Peter Morici
Now streaming on your handheld devices is America’s New Economy, and it will soon make the messages of both political parties obsolete.
American consumers always spent too much. Thomas Jefferson went bankrupt by living high on credit and ever since, his countrymen have borrowed recklessly – until the next financial crisis compelled retrenchment.
Periods of robust economic expansion have been defined by consumers’ willingness to splurge on big ticket items like cars and homes, and businesses’ appetite for grand new projects – Fulton’s steamboat, canals, railroads, airlines and, most recently, shale oil and pipelines.
Remarkably, the economy is now on track to register annual growth of 3 percent for the first time in a dozen years, but auto and home sales are flat and corporate investments in hard business assets – factories, machines and computers – are hardly rocketing.
What has flipped are the jobs market and productivity.
For the first time since the 1960s, workers, not jobs, are genuinely scarce. They are so hard to find that businesses are jettisoning conditions that many positions requiring specific skills or just innate intelligence be filled by folks with substantial experience and technical school or college diplomas.
The marketplace, to the dismay of liberal academics, is holding universities to account for indoctrinating instead of educating by ignoring educational credentials. At the same time, businesses have learned to use capital and human resources much more efficiently.
At the cutting edge, Google was launched with only $25 million in 1999 and grew into a $23 billion enterprise in five years, Now finding that two-year colleges do not impart the technology skills businesses require, Google is offering eight- and 12-month certificate programs through Coursera that connects graduates with employers like Bank of America, Walmart and GE Digital.
Post-secondary education is getting streamlined, less pretentious and moved online.
Productivity growth, after languishing during the Obama presidency, is taking off again. This permits businesses to offer low-skilled workers opportunities for bigger pay increases, often through in-house training programs. As many businesses automate, they are training semi-skilled line workers to maintain machines and even become software engineers.
All this is happening, just as Generation Z – those born after 1996 and raised in the jaws of the financial crisis – is entering the labor force. They are more focused on career and financial success, more sober (they do not party nearly as much) and even more tech savvy than millennials who preceded them.
They are more diverse – little more than 50 percent are white. Raised by baby-boom moms in non-traditional careers, they are more comfortable with women and men working side-by-side and in racially mixed groups.
All this spells change for the faculty at universities, businesses and the political class.
Young folks are bargaining with colleges and often selecting the best value as opposed to the most prestigious choice – or skipping college altogether – and forcing universities to trim costs.
MBA programs and law schools are downsizing. Businesses cannot discriminate – workers and good skills are too scarce – and young employees will not tolerate it.
This is bad news for the new age Democrats like Alexandria Ocasio-Cortez. She is merely reskinning Bernie Sanders and Hillary Clinton’s socialism and identity politics that were better suited to an age of scarce jobs and discrimination in rationing opportunities.
Similarly, the anti-Trump wing of the GOP’s obsessions with the sanctity of the World Trade Organization and tariffs on automobiles and agricultural commodities are tragically misplaced. Just about anything of value can be made or grown on any continent these days.
What really matters is the intellectual property – the artificial intelligence that goes into cars and the genetics in the seeds. That is what driving President Trump’s trade policy – look at the extensive new protections for American intellectual property in the deal just struck with Mexico. Mr. Trump grasps all this in ways his critics cannot comprehend, or is backing into it thanks to Federalist Society screening his judicial nominations and his daughter, Ivanka, promoting Labor Department apprenticeship programs.
The GOP may well get skewered in the midterms and Mr. Trump may be denied a second term from the sheer weight of hectoring by liberal Democrats, Bush-era Republicans and the media, but history will treat him more kindly.
It will speak of a man who saw a new age coming and was vilified by those invested in the past.
Peter Morici is an economist and business professor at the University of Maryland, and a national columnist. © The Washington Times, LLC.
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