Here's a short piece of interesting material I wrote in the "What's Wrong" section of my ReformAmericaNow site. You can use it any way you see fit to develop your speech from the ideas & data that's in this excerpt. In return, you can do me a favor and make your parents and friends aware of this site. It has a lot of other interesting stuff on it and its not nutty. Please do so even if you decide to do your speech on some other topic. My material follows:
WE IGNORE THE IMPORTANCE OF ECONOMIC GROWTH
Economic growth is the only thing that makes it possible to improve life and general welfare for current and future generations of American citizens. Actually, our non-statist Constitution and rapid economic growth have been the true sources of America’s power, wealth and influence because it promotes individual rights and innovation.
It is estimated that it takes a $34,000 annual income per family to make the top 1% level in the world. After including the value of government benefits to disadvantaged Americans, at least 90% of all Americans are in that 1% club. This is cited not to gloat, but to hammer home that it is economic growth that made it possible!
Abundant natural resources in the U.S. helped but are not essential in a world where countries trade with each other. For example, Japan was devastated by WWII bombing, has few natural resources, is subjected to numerous earthquakes and tsunamis annually, but yet it became and still is the third largest economy.
Rapid annual economic growth per capita allows:
• More money to be spent on social programs without overburdening the economy.
• Reduction in unemployment and increased tax receipts.
• Lessening the burden & affordability of any government debt load.
• Increasing confidence, risk taking, and productivity in the economy.
• Increasing individual freedom (e.g., job choice, relocation ease) and opportunities for individuals and families to flourish.
• Betterment of life for each succeeding generation.
It seems that during the past 5 years America has forgotten how to grow our economy. Our growth rate has averaged less than half of our average since World War II. But it’s actually worse than that. Based on all previous patterns for coming out of a recession, the growth rate should be about twice that average for a few years until we exceed previous non-recession highs. So our performance has been roughly one-fourth of what it should have been. We have to return to levels near our historical performance or certainly higher than we’ve experienced lately.
To demonstrate “roughly” how critical high economic growth is, let’s compare the per capita performance (which adjusts for differing population sizes) of the U.S. and Venezuela over a long period of time, say 1950 to 2012, or across about 2 generations.
Example: America vs. Venezuela
On this fair basis of comparison, America now produces about 4 times the wealth that Venezuela does. You may think, no surprise since Venezuela is an “emerging country”. But back in 1950, America’s advantage was almost non-existent, so what happened?
In 1950, the U.S. per capita GDP (Gross Domestic Product which measures the total economy size) was only about 29% higher than Venezuela’s. But by 2012, the U.S. number was 5.2 times higher than in 1950, while Venezuela’s GDP only increased by a factor of 1.8, so America’s advantage grew from a rather small 29% (about a quarter higher) to almost 4 times higher! During this 2-generation period, capitalist America was burdened by several wars, ran heavy defense expenditures, gave out foreign aid, etc, while socialist Venezuela was helping its “poorer classes” by eliminating greedy corporate profits and imposing well-intentioned state controls over its economy – following a typical statist approach.
Thus by 2012 while America spent slightly over 15% of its GDP on “human resource” programs (i.e., our current welfare state which many leftists decry as totally inadequate), Venezuela would have to spend over 56% of its smaller GDP on human resources just to match our current per capita expenditure levels. No country can afford to do that on a sustainable basis. Growth would disappear and the economy would actually start spiraling downward. And with this “grand socialist experiment” – and despite its bountiful nationalized oil revenues - Venezuela has succeeded in circumscribing individual freedoms and producing shortages of basic goods. Similar long-term comparative examples of reduced economic growth exist for other countries that tried and failed to govern based on various ideological “isms”.
So the obvious conclusion to draw from this Venezuela example is that “to continue helping people in various ways on a sustainable basis into the future, you cannot ignore the critical necessity for fostering economic growth”. How much growth is possible will depend on the situation.
Traditionally society’s knowledge base changed slowly, so growth opportunities were largely resource based (land, workers or slaves, wealth). In the 21st century, they have largely become knowledge-based as computers, universities, communication & transportation systems, and programmed research & development have speeded up change. One can get the risk capital, normal financing, workers, material resources, and other needed inputs readily in America or in other countries as outsourcing has demonstrated.
If a per capita money comparison doesn’t cover all aspects of general welfare (true), then why do statist solutions always require increased taxes and maximum economic governmental control even though this approach becomes self-defeating over the long run? Then what will the endgame look like in monetary and non-monetary terms?
In Venezuela, once South America’s richest country - after many years of Socialism and despite over a trillion dollars in oil revenue since 2000 - its current near-endgame state in 2014 is characterized by:
• The government is broke and is printing so much paper money so that the official annual inflation rate is 56%, but really over 200% realistically. Toilet paper is now supposedly more valuable than the paper money.
• Production by the state oil monopoly has dropped by about 30% per cent since 2000 as it politicized its management and underinvested in needed technology. It is the only major world energy producer to experience a decline in the last quarter of a century. And it now must import gasoline.
• The private sector has been decimated after hundreds of governmental interventions and expropriations. The government has imposed draconian price controls and has raided businesses after accusing them of hoarding. So there are widespread shortages of food and medicines, consumers have to endure long lines in supermarkets, and basic products are repeatedly out of stock.
• Crime and murder rates have risen rapidly. Protests are growing, despite the government’s brutal dictatorial political repression which has killed people and corrupted the media. Venezuela is quickly becoming unlivable and many citizens think that they have nothing to lose any longer. Obviously, this is not what Socialism promised at the outset!
David D. D.