Survival and Revival of the American Dream: Remaking America and the West

By Ernst G. Frankel

This book is about the cristicism of the American economic strategy.

• Language: English
• Publisher: AuthorHouse
• Release date: Nov 12, 2013
• ISBN: 9781491832288

Ernst G. Frankel

Ernst G. Frankel is Professor Emeritus of MIT and has worked in senior positions for the U.S. Government, the World Bank, the Governments of China, the U.K., Israel, Singapore, and others. He is a member of the board of shipping companies, Panama Canal, and others. He authored 21 books and over 700 refereed papers. This book is a critical review of the problems that caused America's decline in economic, strategic, and cultural leadership.

Book preview

© 2013 Ernst G. Frankel. All rights reserved.

No part of this book may be reproduced, stored in a retrieval system, or transmitted by any means without the written permission of the author.

Published by AuthorHouse   11/05/2013

ISBN: 978-1-4918-3226-4 (sc)

ISBN: 978-1-4918-3225-7 (hc)

ISBN: 978-1-4918-3228-8 (e)

Library of Congress Control Number: 2013920255

Any people depicted in stock imagery provided by Thinkstock are models,

and such images are being used for illustrative purposes only.

Certain stock imagery © Thinkstock.

Because of the dynamic nature of the Internet, any web addresses or links contained in this book may have changed since publication and may no longer be valid. The views expressed in this work are solely those of the author and do not necessarily reflect the views of the publisher, and the publisher hereby disclaims any responsibility for them.

Table of Contents

PART ONE  CURRENT CONDITION

Chapter 1    Destruction from Within and How to Recognize It

Chapter 2    Funding and Operating America

Chapter 3    Reining in Consumption and Greed

Chapter 4    Social Factors and Income Inequality

Chapter 5    Health Care and Education

Chapter 6    Infrastructure Needs

Chapter 7    Our Legal System, Law Enforcement, and the War on Drugs

Chapter 8    Defending America against Domestic Enemies

Chapter 9    American Democracy and Government

Chapter 10  Making Global Decisions

PART TWO  REVIVAL OPPORTUNITIES

Chapter 11  Restoring Economic Vitality

Chapter 12  Whoever Does Not Learn from the Past

Chapter 13  Education, Training, and Maintenance

Chapter 14  Recommendations for Improving Health Care

Chapter 15  Law Enforcement

Chapter 16  More Effective Government Needed

Chapter 17  Values to Support the Remaking of America

APPENDICES

Appendix A  Total Tax Revenues (% of GDP, 2010)

Appendix B  U.S. Taxation

Appendix C  The Tea Party Phenomenon

Appendix D  America’s New Keystone Prosecutors

Appendix E  German Discipline and Example

Appendix F  American Responsibilities

Appendix G  American Building Codes and Methods

Appendix H  Improving America’s Everyday Life and Services

What needs to be done if we want America to regain its economic, moral, strategic, and industrial leadership and help the West to regain economic and cultural leadership in the world.

Possible Blurbs for Jacket

How America lost its way and became full of pizzaz and self-delusion!

Where money and greed rule in everyday life as well as in politics and government.

A recent history of the state of the United States of America and how it lost its way and thereby economic and strategic leadership in the world by emphasizing consumption, deregulation, and allowing special interests to rule them while ignoring the larger issues of social justice, conservation, and sustainability as well as many basic human values established and refined over a long human history.

The common good, safety, and security must always take precedence over narrow personal, individual, and corporate rights and obligations. America and the West have made many serious mistakes in recent years under the delusion that they are all powerful and immune from any potential hazards. The results of these delusions are now coming home to roost as explained in this book.

PROLOGUE

W estern free market democracy has been touted as the most perfect of human organizational structures, a system that assures effective representation and freedoms for all. Starting with the Greek philosophers and city states, such systems could assure people of justice, fairness, opportunity, and safety. However, recent developments show that the concept is still utopian after nearly 3,000 years. These conditions and achievements should, in theory, permit the development of near perfect human organizational structures and capabilities.

America, a country of immigrants who sought refuge in a land of plenty with freedoms guaranteed by a most fair and wise Constitution, grew into a world power not by design but by fate, hard work, cooperation, and openness to ideas and individuality. However, over time our achievements and role in the world have given us a feeling of superiority, power, and an inherent right to leadership. Leadership requires responsibility, self-control, and example. This is where we have largely failed.

We must start to recognize that we are telling ourselves and everyone else how great we are without being able to really explain how, why, or in what we are great. We used to have the best education, health care, manufacturing, and agricultural productivity. In fact, for much of the last century we were the bread chamber and industrial center of the world, and we produced food and industrial or manufactured goods competitively. This allowed us to become the world’s economic, industrial, and food powerhouse, which in turn allowed us to raise our living standards above those of all others.

America grew into a real world power during the second half of the 20th century. It became not just the world’s largest economy and military power but also the leader in technology, science, standard of living, and even in some areas of culture. Everyone wanted to emulate America, and America became the gold standard for quality, lifestyle, and culture. When challenged by the Soviet Union in space exploration with Sputnik, America responded by putting men on the moon and thereby maintained its superiority.

The problem is that with all the technological advances to facilitate better communication, transportation, production, shelter, health, and sustenance, people continue their often selfish preoccupation to outdo each other. As a result, our forefathers’ concept of a perfect union and the Greeks concept of a free democracy are not really achieved or practiced. While we developed and have at our disposal the resources and tools to achieve such a perfect union, we seem to be moving further and further from it. What we do not admit is that the human character did not advance or improve enough to accept these ideals and the need for honesty and collegiality, compassion, and cooperation that underlay and are a necessary condition for these ideals.

Self-confidence and greed gained the upper hand and before long priorities changed. Prices became increasingly important and greed lost its stigma and became a national pastime. Pride in America and what it stood for took a backseat to greed and indulgence. In parallel, the American economy, long a powerhouse of productivity, lost its preeminence when producers found they could increase their profits by exporting American know-how and equipment and train foreign workers to produce the same goods much cheaper.

And while the American economy was being transformed into a service or self-serve economy, companies soon found that even services could be outsourced abroad cheaply. Before long many of these were also moved abroad. This only left institutions such as health care, law enforcement, education, and government as principle activities performed at home. As noted in the 1998 work by the author entitled America’s Institutional Dilemma, these assumed an increasing percentage of the American economy. The percentage in GDP terms consumed by these services had grown from 15 percent in 1962 to over 50 percent by 1994 and, if allowed to continue to grow, would reach 100 percent by 2032.

This rather comical scenario under which America would produce nothing and everyone would work or devote himself/herself to one of these services is increasingly materializing. In fact, we now live largely on credit because we produce too little to pay for what we need or at least import. And we import an increasing percentage of what we consume. Notwithstanding our dire situation, we continue our merry habits—consume as if there is no tomorrow, enter into foreign policing adventures, continue to allow our infrastructure, institutions, and systems to deteriorate—but maintain or demand leadership in world economic, strategic, and political terms.

So now we have an imperfect, self-serving union which tries to lead the world by a faulty system. We developed a society driven by greed and dishonesty largely governed by or for special interests and undermined by a phantom, largely self-serving regulatory system often in cahoots with those it is supposed to regulate. We also tried to export this system, and the uprising in Egypt in January/February 2011 should not have been a surprise but simply a sign of revolt against the hypocrisy that we have supported.

Looking at ourselves we find that our preaching is largely theoretic and most of our actions hypocritical. We jail minor offenders and punish large white-collar criminals with a pat on the hand, if at all. Minor drug offenders, thieves, and other non-violent criminals burden our law enforcement and jail systems instead of being retrained and put to work. And many major offenders and crooks that severely damage society and the economy get off easily or free. We similarly have a political system that is supposed to be representative but in reality represents special interests.

Technological advances have improved communications and interactions but have also brought opportunities for misuse that damage others and society at large. At the same time, technology has become a major equalizer. No longer can politicians and government hide behind slogans and promises. Facts are openly available and can be received by the multitude in real time. The ability to instantly communicate information and images with friends, family, and the world at large is revolutionizing our social, political, and economic systems.

The developments in Egypt, where a nation came together and revolted against a well established and powerful dictatorship without violence and forced it to return government to the people, should be a valuable lesson for other authoritarian dictatorships and nations governed by politicians who pay more attention to special interest groups than their electorate. Wikileaks and the ready access to information and communications should be a wake up call.

Because greed and special interests have grossly undermined the great achievements and principles of Western democracy, much of the working middle and professional classes in America have been undermined and largely decimated in numbers as well as percentages of the population and economy. But today the facts are out, and the mismanagement, greed, and injustices can no longer be hidden. Could we, as a result, have an uprising of the people similar to what happened in Egypt here in the good old USA? Or are we immune because of our love of country and trust (often misplaced) in the goodness and fairness of our system?

But, as we will show, there is no fairness, for example, in our education system. Kids in poor neighborhoods automatically get poorer education financed by local tax revenues that are obviously lower than more affluent neighborhoods. And bankers and speculators often pocket obscene fortunes using other peoples’ money but are never charged a penalty when they lose. And, is it fair when the tax rate of people earning millions or tens of millions is the same as that of lower middle class earners? Additionally, most wealthy use capital gains that are taxed at a much lower rate than a major or principle source of income.

Other wealthy developed countries like Germany, Japan, and Sweden all have more equitable tax and education systems and also provide greater earning equality and more equal opportunities. For a long time these facts could be hidden and people were brainwashed by slogans of the greatness, goodness, and law-abidingness of America, but today we are aware of the greed, self-service, and delusion of much of our economic system and political leadership.

We have squandered much of our wealth and become a great debtor nation. We have also neglected to maintain our infrastructure and our human and natural resources. Our infrastructure, the pride of the world 50-60 years ago, is now that of a poor developing country. Similarly, many of our institutions—education, health care, and law enforcement—lag far behind those of other nations, though we spend more in real and relative terms for these institutions. There are ways we could and should reverse these developments, rebuild this country, and again make us proud of it and of being Americans.

In this book we will discuss the four most important issues or mistakes that are affecting America’s future: its future economy, role in the world, standard of living, and failure as a world powerhouse and leader. In the last 40 years America has suffered some self-imposed major dilemmas that, if allowed to continue, may greatly affect its future as an economic and strategic leader.

The fact that these were self-imposed recalls President Lincoln’s admonition to guard against potential destruction from within. We are destroying the house system and ideals our forefathers built, and we appear to be following in the footsteps of Rome and other empires. There is still a little time to reverse direction and save ourselves from the inevitable outcome or demise as a world leader. But act we must and time is of the essence.

The major plagues affecting America in recent times are the sub-prime mortgage disaster, the unjustified and useless wars in Iraq and Afghanistan, consumerism, money in politics, and the sub-prime education mess, each of which cost America fortunes in money, life, and hope. Yet all of them were advocated and sold by our leaders as essential.

We will show that not only were our leaders usually wrong but also largely self-serving. The future of America as a leader and beacon of freedom and democracy is on the table, and with it the future of the Western World and many of the values we have cherished for so long.

The decline of the West is now accelerating, and the torch is being passed to the two major economies in Asia—India and China—both with distinctly different political, economic, and social structures than traditional western countries. More importantly, they both have very different value systems and government and decision-making structures.

For most of the 20th century America not only dominated the world’s economy but also served as the world’s arbiter, protector, moral guardian, and example. It saved Europe and the West from disaster in two world wars and was instrumental in freeing Asia and Africa from colonialism. It developed much of the new technology that allowed people to better communicate, live healthier safer lives, and it eliminated conflicts that threatened people’s freedom, cultures, and safety.

America showed that Western-style free market democracy not only worked but also could lead to economic efficiency, social freedoms, and justice even among diverse peoples such as the immigrant society that constituted the USA. America