Markets are sacred. Its a defining principle of American economics; at least rhetorically. Americans hold fast to the idea that markets are more efficient than command economies. That’s probably true in most instances. The history of the twentieth century seems to indicate that the profit motivation is a strong enough force to move the world towards the goods and services most desired by a population. Freedom is a wonderful thing, but it lacks the power to create a great society by itself. Opportunity is necessary to turn a free society into a great society. Without opportunity, freedom is merely a license to starve.
Twenty first-century American society’s biggest problem isn’t a lack of freedom, but a lack of opportunity. Through a combination of government regulation and myopic private greed, opportunity for the next generation is being destroyed at an alarming rate. The wealth gap between the rich and poor is at nearly the same rate as during the Gilded Age, but there is an even more alarming statistic being trotted out in the last few days. The wealth gap between the young and the older generations is the widest it has ever been. According to Business Week, a household headed by someone over 65 years of age is 47 times more wealthy than one headed by someone under 35. That should be an alarming statistic to anyone with any interest in continuing the American experiment. It is proof that there are far fewer opportunities for young Americans than in years past.
You knew that the younger generation of Americans, let alone the global population, was in trouble without hearing this statistic. Any news source of the last few years has given plenty of anecdotal evidence that something was amiss. Childhood poverty rates, a good indicator of opportunity or lack thereof, stands at 1 in 5 nationally. Globally that statistic is 1 in 2, or 1 billion children in a world population of 7 billion. The United States has used education as part of a solution to the opportunity problem since the end of World War II, but costs have risen dramatically. Since 1985 consumer prices (inflation) has grown to 115%, while the costs of education have risen to 498%. It hasn’t helped that state schools are unable to effectively argue their case to the taxpayers, and have seen their funding cut at a time of systemically increased demand. To meet the demand of potential students, education has become a profit driven exercise, helping to drive that massive growth in cost. To pay for this last bastion of opportunity students have taken out relatively massive debts. College graduates have run up an outstanding student loan debt of $1 trillion. By continually graduating into cyclical recessions, many have little way to pay down this debt while also lacking the ability to discharge the debt in bankruptcy court since 2005 financial reforms. The results should be predictable, and are evident in the world around us.
What do we see from educated population that is not only poor, but saddled with a heavy debt burden? We see uprisings from the Arab Spring to the Occupy Wall Street movement. Their grandparents may have been sharecroppers devastated by the Great Depression, their parents were factory workers, and today’s young person sees their own future as that of wage slavery.
This isn’t the first time Americans have faced a crisis of opportunity. The whole American scheme is based upon finding increasing opportunity from the very first settlers’ tobacco plantation, through the “huddled masses yearning to breathe free,” to the struggles of the twentieth century. It isn’t enough to see the problems that we have, but we have to look for answers that we can implement.
Some historical models are more instructive than others. Britons facing economic and religious persecution in the 17th and 18th centuries struck out for the United States. Setting up the colonies of Virginia and Massachusetts Bay, they struggled to carve out a new order, a novus ordo seclorum. Barring more rapid success of Virgin Galactic, I don’t know that we are going to be able to carve out such a world. As the United States developed, striking out farther and farther west became the escape valve that reinvigorated the country. Fredrick Jackson Turner called the American west a series of expanding frontiers, each with new opportunities for Americans to reinvent the individual, and the republic as a whole. Again, there is no new physical frontier through which to escape to new opportunities. But, there was an American statesman who saw these same problems as we see them. He faced a nation that had lost its frontier, and where entrenched interests had used the market to their advantage to create a country where opportunity was no longer available to the average citizen.
Theodore Roosevelt was a crusader for what he called the “Square Deal.” By this he meant that every American deserved an opportunity to succeed. America was more than a home for railroad monopolies, and a place where market giants could use their clout to ignore the basic tenets of the American constitution. In 1903 the Elkins Act protected small farmers from railroad price manipulation that destroyed their access to markets. In 1906 the Pure Food and Drug Act gave the government the right to regulate food production to protect average Americans. In theory market mechanisms would bankrupt a firm that produced tainted food since survivors would be scared off that firm’s products. But why should Americans have to wait, to die, in order for a corporation to put its moral duty before quarterly profits? The stakeholders had to be protected just as the shareholders were. Roosevelt’s vision was a level playing field of opportunity.
Free markets, forced to perform for the benefit of the public, produce opportunity. A command economy cannot envision the next breakthrough, but neither can profit alone protect life. A balance must be struck that favors people first, and the opportunity of those people to do great things if they are able to achieve. A square deal doesn’t protect all people, or guarantee a successful life. It would merely give people the opportunity to succeed without being guaranteed a life of wage slavery and a life less well off than their parents. The alternative is simply the civil strife Roosevelt’s square deal quieted; a strife being seen on the streets of American cities today.