-being of the entire community.  Stuyvesant did not understand public sanitation and the biology of human feces carrying viruses and bacteria dangerous to other people, but he did understand that an overflowing privy “not only creates a great stench and therefore great inconvenience to the passers-by, but also makes the streets foul and unfit for use.”
     For nearly 370 years the city fathers of New York have regulated human sanitation, water quality, and garbage collection; they have even mandated that you have to clean up poop left on the sidewalks by your dog.  The regulations of New York have been widely adopted by cities and states across the country through public health regulations and services.  Communities have gone beyond just sanitation and garbage to enforce ordinances and laws concerning restaurants, restrooms, land zoning, and building codes to protect individual health, lives, and property along with maintaining public order. 
     As I explained in my book, the Federal government is the institution of the national community.  Few people would dispute today the authority of cities and states to regulate public health, but does the Federal government also have the power to regulate it?  As early as 1798, Congress, based on its war powers, created a network of public hospitals for seamen that evolved into the office of the Surgeon General of the U.S., the U.S. Public Health Service, and the U.S. Department of Health and Human Services.  In 1906 Congress, based on its interstate commerce powers, passed the Pure Food and Drug Act and the Meat Inspection Act to protect the health and safety of consumers.  As transportation, communication, and business networks expanded from coast to coast, the Federal government has exerted more national regulatory powers over increasingly national health problems for all Americans that cannot be adequately addressed by just local and state governments.  After all, the water quality of many major lakes and rivers and the air quality that we breathe transcend municipal and state boundaries.
     Does the evolution of the United States as a fully blended national community justify increasing Federal powers to regulate even global climate change and individual healthcare insurance?  Let’s explore this question more fully in future blog posts.

       

© 2017 Stephen M. Millett (All rights reserved)