America: Knowledge v. Belief

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Many civilizations in history, which failed in the absence of being conquered, faced the same 'Zenith Threat' America faces today. Confronted with the threat of leaving their prosperity zenith behind, their civilization divides. Divided, civilizations fail from within. What divides nation's in the face of a Zenith Threat, is two different ways of knowing and consequent prescriptions. I define these two ways of knowing as empiricists and 'wishful believers'. If 'wishful believers' capture control of the nation's decision making apparatus, that civilization fails. America is currently an example of a nation in the throes of a Zenith Threat, with its divisive and hence, potentially negative consequences.
 

Let's define these terms. Empiricists are those who utilize observable and verifiable real world relationships and information to fashion cause and effect solutions that will remedy challenges and problems facing them. "Wishful Believers" adopt beliefs that are centered on wishful results that would benefit them, in the absence, or even rejection of, real world verifiable relationships and data. Note the fundamental difference. Empiricists begin with observable real world relationships, and fashion possible solutions based on those. Wishful believers begin with the end result they seek, and devise wishful strategies to achieve those results, in the absence of education in real world relationships and information, extant.

From its founding, America's population has consisted of both 'wishful believers' and empiricists. America's past is governed, from its founding, almost exclusively by its empiricists, as opposed to its 'wishful believers'. America's history under the empiricists is one of monumental growth, progress, and evolution to ever higher standards of humanity and civilization. All that progress is now threatened to end as the wishful believers achieve ever greater access to power, as evidenced by the 2010 elections of the Republican Party and its Tea Party caucus as the majority in the House of Representatives.

A prime example of Zenith Threat failure was the USSR. It was governed by 'wishful believers', who took as their starting point, military superiority over the U.S. and NATO as their best insurance for future posterity. They rejected real world economic and political realities, and those real world economic and political realities brought down the USSR from within. Their irrational fears of being militarily inferior, became a self-fulfilling prophecy.

Trickle down versus consumer up, economics.


Trickle Down Wishful Believers:

Trickle down wishful believers insist that if the wealthy privileged minority of capital owners and investors is growing either in number or wealth accumulation, that wealth will trickle down through capital and production expansion to employ ever greater numbers of potential consumers, and hence, the economy will expand. What is wishful is that these people wish to be among that privileged minority of capital owners and investors. What their belief is, is that their expanding wealth will result in ever greater consumption by consumers. Their belief justifies their wish. Their end, justifies their means, even as real world analysis contradicts their belief.

As America is experiencing today, wealth accumulation can reach a point at which that wealth withholds too many of the dollars available in that society to fund consumer activity, and hence, consumer activity begins to drop off, and economic expansion slows, or ends. Money is very much like water in the physical world. If water held in the skies does not fall to the ground, the foundation for life, plants and animals including humans, will suffer and even perish for lack of sufficient water to grow food and materials for construction and innovation. Money has to circulate in an economy, constantly back through consumer's hands if that economy is to remain healthy.

Wishful believers are absolutely correct to argue that if their isn't enough money in the hands of capitalists to employ people and expand production, the economy will falter. The problem with that argument today in America, however, is that this condition does not exist.

American businesses and wealthy investors are sitting on 2.5 Trillion dollars of cash reserves, unwilling to put it to work employing people and expanding production, because consumers aren't buying their products in sufficient quantity to justify expanding production of goods and services. In this economic circumstance, allowing ever greater accumulation of wealth in the hands of the capitalist owners of production and service providers only starves ever greater numbers of consumers of the necessary resources to grow consumption and expand demand for business products and services.

Wishful believers, however, refuse to acknowledge these real world facts and evidence, and vehemently refuse all measures by the government to increase taxes on the wealthiest, in order to recirculate that tax money back down through consumer's hands in order to increase demand for business products and services. And the reason they reject this evidence, is because it would lead to actions that in the short term, would affect their wishful aspiration to be ever more wealthy. They refuse to accept even the most modest attempts of government to relieve them of any part of their accumulated wealth, even though, such efforts would insure the wealthiest remain wealthy, or even wealthier, into the future. 

Wishful believers reject reality out of the irrational fear that the empiricists, if they get their way, will relieve them of ALL their wealth. They see an unfounded slippery slope in their irrational fear, that if the government takes some of their wealth by increasing taxes, there is nothing to stop government from taking all their wealth, eventually. However, nothing could be further from the truth in America, since, empiricists understand the necessity of a wealthy investor and capitalist population as absolutely necessary to a healthy economy. Empiricist economists understand that recirculating wealth constantly from consumers to wealthy capitalists and investors, and back again, through jobs and taxation when necessary, to consumers, maintains a balance that promotes a modest but continuous expansion of growth and progress for all, from the poorest to the wealthiest. In other words, empiricist economists understand and accept the need for wealthy capitalists and investors as part of this balance.

Many Republicans make these irrational fears obvious by referring to Democrats as Socialists, or Obama's policies as socialist, reflecting the fear that if the empiricists get a little, they will eventually take all the wealth, and hand it out to the poor, making poor and wealthy equal in income and assets. That is a completely irrational and indefensible fear. But, it is what motivates Republicans to destroy America's economy in defense of their wish to remain, or become, one of the wealthiest. It motivates them to destroy the very economy upon which their wealth, present and future, depends. It quite literally, is deranged behavior born of irrational fears.

Wishful believers suffer from a self-fulfilling prophecy. They fear government seeking their wealth through taxation to shore up the consumer capacity of the labor force will have no limits, and their actions to prevent this from happening, is in fact, creating a consumer starved economy which will undermine the the profits and wealth of capitalists and investors, going forward. They are bringing about the very loss of wealth, through economic Recession or Depression, that they fear will occur if government taxes them more.

What Republicans lack, is an objective critical education in America's history, which teaches critical and rational minds that America has grown powerful and wealthy as a centrist and moderate nation politically, in which the excesses of the capitalists and socialists, have ever been reversed by each other as those excesses posed a threat to the centrists and moderates who know that a healthy balance created by a capitalist system with social economic policies in essential for growth and prosperity. Centrists and moderates understand this balance is required for continued economic growth and humane progress for all, generation after generation.

This lack of education of Republicans, especially pronounced in Tea Party activists, has for over a decade, been ever increasingly choking the political economic apparatus to funnel currency resources to consumers through taxation, (not to mention offset deficits and prevent debt growth), and our economy has become progressively more unstable. Republicans argue they have cut taxes in the last 10 years, but, fail to acknowledge huge increases in fee for services and other hidden taxes that offset the tax cuts, not to mention their doubling of the national debt in 8 years under Pres. G.W. Bush. This choking effect has been compounded by businesses dramatically increasing their automation to replace labor, and the private sector's incessant search for cheaper labor overseas, as well as consumers clawing their own way out from under overextended credit and mortgages, promulgated and facilitated by irresponsible lenders.

The end result is a consumer class without sufficient consumer resources to support America's economy, let alone address deficits and debt. Fears of a second Recession have driven stock markets and investor's hopes of profitable corporations down dramatically in recent weeks. Refusing to accept reality and facts, Republicans, have quite literally engaged in doing the same thing over and over again in fighting taxes and labor wages, while expecting a different result in the economy, other than decline. Einstein called this behavior, insane. Of course, Einstein was an empiricist, which supported his belief in a Creator!

Consumer Up Empiricists


About 70% of America's current economy is driven by consumers, despite statistical revisionists on the Right. When consumers fail to consume, the economy falters, and wealth amongst all in the society, from the richest to the poorest, is lost. These are real world observable facts demonstrated many, many times in America's history. The most prominent example in America's history is found in the period from 1929, beginning with the stock market crash, through the economic expansion of the 1950's and '60's.

The Great Depression was a series of devastating recessions that began in the 1930's and terminated with WWII. What began as a stock market crash as a result of over-leveraging of investments and by banks (sound familiar?) was followed by ever increasing unemployment and devastating drops in consumer activity, as homes and farms were foreclosed upon. When all was said and done, 25% of America's work force was left unemployed and bankrupt. Attempts were made during the Roosevelt Administration to deficit spend on the creation of jobs and reemploying as much of the work force as possible. These efforts failed, however, to halt the Great Depression and restore economic growth on a sustainable level throughout the 1930's.

Why did such stimulative efforts fail to restore a vigorous economy? They weren't big enough. That is a factual and empirical answer. How do we know that is the answer? Simple. The stimulative efforts of the 1930's paled against the borrowing and spending on employment that was set in place with the onset of WWII. The federal government's national debt soared to its highest level as a percent of GDP during WWII, putting more of the population to work during the first 5 years of 1940 than at any other time previously. Not only were virtually all of America's male work force employed by government war stimulus spending, but, American women were brought into the work force as well to take up jobs which soldiers shipping out for Europe and the Asian-Pacific couldn't. In five short years of massive deficit spending and spiraling national debt, full employment was achieved to heights never dreamed of before WWII.

What followed the end of WWII was a dynamic and growing economy. It became an economy flush with cash, consumers, and educational opportunity, and a business sector primed for innovation, research and development, and a talented and entrepreneurial labor force eager to work and spend. What sustained America's growth after WWII was an economy that grew faster than debt. In 30 years America went from Depression and World War deficits and debt, to the greatest expansion of the middle class consumer ever in history, as well as putting people on the Moon, dramatic advances in medicine, electronics, automation, civil rights and liberties. These are facts in our history that are discounted or rejected by wishful believers who aspire to wealth without the understanding that wealth in America is underwritten and sustained by a vast and relatively wealthy middle class of consumers. For wishful believers who aspire to wealth without sharing a modest portion of it with the rest in society, taxation is an evil to be fought tooth and nail, because greed underwrites their world view, not education and real world fact.

The real world of American economics demands an approach to our current challenges that begins with restoring the health and resource capacity of consumers to consume. This is the way American economic empiricists understand economics because it is demonstrated time and again in our history. Or, as the empiricists of the American working class put it, it begins with jobs. But, here's the rub.

The private sector, as discussed above, cannot justify creating jobs for people who will stand idly around all day doing nothing productive in the absence of enough customers walking through the door to make them busy. In other words, as in the 1930's, the private sector is in no position to profit from hiring more people. That creates the situation in which the only organization capable of stimulating job growth is the federal government. States are barred from creating jobs through deficit spending by their Constitutions requiring a balanced budget. The Federal government however, is under no such constraint, and therefore is, the employer of last resort, to rescue the economy from a spiral downward that hurts both business and workers in ever increasing numbers.

And that is why, despite its popularity in public polling, a balanced budget amendment to the Federal Constitution is like denying a gravely ill patient access to health care. In circumstances such as these which America faces today, the only practical and effective solution to economic decline is job creation, and the government is the only organization capable of stimulating the growth of those jobs. It can do so by contracting with the private sector to employ workers. Such measures will be proposed by Pres. Obama in September on public works, like roads, bridges, and possibly mass transit, aviation control upgrades, and energy infrastructure built around new, more environmentally friendly and renewable, energy resources.

If implemented, in the short run, federal deficits and debt will grow as they did in WWII, even as offsets via revenue increases from the wealthiest and investors increase (if the GOP can be checked). In the longer term, however, a superhighway is built for economic growth, increasing federal revenues, dropping demand for government assistance by the unemployed, growing business profits, and the eventual reduction of federal debt. It all begins with the consuming middle class re-employed and re-primed to buy goods and services from American business. Growing the economy faster than the growth of federal debt, has to be the long term objective.

As European nations are discovering, austerity measures which fight deficits and debt in a sluggish or, recessionary economy, don't get you there. In fact, they take you in the opposite direction, ever increasing debt and civil unrest. America is not in the same place as Greece or Italy, where these nations passed the point of no return to stimulate their economic growth with deficits while their credit rating to borrow was still intact. These European countries waited until their credit rating was trashed and interest rates rose dramatically before addressing their economic and fiscal challenges to grow jobs and revenues.

America has not yet passed the point of no return to grow the economy and government revenues faster than debt over the next couple decades. To be sure, however, accomplishing this will require modification of sacred special interests to both the extreme Left and Right wings of the Democratic and Republican Parties. The very difficult political task immediately at hand is to put forth a plan to grow jobs to 7% or less of unemployment in the near term, while simultaneously laying down a realistic plan to zero out deficits in the intermediate term of 10 years or so, and buy down the debt in the out years, after 10 or 15 years.

Such a measure would increase government revenues, offset deficit spending, assuage lender fears about investing in U.S. treasury bonds and, thereby, keep debt interest rates low, while appeasing credit rating agencies about the viability of federal debt being brought down in the future. It is entirely doable. All that stands between America and accomplishing this task, is our partisan representatives in Congress. American voters have the power to force Congress' hand in 2012, toward accomplishing this task. More on that in a moment.

Anecdote

This writer is obviously a consumer up empiricist. This position is predicated upon an education by those who hold true to the empirical model of knowing and knowledge. Wishful believers must discount or reject the evidence of history and economic fact, to maintain their opposition to government stimulus to create jobs.

That said: while I believe in God, I don't believe as Texas Governor and Presidential candidate, Rick Perry does, that mass prayer will change our economic deficiencies through divine intervention. I believe Christians are correct when they say, "God helps those who help themselves", to resolve worldly challenges and difficulties. Having an education in real world cause and effect relationships that are verifiable, repeatable, and consensual amongst empiricists, I know that people both create their own difficulties, as I know there exists the ability of the human empirical mind to understand and solve those difficulties.

Earlier this evening my wife was watching the second of the series of movies entitled, Jurassic Park. At the point in the movie when the man picks up the baby T-Rex with a broken leg with the intent of helping it, and the science woman played by Julianne Moore is reluctantly pulled in to partner with the man to rescue the baby T-Rex, I offered my wife a bit of critique on the movie, which ticked her off.

I told her that it was a real weakness in the script that it has Julianne Moore's character abandon her scientific admonitions to all the men arrived on the Island that humans should only be their to observe and not to interact, for motherly instincts to help the poor baby T-Rex mend its broken leg. The scripts' author has her choose her motherly instincts over scientific education and wisdom. When I explained this was a weakness in the script, my wife told me to please shut up. I asked her why she was reacting to my critique in this manner. She answered, "Because you are ruining the movie for me".

I laughed and left the room to write this article. What I found amusing was the fact that most movies require the audience to suspend their disbelief; in other words to believe in the improbable or impossible in order to enjoy the entertainment value of the movie experience. Movies ask viewers to become wishful believers in the efficacy of the story, regardless of how ridiculous the events in the movie, are. My wife could not enjoy the movie without suspending her disbelief, and I couldn't appreciate the script for its choice of having a woman educated in science and real world realities and threats, abandon that education in the study of animal behavior as well as her fears of T-Rex parental reprisal, all in the name of her own maternal extincts to help a baby T-Rex. It was for me, unbelievably improbable.

The wife and I lacked common ground on this particular point of the movie, (because I stepped into the room in the middle of the movie, rather than being drawn into the entertainment value of it from the beginning). In the same way, Republicans and Democrats, wishful believers and empiricists, lack common ground upon with to achieve consensus to deal with America's economic challenges today.

2012 Elections

If power falls to the wishful believers, solutions to our nation's challenges will not be found and exercised. If power falls to the wishful believers, all that will be accomplished is the realization of the personal wishes of those wishful believers, for however a short period, before failure comes crushing in on them, and us all. I remain optimistic that the American majority of voters, despite gerrymandered "safe" districts, and new laws designed to prevent voters from voting, and massive spending by the wealthiest to protect themselves from taxation, small or large, will choose in November, 2012 to remove enough 'wishful believers' from office as to create a majority of consumer up empiricists in our federal government to save our economic future. Otherwise, collapsing employment and economy, and then deficits and debt, each in its turn as our future unfolds, will surely make the Zenith Threat, a reality.

(This article was previously published at Discuss America).

2 Comments

"As America is experiencing today, wealth accumulation can reach a point at which that wealth withholds too many of the dollars available in that society to fund consumer activity, and hence, consumer activity begins to drop off, and economic expansion slows, or ends." I appreciate this quote so much for the mere fact that it underscores perfectly today's economic reality. My concern is however, are we so far gone in the blame game and the failure to acknowledge the changes that have occurred in our global world that we begin to think that redress can take place within two years or three for that matter. The cry for greater tolerance of big companies by some is resounding and particular movements are playing their part to ensure that this outcry will reach the masses. My cry is for the people to wake up and begin to listen and think, greater leniency for big private companies will not lead necessarily to economic growth. If several of these companies have already sought to outsource aspects of their operation, who says that they will ultimately employ more locally given a change in governmental policies and legislature?

Michelle,

Thank you for taking the time to respond to the article.

Couldn't agree with you more. Business responds to demand for their products or services. As long as consumer demand remains tepid, so too will employment remain tepid and unemployment, unacceptably high. Business will hire, when hiring will mean an increase in their sales, and hence, their revenues and profits. That is the nature of business, and there is nothing wrong with that. What is broken, is the traditional mechanisms to recirculate money through the economy from the top to the bottom and back to the top, again, enriching everyone. Too much money is now shipped overseas or held in reserve by the wealthiest individuals and businesses (two trillion dollars in American idle business cash reserves, currently).

Health care costs continue to drain the public of cash that could otherwise stimulate the economy. Premiums for employer based health insurance rose 9% between 2010 and 2011. It is neither simple nor easy, but, one of the greatest boons to consumer demand could potentially come from halting the inflation of health care costs.

Repatriating American corporation overseas profits could help, but, ONLY if those profits circulate in the economy upon repatriation. So, far, there is no plan on the table to force that to happen, hence, no action on that front.

Implementing American infrastructure upgrades and repairs could be the most "no-brainer" common sense policy to both employ more workers and increase American production and economic activity, as well as government revenues, in the longer term. But, such measures are blocked by the House of Representatives and Tea Partyers who insist that we balance the budget first.

Balancing the budget immediately, would crater our economy practically overnight, causing the lower middle class and poorest to lose what consumer spending capacity they now engage in. It is imperative that the current economy and employment be grown, which will in turn, help reduce deficits.

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This page contains a single entry by David R. Remer published on August 21, 2011 10:02 AM.

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