Here is an excerpt from a column written by Conrad Black on this very subject. Before anyone gets their panties in a knot over his criminal status, just read what he wrote and you'll see where I'm coming from.
http://network.nationalpost.com/np/blogs/fullcomment/archive/2008/09/20/conrad-black-lessons-to-learn-from-wall-street-s-week-of-no-return.aspx
Broadly, the principal official financial policy errors in the United States over the last 15 years or so (during which time there has been minimal inflation and unemployment, and nearly 30-million net new jobs created), have been:
• Nothing has been done in U.S. tax policy to discourage excessive debt accumulation by the American public, which has spent more than it has earned for years, most of it on non-durable goods, and much of it imported. This has created terrible financial and psychological vulnerability throughout the population.
• Nothing has been done to reduce the back-breaking importation of oil, which has grossly raised energy costs, fueled inflation, enriched unfriendly states such as Russia, Iran and Venezuela, and financed their mischief, and burdened the United States with about half of its $800- billion annual current account deficit.
• Successive U.S. administrations of both parties have sat, inert as suet puddings, while China has piled up a $265-billion annual trade surplus with the United States.
• The deliberate reduction in the value of the U.S. dollar came too late to save manufacturing jobs and went on too long to improve the real buying power of American consumers. Meanwhile, Washington’s low-interest-rate policy was too deep and prolonged, and encouraged compulsive spending and expansion, and excessive borrowing and speculation, especially in housing.
Beyond that, the United States and other countries have fallen too far into the fool’s paradise of the service economy. The U.S. GDP of $13-trillion is about half composed of worthless and non-productive effort, which yet engages the efforts of a large number of very skilled people. A trillion dollars annually goes into legal expenses to feed the absurdly litigious society and state prosecutocracy. Another great fortune goes to insane insurance costs on medical lawsuits, and superfluous consulting fees -- which mainly substitute for what management should be doing, and provide a lightning rod to shelter inept management from shareholder wrath.
I
n all of the nearly 50 American metropolitan areas that have more than a million inhabitants, towering downtown skyscrapers are jammed with people who work hard and are very talented, but don’t actually do anything useful. People who make paper clips or rubber bands, or the proverbial widget, are at least producing something. But as a society, we came to despise blue collar work as menial, and most of it has migrated to formerly Third World places. The service economy only works when people want and can pay for the services. This progressively ceases to be the case — more swiftly and profoundly than with finished goods -- as economies slow down.
