We Moved from a Manufacturing to a Service Economy under Reagan-Bush-Clinton-Bush
A statement released last week by Obama administration Council of Economic Advisers Chair Christina Romer warns that when it comes to the economy we are very far from being OK. Romer put out a statement concerned that many “observers” are approaching the high unemployment rates in the country without the appropriate sense of urgency. Romer says the unemployment remains high because the economy is producing dramatically below its capacity and the tools and knowledge are available to counteract economic shortfalls and they should be used aggressively. Let me add a few things to Christina Romer's observation. About 25 percent of all profits being generated in our economy right now are in the financial services sector - the billions in profits and bonuses going to a few thousand banksters, mostly on Wall Street. Historically this was a tiny slice of our economy, because banks don't actually manufacture any product that adds value to our economy. Additionally, since we moved from a manufacturing to a service economy under Reagan-Bush-Clinton-Bush we've seen manufacturing fall from about a quarter of our economy to only 11 percent of it. That means we no longer make anything of value here. Without making things, we don't create true wealth - we just move money around. You wash my car, and I'll mow your law - a so-called service economy - leads to economic disintegration over time, as eventually the car will fall apart and the lawn needs to be re-seeded. We need to reject Reaganonomics and Clintonomics, accept Bill Clinton at his word that he was wrong to listen to Rubin and Sommers, and go back to an economy that works. And roll back the Reagan tax cuts as a starting point.