INTRODUCTION TO THE XENOPHYTE PERSPECTIVE
This website provides a brief introduction to the Xenophyte Perspective concerning economic engineering. The term "Xenophyte" is derived from the Greek term xeno, meaning foreigner. It refers to the standpoint of ideological neutrality that could theoretically be achieved by a group of foreigners who had little or no knowledge of the conventions of a particular society.  Theoretically, such a group of disinterested observers could more easily identify those social, economic, and political arrangements which would be optimally functional, or those which would be most conducive to the long term welfare of a particular society. And while this standpoint of complete ideological neutrality is only an ideal, it is important to note that it is an ideal which is opposed to the polar ideological views of both liberals and conservatives. The Xenophyte Perspective does not initially favor concepts or policies which are more closely associated with either the political left or the political right. This perspective only ends up favoring concepts or policies which are more closely associated with the political left or the political right, according to where the best arguments happen to be, in light of certain "functional" considerations. From the Xenophyte Perspective, the most important functional considerations are those related to the goals of maximizing stability and progress.

The ultimate purpose of the Xenophyte Perspective is to devise or "engineer" the most functional social system for human beings generally. To achieve this end requires the creation of an optimal state of equilibrium between the design parameters of maximizing stability and maximizing progress.  A state of disequilibrium between the goals of stability and progress only tends to exist within political systems which are dominated by groups which emphasize one of these parameters to the exclusion of the other, or in a polarized institutional framework. Our current two party system represents exactly such an institutional framework. Under a political system dominated by ideologically polarized political parties, community interests are held hostage to the interests of those who would advance stability over progress (conservatives) or those who would advance what they believe is progress over stability (liberals). At times, the results of the power struggle between conservatives and liberals may incidentally coincide with community interests. But, more commonly, one or the other side in the struggle is able to achieve a legislative victory which allows it to confer disproportionate advantages to its side, at the expense of the interests of the other side, and at the expense of the community interest. By contrast, under a political system managed by "synthesists" the terms liberal and conservative become anachronisms. Because their understanding of the general interest tends to be more "comprehensively rational" than that of either liberals or conservatives, synthesists are better able to calculate the the point of maximum equilibrium between the competing demands of stability and progress. Consequently, synthesists are better able to make public policy decisions which will serve community interests over the longer term, than either liberals or conservatives.

Because tension exists between the design parameters of stability and progress, these parameters must be mediated by the higher goal of achieving an optimal point of equilibrium where both stability and progress are maximized. This is the point at which no additional progress can be made without threatening stability, and no additional stability can be achieved without threatening progress. This is also the point at which species survivability is maximized. That is to say, this is the point where the threats to human survivability emanating from both the natural world and from human sources are equalized. Threats emanating from the natural world are countered by technological advances. Threats from human sources, including social instabilities generated by technological advances themselves, are countered by properly engineered social, economic, and political systems (progress and stability). When human social, economic, and political systems have achieved their optimal form (the form which is natural and endemic to the species, and which is not corrupted by unnatural conventions) these systems are also much better able to accommodate technological changes. Technological progress can be inherently destabilizing if it occurs rapidly enough in a sub optimal social system. Synthesists are mainly concerned with being able to design a social, economic, and political system which will facilitate technological advances without becoming unstable. In other words, their aim is to create conditions under which the technological culture will be highly dynamic and progressive and in which the society will be highly stable.

The potentially conflicting parameters of stability and progress are reconcilable, just as liberal and conservative principles are reconcilable, if these parameters are subsumed by a more comprehensive understanding of community interests. In the case of the Xenophyte Perspective, the successful reconciliation or "synthesis' of these parameters will make it possible to engineer a model of society which is optimally functional, or one which is maximally conducive to the survivability of the species. Within the  Xenophyte Perspective, the central concern with maximizing the survivability of the species is known as the "prime criterion." This is the concern to which all other human concerns must be subordinated. Again, maximizing survivability depends upon achieving an optimal state of equilibrium between the need for social stability, and the need for social and technological progress. Whenever either one of these parameters is stressed too highly, a state of disequilibrium tends to occur.  As a result of this disequilibrium, human survivability is rendered sub optimal. As a practical matter, a state of imbalance between these parameters means that human social systems are either threatened internally by forces tending towards their disintegration (too little social stability) or they are threatened externally by elements of the natural world (too little progress).

Because of its overarching goal of maximizing species survivability, the Xenophyte Perspective transcends and subsumes both liberal and conservative ideologies.  The Xenophyte Perspective makes use of these ideologies, but it is not bound by them. It mediates the conflicting priorities of stability and progress within a larger conception of the species interests over the longer term (maximization of survivability). As an ideology, the Xenophyte Perspective is synthetic, and considers a wide variety of human interests and concerns within a comprehensive, long term framework. By contrast, liberalism and conservatism are monolithic, polar ideologies which are designed to promote the narrow interests of particular groups in society over the shorter term, often at the expense of the long term public interest. As a way of interpreting social, economic, and political realities, the Xenophyte Perspective is initially just as skeptical of liberal views as it is of conservative views. Because it is so critical of liberal and conservative world views, in their monolithic and ideological forms, the Xenophyte Perspective tends to be unpopular among both liberals and conservatives. This lack of popularity among liberals and conservatives stands as a great testament to the Xenophyte Perspective's claim to ideological neutrality. But while the Xenophyte Perspective is critical of the polar ideologies in their monolithic forms, it should not be mistaken as a proxy for a centrist or a moderate ideology. To begin with, centrists and moderates, as these labels suggest, tend to aggregate towards the center of the ideological continuum in their policy preferences. However, "optimal policy points" are distributed throughout the ideological continuum.  On a given issue, the optimal policy, or the one which is "most functional for society" may fall distinctly to the right, or distinctly to the left of the ideological continuum. On some issues, the optimal policy point may be closer to the center. Hence, at times, the Xenophyte Perspective must inevitably coincide with certain views which happen to be more closely associated with either the ideological left or the ideological right. On given issues, either the liberals or the conservatives may have the better arguments on their side. Where liberals and conservatives make their biggest mistake, and where they pose the greatest threat to the public interest, is in holding liberal or conservative views "monolithically," across virtually all issues.

Today, the majority of political activists in both the Democratic and the Republican parties identify themselves as either liberals or conservatives, respectively. Both liberals and conservatives are responsible for our current polarized policy making environment. This policy making environment often fails to produce public policies which are maximally conducive to the public interest, or those which are "most functional" for our society. In such an environment, liberals and conservatives practice the art of political rhetoric, often at the expense of substance and truth. Because they hold monolithic, polar, and one sided views, both liberals and conservatives can be regarded as equally "radical" and simplistic in their convictions. By contrast, the belief systems of "synthesists" or "Xenophytes," tend  to be much more complex, comprehensively rational, and synthetic.  A synthetic belief system incorporates a much wider variety of human concerns and requires a much greater understanding of the cause and effect basis of human society, than either liberalism or conservatism.

According to the Xenophyte Perspective, human societies must be considered "systemically" and without primary reference to the interests of particular groups, to arrive at optimal policy choices. Optimal policy choices are those which promise to yield the greatest benefits to humanity over the longer term. Arriving at these policy choices requires the ability to process information impartially, and without primary reference to liberal or conservative principles.  Neither liberalism nor conservatism provide a conceptual framework that is capable of achieving this more comprehensive understanding of the public interest. Liberals believe that truths about human beings consistently favor policies which aggregate near the left of the ideological continuum. Conservatives believe that truths about human beings consistently favor policies which aggregate near the right of the ideological continuum. By contrast, synthesists believe that truths about human societies favor policies which are distributed throughout the ideological spectrum. Synthesists also believe that human societies in general, and the vast majority of social, economic, and political issues, are too complex to be understood by reference to either liberal or conservative principles alone. An understanding of society which is most likely to be maximally conducive to the survivability of the species is based upon a more eclectic and comprehensive understanding of human beings and their behaviors. These truths are presumed to be "incoherent," and to occur randomly. Consequently, these truths are associated with points all throughout the ideological continuum.

The most functional ideology is the product of the successful synthesis and reconciliation of the truths associated with the ideological left and the ideological right.  Ideally, every individual would be able to perform ideological synthesis subjectively. Ideally, each individual would be able to reconcile opposing views and interests in their own minds to arrive at an accurate conception of the species interest. In this way, political support for the most functional policies (those policies which are maximally conducive to species survivability) could be maximized. Unfortunately, most people, and even most political elites, have not mastered the technique of ideological synthesis. Consequently, whenever synthetic policies emerge from the policy making environment, these policies tend to result incidentally, and not by design.

The knowledge required for individuals to synthesize opposing ideological viewpoints is substantially beyond that which most Americans are willing to acquire at this point. At this stage, most Americans continue to rank low on the scale of political sophistication, despite some encouraging signs that their political sophistication has been increasing in recent years. At this point, most Americans are not prepared to accept, or even to understand, the concept of synthesis. Most Americans continue to hold rather poorly developed, amorphous views about politics. Many Americans continue to vote simply on the basis of the fact that they happen to like a candidate's personality, or they continue to cast votes blindly on the basis of party label. Typically, Americans know little about where a candidate stands on a particular issues or even how particular issues relate to them personally. Consequently, at the present time, it is simply asking too much for most Americans to perform the complex mental processes which synthesis requires. The task of leading the public to synthesis is made more difficult by the fact that the political and policy making environments continue to be dominated by liberals and conservatives. Liberals and conservatives are quick to capitalize on Americans' lack of political sophistication. Because most politically active Americans have only attained an intermediate level of political sophistication (at best) they continue to think about political issues dichotomously, and in terms of a polarized (left and right) framework, if they think about politics at all. This polarized way of thinking about politics is the primary source of political power for the liberal and conservative elites in the Democratic and Republican parties respectively. Unfortunately, these elites cannot be consistently counted on to propose policies which will best serve the national interest over the longer term. Therefore, the responsibility for designing optimal policies falls to "synthesists," or to a class of professionals which is dedicated to engineering those social, economic, and political arrangements which promise to be maximally conducive to the public interest over the longer term.  The policy making "think tank" for these synthesists is the American Centrist Coalition. This think tank provides a policy making or "engineering" environment which is as free as possible from ideological contamination associated with either liberalism or conservatism. The activist arm of the synthesis movement is the American Synthesis party. This organization is committed to generating the political support needed for synthetic policies to become law.

To summarize, the Xenophyte Perspective is the ideal vantage point of ideological neutrality from which synthesists attempt to view society. By means of adopting this vantage point, synthesists are able to offer prescriptions for change designed to either restore or to maintain the highest possible state of balance (equilibrium) between the two conflicting survival related priorities of stability and progress. The ideal goal is to achieve the highest degree of stability without hurting progress, and the highest degree of progress without hurting stability. Where liberals and conservatives make their biggest mistake is in placing too much emphasis on one of these goals to the detriment of the other. Equilibrium is upset when interest groups on either the ideological right or the left are able to dominate policy making debates on particular issues. Consequently, on particular issues, the Xenophyte Perspective may be more critical of the ideological right, or the ideological left, depending on which side has the arguments with the most flaws. The Xenophyte Perspective accepts the premises that truth about human society is not monolithic and that it does not aggregate towards either end of the ideological continuum. Rather, truth about human society is "incoherent" and may occur at any point along the ideological continuum.

As it relates to the topic of "economic engineering," the Xenophyte Perspective is most immediately concerned with achieving an optimal state of equilibrium between the interests of labor and the interests of capital.  Placing equal emphasis on the American worker does not automatically render the Xenophyte Perspective hostile to the concept of free trade. For it is possible to engineer certain conditions into free trade that will benefit foreign labor and improve the competitive position of domestic labor, while having a minimum impact on consumers. It is possible to design trade arrangements that are not zero sum, and which are "more fair" to the American worker. On the issue of  free trade, it is necessary to reconcile the interests of domestic capital, domestic labor, foreign labor, and domestic consumers, for the following reason. In a global economy, interdependencies between these groups become so great that what adversely impacts the interests of one group must be considered for its potential to adversely impact all the other groups. If the material interests of any one of these groups is not adequately defended, given such close interdependencies, the repercussions will impose costs upon all the other groups.

According to the Xenophyte Perspective, because foreign economies have become so heavily dependent on our consumers to provide a market for their products, the United States has effectively become the economic linchpin of the world.  If the Unites States economy falters, the world economy is likely to stumble as well. And because the United States comes closest to being "an optimal system," its interests are considered to be synonymous with the species interest. On the economic plane, this means it is necessary to adopt "America First" policies, in order to eventually be in a position to facilitate the development of other nations. Over the intermediate term, the American consumer, and to a lesser extent, the consumers of other developed nations, are the most important engines driving the world economy.  The world economy must depend upon these engines to facilitate both its stability and its progress, until the developing nations have a middle-class which is large enough to provide major markets for the goods it now produces.

The primary operational goal of the Xenophyte Perspective Concerning Economic Engineering is to propose a  blueprint for economic development which is "most functional" in light of the twin considerations of maximizing stability and maximizing progress. To these primary design parameters can be added other important parameters, such as the need to moderate gross disparities in wealth, or economic inequalities; the right to earn a living wage; the right to meaningful employment; the right to enjoy a high standard of living and a high quality of life. These concerns are all closely related to the primary design parameters of stability and progress. Typically, this group of concerns enjoys a closer association with the political left.  But, to these concerns must be added the importance of individual responsibility. The Xenophyte Perspective places great stress on the need for individuals to assume personal responsibility. The stress on personal responsibility is typically more closely associated with the political right. By means of such equalization, the Xenophyte Perspective achieves an operational equilibrium. The most important general statement of this operational equilibrium is that individuals and the societies in which they live have reciprocal obligations.

According to the Xenophyte Perspective, society has certain duties to the individual. But, the individual has reciprocal duties to society. Liberals tend to emphasize the former side this equation, while conservatives tend to emphasize the latter. As a result, public policy debates tend to be distorted by the singular focus on one of these major priorities, to the exclusion of the other. The Xenophyte Perspective seeks the point of optimal equilibrium between the demands which individuals place upon the state, and the demands which the state places upon individuals. In its view, the state is not just some abstract entity. It is a real seat of power and economic resources which individuals contribute to at various stages of their lives, and on which they have to rely at other points of their lives. Our current policy making environment does not keep the reciprocity of obligations between the individual and the state firmly in focus.

The Xenophyte Perspective Concerning Economic Engineering is also devoted to "engineering" a set of economic policies which will be best for the developed nations, and ultimately, best for the undeveloped nations as well. This will involve designing  economic policies  which will be conducive to modest sustainable growth, and which also produce a minimum of environmental externalities. Given these goals, our current pattern of economic growth based on consumer spending is not infinitely sustainable. There are "hard limits" on the resources required to fuel consumer economies on the one hand, and there are a host of environmental consequences that flow from this pattern of economic activity on the other. The twin considerations of resource depletion and unacceptable levels of environmental damage represent  the "material limits" of our current economic system. At an entirely different level, there are concerns about the differentials in wealth which result from our system of allocating economic resources. And, there are concerns that the consumer ethos is insufficient to provide a higher sense of purpose or "direction" in our lives. These represent some of the major "ideological limits" of consumerism.

Both the material and ideological limits of consumerism will eventually force us to make difficult choices. The sooner we begin to make these choices the better chance we will have to cushion the blows that will come from either resource depletion, environmental degradation, or both. The most important natural resources that we have to worry about running out of is petroleum. Because this resource is finite and "depleteable," it will eventually reach a point of such scarcity where our demand for this resource vastly exceeds our ability to produce it. In other words, this resource will run into "hard limits" which no amount of technological innovation will be able to overcome. The increasing scarcity of petroleum and other resources which are vital to the production of a wide variety of consumer goods will eventually force us to curtail our consumption patterns. In turn, a reduction in aggregate demand will lead to an increase in the unemployment rate.

When domestic consumer spending fails to remain at or near current levels, many domestic private sector jobs will be lost.  If the private sector cannot provide jobs for these people, some responsibility for providing jobs falls on government. In cases of massive unemployment triggered by a collapse in consumer demand, government cannot just abandon its responsibility to insure the welfare of its people, any more than the people can abandon their responsibility to support their government. The liberal point of view emphasizes the responsibility that government has to insure the welfare of the people. The conservative point of view emphasizes the responsibility that the people have to their government. In the case of employment, both points of view have merit. On the liberal side of the argument, the people have a right to a "living wage." It is up to government to protect this right by providing people with employment during downturns in the business cycle, and even in cases of personal adversity which are unrelated to the business cycle. However, on the conservative side of the equation, if the government is expected to guarantee the people a right to a living wage, then the  taxpayers have a right to demand labor in return for a living wage. This labor should be of a such a kind and difficulty that it discourages resort to its use, except under the worst of personal and economic circumstances. These then are some of the important considerations which will guide the work that is to follow.

As with all capital, American capital seeks the highest return on investment.  In order to maximize profitability, capital  must seek out the cheapest sources of labor. The developing nations of the third world have provided capital with a cheap source of labor.  As a result of capital's pursuit of the cheapest sources of labor, the interests of international capital and the interests of the developing nations have coincided at certain points. Simultaneously, as capital has migrated from the developed nations to the undeveloped nations, in search of cheap labor, our industrial working class has incurred tremendous losses in both its wage earning potential and its collective bargaining power. Labor's collective bargaining power has declined in direct proportion to the number of industrial jobs which have been lost to foreign labor. Yet, the demise of "big labor" has not been all bad. Many of our largest labor unions were notoriously corrupt and did not deserve their power. Their abuse of power contributed to their undoing. From its previous position of collective bargaining strength, American labor gave industrial capital increased incentives to locate in those countries where the labor force is unorganized, and where it is substantially less inclined to collectively bargain for higher wages. The fact that weak labor laws and unorganized labor tend to prevail throughout most of the third world is attractive from the standpoint of capital.

Industrial capital has attempted to rationalize its movements to the periphery by emphasizing the consumer benefits.
A cheap third world labor force has made possible the proliferation of a wide variety of inexpensive consumer goods in the developed nations generally.  At the same time, the purchasing power of the American industrial working class has declined as a result of the movement of domestic industry to the undeveloped nations. Correspondingly, the benefits to consumers which have flowed from the relocation of capital to the third world have been unevenly distributed. From the standpoint of most consumers, free trade does not mean the loss of its jobs; it means less expensive consumer goods. But, from the standpoint of those in the industrial working class, they would have been better off if they had been able to keep their high paying jobs, even if it meant that they had to pay more for a variety of consumer products which were produced by their own labor. The migration of  industrial capital to the periphery has imposed heavy costs on our own industrial working class and on our industrial infrastructure.

Industrial capitalists rationalize capital movements to the periphery in a number of ways. These capitalists are quick to point to the historically low rates of domestic unemployment as evidence that the economic position of the American worker has improved throughout the process of domestic deindustrialization. Low domestic unemployment rates would seem to support the view of that the overall health of the American economy is sound. But, to assess the actual state of of employment levels, one must look beyond simple unemployment statistics. The way that labor statistics are currently calculated, they do indicate historically low rates of unemployment. But, the way these statistics are calculated has changed over the years.  These statistics now count people who are employed less than full time as being "employed." Formerly, labor statistics only counted those who were employed full time. The proper way to calculate the unemployment rate is to determine the percentage of the eligible workforce between the ages of 18 and 65 that is seeking full time employment.  According to this more stringent measure, the unemployment rate is not exceptionally low. Unemployment statistics do not tell the whole story of what has been happening in our economy.

Due to so called "free trade," the vast disparities in living standards and wages between the developed and the underdeveloped have become more relevant to the American worker than ever before. International capital movements and the loss of American manufacturing jobs to cheap foreign labor have driven home global economic interconnectedness and interdependencies. But, free trade cannot truthfully be called "fair trade" if it forces workers from nations with high standards of living to directly compete against workers from nations with vastly lower standards of living. In their current forms, our "free trade" policies are structured to benefit businesses, capital, and consumers first. The preservation of the domestic industrial infrastructure, and the preservation of American manufacturing jobs are assigned a lower priority. Currently, there is a state of "disequilibrium" between these competing priorities. By extension, there is disequilibrium between the interests of capital and the interests of labor. This disequilibrium tends to favor capital. And yet, from the standpoint of free trade, any attempts to artificially protect domestic jobs would be suspect. Government efforts designed to protect domestic jobs often translate into subsidized inefficiencies. For inevitably, whenever protectionism is involved, inefficiencies in the workforce will tend to arise.  Consumers and businesses tend to be hurt by protectionist policies. If American labor is not competitive, then the laws of capitalism dictate that it must suffer the consequences. Even so, the fact remains that It is manifestly unfair to ask American workers who receive relatively high wages, and who enjoy a relatively high standard of living, to compete against a third world labor force.

There are principally two ways that we can approach the problem of unfair competition that takes place between nations with relatively expensive labor forces and relatively high standards of living, and those with relatively cheap labor forces and much lower standards of living.  First, we can adopt a strategy that accepts this unfairness as an inescapable aspect of the nature of economic competition. As a logical extension of this strategy, we can simply choose to emphasize the benefits of free trade for American businesses and consumers. In turn, this strategy will also be the one which benefits  foreign labor over the short term.  Alternatively, it is possible to conceive of a certain compromise between the adoption of outright protectionism on the one hand, and unconditional free trade on the other.  This alternative strategy would be designed to improve the competitive position of the American worker and it would also be designed to raise wages and living standards of the developed countries. This plan would involve the phased implementation of "wage equalization duties" or WEDs. For instance, lets say that the differential in labor costs required to produce a widget in the United States and Mexico is $2 per widget. In other words, if a widget were produced using our domestic labor force, it would cost $2 more than it would cost to make the same widget in Mexico. In this case, the manufacturers of widgets located in Mexico would have the option of either paying a wage equalization duty of $2 per widget on every widget imported into the United States from Mexico, or they would have the option of actually distributing 2$ per widget directly to the assembly line workers who are engaged in its manufacture in Mexico. Given these choices, most sensible firms would choose the latter option. If a plan for such WEDs were phased in gradually, its would have a minimal impact on the demand for widgets.

The flight of production jobs from the developed nations to the third world was virtually inevitable. The inexorable laws of capitalism would allow no other result. And yet, government could have easily provided capital with incentives to remain in the United States. By means of WEDs and similar devices, the U.S. government can now provide firms with incentives to keep a larger portion of their labor forces in the United States.  WEDs will allow our labor force to compete on more or less equal terms with the labor forces of other nations, without having to give up their standards of living. They will help level the playing field between the labor forces of the developed nations and the undeveloped nations. Simultaneously, they will facilitate third world development by increasing wages in undeveloped countries.  Without such measures, it is not fair to ask the American worker to compete against a labor force from countries that have weak or non-existent labor laws.

Without government efforts designed to level the playing field, the domestic economy and the fate of the American worker are very much subject to international forces which are largely beyond our control.  WEDs are but one example of some of the ways that we can begin to place the international economy more firmly under our control, both for the benefit of our own workers, and for the benefit of developing nations. Control in this sense means predictability. Predictability translates into sound financial markets. Predictability and sound financial markets translate into the potential for economic prosperity on a global scale. Yet, for this prosperity to occur, planning on a global scale must also occur.  A high level of coordination and planning between the industrialized nations will be needed for the successful implementation of WEDs. WEDs will not be effective if they are implemented in a piecemeal fashion by one or two industrialized nations. They must be implemented by all the industrialized nations nations through a coordinated effort.  At the same time, they must follow a schedule which phases them in gradually, in order to have a minimal impact on demand. This will require a high degree of cooperation and planning between the developed nations and the corporations which have manufacturing facilities in the developing nations. WEDs represent just one important step that must be taken to help improve the competitive position of the industrial labor force in the developed nations vis a vis the developing nations, and to help raise living standards in the developing nations. Until such measures have been implemented and begin to take effect, our obligations to our industrial labor force, and our industrial infrastructure will go unfulfilled.

Apologists for the status quo have proudly hailed continued (until recently) economic expansion and gains in GDP as evidence of the strength of the American economy. But these gains in GDP do not necessarily reflect an improvement in labor's economic condition. These gains can largely be tallied on the "services" side of goods and services, which disproportionately benefits the professional and entrepreneurial middle class. And as long as the gains in the service economy exceed the losses in the manufacturing sector, then GDP will continue to register gains, however meaningless these gains might be for the industrial working class. Just as benefits accruing to labor from GNP prove to be illusory, so too do other supposed benefits appear to lack foundation. Major corporations often point with pride to the number of domestic jobs that are created as a result of their overseas manufacturing operations. But insofar as these newly created jobs are predominantly clerical, managerial, technical, and financial, they are not typically filled by the workers who have been displaced from manufacturing. Because of their relatively low levels of education, members of the traditional working class are not easily qualified for these newly created clerical, managerial, and technical positions. Thus, the typical industrial worker who has been displaced from a higher paying, more secure manufacturing job that offered better benefits, is compelled to compete with other similarly displaced workers for lower paying (and arguably lower status) jobs in the service sector.  These service sector jobs do not  typically reward longevity of service, experience gained in the work place, or the training and skills that these workers brought with them from the manufacturing sector.

The loss of many of our highest paying industrial jobs to cheap foreign labor is the immediate cause for the transformation of our economy from industry and manufacturing to services. At the same time as the service sector has grown to become the defining feature of our economy, a host of new generation "first tier" technical jobs have been created to replace some of the first tier industrial jobs which were lost in the exodus of manufacturing to the third world. However,  this new generation of technical jobs employs a smaller percentage of the total workforce than did the industrial sector. Hence, a smaller percentage of our total population is benefiting from the creation of this new generation of first tier technology jobs than benefited from the industrial production jobs which have been lost to foreign labor. In addition, technical jobs require more education than the higher paying old economy jobs which have been lost to foreign labor. The net effect of these developments is that an increasingly large proportion of our population is employed in relatively low paying service jobs, while a larger proportion of the higher paying jobs have shifted from manufacturing to professional and technical jobs that require more education. Such developments have a lasting adverse impact on our domestic industrial working class, and on our industrial infrastructure.

A younger, more highly educated and technologically savvy generation has been the primary beneficiary of the creation of the new generation of high paying jobs. But, in addition to a relatively small percentage of high paying jobs, there has been a proliferation of lower paying service sector or "technical support jobs" within the high tech sector itself.  The actual big money software and other high paying technology jobs related to the so called new economy, actually remains a small percentage of the total labor force. In addition to the proliferation of these second tier technical jobs, there has also been a proliferation of service jobs more generally. Arguably, this proliferation would not have been possible if many industrial workers had not not lost their jobs to foreign labor. By throwing large numbers of people out of work in the industrial sector of the developed nations, deindustrialization increased the pool of available labor in the developed nations. This increase availability of labor helped to create the low wage environment which has allowed many businesses in the service sector to become profitable.

At the same time as these important transformations have been occurring in our economy, a new wave of uncontrolled mass immigration to the United States has been taking place. The majority of these immigrants come from poor Latin American nations. Many of these immigrants, both legal and illegal, are willing to work at or below minimum wage, once they enter the United States. The entry of these immigrants into our workforce has tended to exert further downward pressure on American wages. As a result, our native workers must compete against low wage foreign labor, even in their own country. In turn, these developments have combined to vastly diminish the bargaining power of American labor and the wage earning potential of the American industrial worker.

In order for our domestic consumer markets to remain healthy, the spending power of the American worker must remain strong. This spending power has been undercut by the process of deindustrialization. The total extent of this reduction in spending power has been masked by the wealth effect of the decade long bull market, and by the emergence of a new generation of non industrial workers who who have been employed in the information economy. The trickle down or wealth effect of the stock market, and the emergence of upper end information economy jobs have been able to somewhat offset the loss of consumer spending power that has resulted from the decimation of our industrial working class.

Thus, we have a low wage inflation environment which is kept low, as long as there is a large pool of poor labor to draw on, both domestically, and in the third world; and as long as the natural resources upon which our economies have become critically dependent (principally oil), do not run into "hard limits." In the midst of this low inflation environment, the American consumer continues to depend on a foreign labor force to inexpensively produce many of the goods it consumes. Purely from the standpoint of the consumer side of the equation, cheap foreign labor is a benefit. At the same time, the availability of cheap foreign labor has been the principal reason for the decline of the industrial sector in the developed nations, and for the loss of relatively high paying industrial jobs in the United States, Western Europe, and more recently, Japan. These developments have affected Americans differently depending on their roles as service workers, professional workers, industrial workers, and consumers. As industrial workers, and especially the less educated industrial workers, the effects from the transition to a service economy have been almost uniformly negative. It is much easier for us to emphasize the consumer side of the equation, if we happen to hold one of the higher paying first tier professional or technical jobs ourselves. But, for those of us who have been relegated to one of the many lower paying service jobs as a result of international capital seeking a higher return on its investment, these are not totally healthy developments.  And, if the vast majority of Americans become permanently relegated to lower paying second tier jobs, it foretells the birth of a new system of social and economic stratification which will be bad for the nation as a whole, over the longer term. Under this new system, the vast majority of Americans will perform services for those who occupy first tier professional, managerial, and technical jobs. In such a system of social and economic stratification, the industrial middle-class, which was once the mainstay of the lower middle-class, becomes all but obsolete.

The decline of the domestic manufacturing base and the concurrent rise of the service sector as a major employer has undermined many of labor's post-war gains in the way of wages, benefits, job security, and collective bargaining power. Manufacturing has traditionally harbored some inherent strengths for labor that are not to be found in service sector employment. Specifically, the factory, by placing large groups of similarly engaged workers together in a single place, more readily lends itself to labor organizing activity and unionization than the diffuse work settings characteristic of much service sector employment. Moreover, by virtue of economies of scale, and by virtue of relatively high rates of return on investment that are more typical of heavy industry, manufacturing has been better able to offer labor relatively high wages, good benefits, and stable employment. Because services tend to be less capital intensive, and are less productive of wealth than the physical act of production itself, there is less wealth to distribute to workers in the form of wages and benefits. Consequently, most of the fastest growing service sector jobs are associated with low capital intensity small businesses that typically offer much less in the way of benefits, wages, and job security. Thus, from the standpoint of labor that has been displaced from the manufacturing sector, due to international competition with low wage foreign labor, the recent proliferation of small, independently owned businesses that has followed in the wake of the domestic deindustrialization does not represent a gain. For typically, the new class of entrepreneurs who own and operate these businesses are not former laborers. Typically, this class has been recruited from a somewhat more privileged sector of professional upper middle-class society which has some degree of managerial and business "know how," and often, some degree of capital backing. Moreover, this class of entrepreneurs actually stands to gain from the labor glut resulting from lost manufacturing jobs. For this labor glut will tend to exert downward pressure on wages and will allow these entrepreneurs to hire better workers more "cost effectively." And while a favorable business climate may allow these small businesses to expand and hire more workers, the jobs thus created will not make up for the lost manufacturing jobs for the reasons cited. The industrial working class still emerges the loser.

At the same time, a new generation of workers has emerged in the U.S. which is less content to make things on the factory floor, and which is more at home with information technology. This development will prove to be a double edged sword. There are obvious benefits to our information economy. There are also obvious benefits from the old economy jobs that have been exported to the developing nations.  Many of these benefits are related to the trade deficit. To the extent that the labor force of a nation is unwilling or unable (due to capital movements) to produce the goods or provide the services that it consumes, it cedes economic power to the labor forces of those nations which are willing and able to produce these goods and provide these services. It would have been a better result for American labor, if not for the American consumer, if we could have kept a larger percentage of our manufacturing jobs in the in the United States, at the same time that we added "new economy" jobs. From the standpoint of keeping trade deficits low, It is always best if the people who are the primary consumers of given products are also the primary producers of those products. Whenever we allow ourselves to become dependent on the workforces of other nations to produce what we consume, we should expect "balance of payment" problems related to running large and chronic trade deficits. In addition, maintaining a relatively large production sector is generally healthy for any economy. A nation which allows itself to become too heavily dependent on the importation of finished products will become vulnerable to disruptions in trade from transient political and economic events.

From the standpoint of American labor, all the changes that have accompanied the transition from producing hard goods to the provision of soft services have not been welcome ones.  To reiterate, most service jobs tend to pay substantially less than the myriad of production jobs which they have displaced. Service jobs disproportionately fall into the category known as "second tier jobs." In addition to low salaries, these second tier jobs typically feature comparatively poor benefits, and little in the way of job security.  As the ranks of our industrial workforce have been decimated, due to competition with foreign labor, it has contributed to the increased availability of workers in our domestic work force. In turn, this labor glut has exerted downward pressure on labor costs, which has further contributed to the creation of service sector jobs. Many services which are now marginally profitable would not have been profitable at all in an environment of higher labor costs and tighter labor markets. These services were made profitable precisely because deindustrialization has taken place. These are just some of the consequences of the process of domestic deindustrialization.

Most American females are now socialized to enter the workforce, rather than become "homemakers" whose primary focus is the education and normative development of their children. Under the influence of dominant social norms, women today seek employment outside the home as much out of choice as necessity. As a higher proportion of women have entered the workforce, either out of choice or necessity, it has exerted further downward pressure on domestic wages. The massive entry of women into the workforce (primarily in clerical and service jobs), by expanding the labor pool, has helped to keep domestic wages in certain professions lower than they otherwise would have been. The downward pressure on wages which results from the massive entry of women into the workforce represents a benefit for Americans consumers. At the same time, it tends to hurt Americans as families. More time spent in the workforce means less time is available for parental responsibilities. Less time available for parental responsibilities means less time is available for the education and normative development of children. Less time available for the education and normative development of children means more uneducated and malsocialized adults. When the number of uneducated and malsocialized adults reaches a critical mass, it can potentially have catastrophic effects at the societal level.

If one parent in two parent households did not have to work, it is not at all certain that the unworking parents would devote any additional free time they might have to the proper training of their children. But, the point is that parents cannot devote time to more fully socialize their children when they don't have it to begin with. Under circumstances in which both parents must work to make a living, more and more Americans are forced to depend on "professionals" to socialize their children. Overall, the mass socialization environments that these professionals operate in tend to be much more loosely structured and normatively permissive that the home environment. These "commercial child processing" environments are subject to contamination from a host of influences, including those influences brought in by malsocialized children themselves. These influences pose resistance to the proper normative development of children. As a result, an entire generation of malsocialized children has become a by-product of our current pattern of economic development.

There is a close relationship between patterns of socialization, resultant values, and patterns of economic development. In more technical terms, there is a dialectic at work between socialization, value systems, and the successful creation and conduct of industrial societies. Industrialization first requires certain values to provide its foundations. Values require proper socialization and normative development. At the same time as industrial processes are producing higher standards of living, they are also creating the environmental conditions which can lead to normative failure. If the extent of normative failure is sufficient, the family will come under threat. The family is the most basic institution of socialization. If the institution of the family comes under threat, the future of the entire civilization is placed in jeopardy.

As the middle-class family comes under threat, its fertility rates will decline, relative to the lower classes. At the same, the fertility rates of the least educated and worst socialized members of our society will tend to remain high. The result will be an increase in the proportions of those who hold dysfunctional value systems, and a decrease in those who hold the functional value systems on which the civilization depends, and to which it owes its success. Under such circumstances, it is only a matter of time before the inexorable laws of history assert themselves. This is the pattern of normative development that is playing out in the United states today. The relatively well educated and well socialized segments of our population in the upper and middle classes are having fewer children. As a result, the values which made them successful are held by a smaller proportion of the population.  At the same time, groups with less functional value systems, which have higher fertility rates, are becoming a larger proportion of the population. Simultaneously, most of our immigration is from countries that have been the slowest to industrialize, presumably, because their indigenous value systems were not maximally conducive to such industrialization. These are the value systems which are least conducive to the creation, progress and maintenance of maximally progressive and stabile industrialized societies. If we were to alter our immigration laws so that immigration was mainly restricted to Canada, Australia, the far east, (principally  Japan and India) the middle east (principally, Israel and Saudi Arabia), and Northern European countries, we could better "engineer" the normative composition of our population, as a safeguard against the prospects of normative decline. Normatively speaking, people from these areas of the world would typically provide the best raw materials for our future citizens. For these countries have cultures and value systems which are more conducive to the creation, progress, and maintenance of successful industrial civilizations.

There are major differences in standards of living between countries which are generally related to differences in value systems between nations. The existence of industrial civilizations is critically dependent on the values that people hold.
In particular, the existence of industrial nations depends upon values which conduce to the production of goods and the provision of services on which a high standard of living depends. A high standard of living not only rests upon values which lead to innovation, but on those which lead to the kind of discipline that is required for the production process to remain efficient. In less extravagant terms, a high standard of living depends upon the work ethic. The work ethic of the developed nations, and especially the United States and Western Europe, has arguably been in a state of decline since the early 70s. The same value systems which have allowed us to enjoy the highest standard of living in the world are now coming back to threaten us. When a people enjoy a high standard of living for a sufficient period of time, it can easily have a decadent effect. Most importantly, this effect manifests itself in a loss of the discipline which made the high standard of living possible in the first place. This decadence effect has been illustrated time and again throughout history. Absent some radical self critique and intervention, the same pattern of values degradation which is now playing itself out in the United States, chiefly by means of an increasingly decadent popular culture, will eventually play itself out in the developing nations of the third world. In the meantime, the United States could easily decline and lose its status as the preeminent world economic and military superpower. This would be a very unfortunate development for humanity generally. No other nation is as well equipped for stewardship of the human race as the United States.  No other nation has the traditions, institutions, or other resources which equip it for stewardship of the human race. If the United States fails, due to internal normative failure, the human project fails. Consequently, It is very important that our cultural ethos remain as pure as possible, and as true to our founding ideals as possible. Even at an advanced stage of decline, a nation can recognize and reverse decadent trends. Given our current knowledge of social sciences, we have no excuse for not reversing these trends. The social sciences provide us with a unique window into the cause and effect basis for the decline and fall of nations. This knowledge gives us the rare opportunity to prevent the cycle of history from happening to us. But, aggressive measures will need to be taken, because the forces of decline are already strong, and are gaining in strength.

Specifically, the NIDL thesis suggests that enhanced capital mobility has been facilitated by technological features (such as advances in telecommunications) and institutional features (such as advances in, or expansion of banking, accounting and legal services). In turn, this mobility has enabled capital to exercise increased flexibility in an increasingly volatile and unpredictable market environment. These advances have allowed capital to pursue a global strategy of profit maximization, by taking advantage of the cheapest supplies of raw materials, semi-finished goods, and particularly, labor.

The expansion and internationalization of the operations of the trans-national corporations (TNCs) also represents a strategy for diversification and decentralization to spread the risks of loss in an increasingly unpredictable world economy. The desire to achieve security through diversification came not only as the result of growing insecurity of markets, but also as the result of falling profits. Falling profits of Trans-National Corporations (TNCs) were in part attributable to the increases in labor costs in core countries that came in the aftermath of World War II, when labor's bargaining position was particularly strong, by historical standards. Falling profits are also to be understood in terms of the state's attempts to impose greater regulatory restraints upon capital and exact more from capital in the way of revenues. Because capital has assumed an international strategy for profit maximization, it must locate in those regions where it will incur the lowest costs, both in terms of labor wages, and in terms of taxes, tariffs, and other state related expenses, in order to remain competitive. That is to say, if international capital is not competitive "internationally" it is not competitive at all.

The new tendency of capital to seek the highest possible return on investment, rather than to simply enjoy an "adequate" return, relates to is newfound mobility. Prior to the advances which now facilitate rapid capital movements, (which may take place without showing up as dramatic changes in the rate of direct foreign investment) capital pursued regional strategies which meant that its alternative investments, variable costs, and profitability tended to fall within a narrower range, where the differences between what constituted an adequate return and a maximum potential return were not all that apparent. An investment which yielded a lower rate of consistent profit might thus be chosen over a more volatile investment which tended to spike and fall. Moreover, capital was fundamentally different in this setting as opposed to its international form, in that it was primarily tied into productive investment, rather than speculative, paper investment. Thus, productive capacity for specific core countries was higher before capital became internationalized.

In the quest for profit maximization, NIDL proponents argue international capital has migrated from core nations to the periphery in order to take advantage of cheap labor markets and lower taxes (largely due to undeveloped patterns of social spending on infrastructure and provision of a living wage common in core countries). Some NIDL theorists argue that this move was directly calculated to discipline organized labor and to penalize those states that had grown too big in terms of their social welfare functions, both of which result in costs to capital and thereby inhibit global competitiveness.

To summarize, the forces seen as driving the NIDL are the desire to expand markets, the desire to minimize costs by taking advantage of the least expensive sources of labor, semi-finished goods and raw materials, the desire to take advantage of national policies specifically designed to attract capital. These policies include tax incentives, lowering or elimination of trade barriers, provision of infrastructure, such as port facilities, highways and an educated workforce (when required), all aimed at maintaining global competitiveness and maximizing profits. The patterns of development that result from these forces which influence the movement of international capital represent a major transformation of both core and periphery.

The patterns of development that emerge from international capital's attempt to maximize profits have broad implications for both the state and for organized labor. Insofar as the state is dependent upon capital as a source of revenue, and as a source of jobs and income for its people, it has a fundamental interest in keeping capital within its borders, especially productive capital, or that which is invested in the means of production. Capital thus has considerable leverage in its dealings with the state under the NIDL hypothesis, which explains why the state is persuaded to create an environment that is favorable for business. A favorable business climate typically entails the dropping of regulations and or the lowering of taxes. This in turn reduces the state's ability to provide a social wage and other social services that make up the modern welfare state typical of most core countries.

Similarly, labor has a compelling interest in attracting capital as a source of employment. Towards this end, it has had to resort to making concessions in the way of lowering its expectations for wages and benefits. The NIDL stresses the intensification of competition for workers that results as international capital makes choices between relatively high priced labor in the core and relatively low priced labor in the periphery. But, an unexpected effect of the NIDL is the peripheralization of the core. For as capital flight takes place in one area, it will tend to depress wages, which will then serve as the impetus for attraction of new capital. Peripheralization of the core also occurs as a result of the proliferation of high end and low end jobs, with a relative decline of jobs in the middle (industrial jobs). This bifurcation of the occupational structure is seen as the dominant pattern emerging in global cities.

Closely associated with the NIDL hypothesis is the globalization of production hypothesis. According to the GOP perspective, the movement of production from North to South is relatively less important than the centralization and concentration of capital that is being brought about by the decentralization of production sites in both advanced and in developing countries, and the enhancement of coordination and control over these decentralized production sites by TNCs. These trends combine under the GOP perspective, to increase international interdependency. This has the effect of increasing the leverage of TNCs in their dealings with governments and unions. The enhanced coordination and control allows TNCs to demand more in the way of concessions from unions and more in the way of infrastructure from government, in return for locating their production facilities in these countries. Enhanced coordination and control functions also allow greater mobility of capital which enhances global interdependence and conduces toward decentralization. Finally, the internationalization of the finance capital has greatly extended and enhanced the power of TNCs, according to the GOP hypothesis, which places communities and countries on a heightened competitive plane as they contend with one another to attract capital.

Labor is also under additional pressure to achieve average social profitability, under NIDL/GOP hypotheses. This enhanced competition applies pressure on labor to keep its wages low enough to attract capital, as workers in the core are increasingly brought into competition with labor forces in the periphery, as an effect of capital's increasing decentralization and mobility. In turn, governments are under increasing pressure to undermine their own tax base in order to attract capital, which means cuts in social services and the loss of a guaranteed minimum income. The loss of a guaranteed survival wage places yet additional pressure on labor to sell their labor power for or at near subsistence wages. Thus, workers face a worsening in their bargaining position with capital over wages, and with the state over a social wage, while the bargaining position of international capital experiences a corresponding improvement. The expansion of the state, and particularly, the expansion of its social welfare functions, is no longer a given of western social democracies, as these functions come under increasing scrutiny form both capital and from governments that are interested in keeping existing capital, or in attracting new capital.

Both the NIDL and GOP hypotheses are subject to a number of convincing criticisms. First, the high stress that the NIDL places upon cheap labor in the periphery as a magnet for capital may be unwarranted. Capital does not appear to have a one minded concern with cheap labor, although cheap labor is by far one of the most important factors involved in its decision making. A very inexpensive workforce would automatically seem to hold promise for the maximization of profits and thereby lend support to the NIDL hypothesis, until other variables that represent costs to capital are figured into its calculations. Chief among these other variables is the political stability of its prospective host country. To locate in a country that is highly unstable politically, is to potentially invite nationalization, or even outright expropriation. Also of concern to capital is the economic condition of the country in which it is located, particularly with regard to the exchange rate of its currency, vis-a-vis the U.S. dollar and other leading currencies. For this will ultimately exert an influence on the international value of what the firm pays for labor in the country. Also to be considered are economic and trade policies, and particularly, what are a country's export duties and taxes on finished and semi-finished goods to be exported. And finally, the condition of a country's infrastructure is a key concern, particularly with regard to education and the literacy rate of its population. The importance that capital attaches to political and economic stability of a prospective location for investment is likely to be relatively constant. But, the importance it attaches to the average degree of literacy and educational attainment of the workforce will tend to be variable, based upon the skill requirements associated with the particular kind of production it is to be involved in.

The typical pattern of development in the core featured the concomitant increase of productive capacity, domestic consumer markets, and capital accumulation. Because the finance capital needed for industrialization originated from within the core itself, the profits tended to be either accumulated or distributed internally, which generated an upward spiral of production, consumption, and capital accumulation. But no such similar pattern can be seen emerging in the periphery. The capital investment necessary for the development of the periphery tends to come overwhelmingly from the core. Consequently, those profits that are not reinvested in plant and equipment tend to get repatriated in the core where they cannot contribute to the capital accumulation process within the periphery. To the extent that the wages of labor are spent on consumption in the periphery, as they tend to be, they are not available for capital accumulation in the periphery.

Because nations in the periphery do not typically have a strong history of support for labor, it is unlikely that short term increases in wages will be significant enough to fuel the expansion of domestic markets in these nations. Moreover, other tendencies threaten to intervene and to derail the transitory gains that may come from further investment. Population growth within the periphery promises to outpace the demand for labor. Necessarily, the proportion of the population engaged in manufacturing will tend to decline. And insofar as the industrial wage earner represents the best hope for a rising standard of living in the periphery, any chances of a "parallel" development would seem to evaporate on this point.

The expansion of consumer markets within the core would seem to hold some hope for workers in the periphery, but this seems unlikely on several accounts. First of all, systemic crises of overproduction are occurring with increasing frequency, resulting in a retrenchment of labor in the periphery. Secondly, technical innovations further decrease the demand for even the cheap labor of the third world. And finally, the leading edge technology that could provide many production jobs for the periphery, is likely to remain within the core. To be sure, during periods of economic expansion within the core, increasing utilization will be made of temporary workers within the periphery. But the long term trend will likely be one of displacement and retrenchment of the industrial labor force within the periphery, absent a substantial transformation of their own economies. The consumer demands of a relatively fixed and proportionately small population can not be reasonably expected to provide a labor demand in the periphery that will sufficient to substantially improve its economic position vis a vis the core.

The current movement of capital and industrial capacity away form the core and into the periphery is not without precedent, even in this century. What is without precedent is the volume, speed, and volatility of this movement, largely made possible by technological advances in telecommunications. The patterns of regional development and decline that have precipitated from the newfound mobility of capital serve as testament to the transformative and disruptive effects of largely unregulated capital movements that are primarily guided by the short-sighted concerns of transitory market demands, labor costs, and profit maximization.

But while the actual transformations in the global economy that have resulted from capital movement maybe seen as a strength of capital, it also reveals the insecurity, and perhaps, the Achilles' heel of capital. The new environment of global competition which high speed, high volume capital movement has engendered leads all capital to adopt a world perspective with regard to labor markets. In turn, this leads capital to abandon any loyalties it may have had to the community or to the workforce of the particular core country that was its primary base of operation, which ultimately poses dangers to capitalism as an institution.

As a result of the dynamics of high mobility, capital's relationship with the state has increasingly assumed a duplicitous character. On the one hand, capital courts favor with the state and even emphasizes its dependence on the state to protect it from "unfair" foreign competition. But, on the other hand, it dismantles its domestic production operations for shipment to the periphery, eliminating jobs and government revenues in the process. To rationalize such behavior, the typical TNC may point to the many technical and professional jobs it has created in the domestic job market. As part of its public relations campaign, it typically extols the virtues of the information age, and stresses the need for a more educated workforce, thereby attempting to shift the burden of proof onto labor.

Although an impressive array of data may be gathered in opposition to both the service economy thesis and the capital flight thesis, there is little denying the fundamental structural changes that have taken place in the economy over the past 35 years. There is no denying that the domestic manufacturing sector employs relatively fewer workers and that non manufacturing jobs, whether you care to call them service or not, have come to employ relatively greater numbers of workers. There can also be little doubt as to the implications of these developments for the long term health of the U.S. economy. Manufacturing has a well established track record in the way of its ability to balance, or to eliminate trade deficits, while services have yet to demonstrate that they can take the place of goods in the area of international trade. Manufacturing has a demonstrated ability to provide high paying jobs for people with only a high school education, while services typically place a premium on education without necessarily promising higher wages. Manufacturing represents the creation of wealth, while services naturally lend themselves to the "shuffling" of the wealth which is created in the production process. From the standpoint of the trade deficit alone, and the decline in economic power that it represents, the attrition of the manufacturing base is an unfortunate event. On this account alone, services will be hard pressed to demonstrate that they can take the place of manufacturing. The burden of proof remains with the opponents of the deindustrialization thesis.

The same norms which led to a dramatic decline of population increases in the developed nations are not as widespread in many developing nations. Unless there is a radical shift in the value systems of these nations which will lead them to radically alter their fertility patterns, and absent intrusive government measures aimed at population control, their populations will continue to expand. As their populations expand, they will continue to eat up the incremental gains that are made in per capita GDP. And, the appetite that these nations have for our foreign aid is likely to grow as well. If we truly desire to assist the development of third world economies, there are a number of steps which we should take beyond "foreign aid." A large percentage of foreign aid is wasted because it does not go to investment, but goes to consumption. As such, it ultimately tends to compound problems rather than to solve them. Consequently, all foreign aid to third world nations should be contingent upon the adoption and implementation of effective population control programs. If populations of third world nations can be held static or reduced, it will contribute to the relative scarcity of labor, and given sufficient time, it will tend to bid up wages and raise standards of living in these countries. In turn, this will make labor in the developed nations more competitive. At the same time, the gradual phasing in of WEDs will also help to increase the wages and living standards of third world labor forces.

The living standards of a nation are a reflection of the value systems of its people. Some value systems are more conducive to human welfare than others. Many traditional cultures around the world cannot expect to emulate the success of the developed nations unless they emulate many of the values and political institutions of the developed nations as well. The differential ability to industrialize, and the corresponding differences in stages of development between nations are a reflection of the relative "functionality" of various social structures and value systems. In the course of competition between people with different value systems, those people who share the most functional values are rewarded with a high standard of living, and those with less functional value systems are denied this standard of living.

At some point, the values that people hold will potentially be affected by the course of industrial development itself. Thus, if there is a sub population of individuals in a country which holds values which are relatively conducive to the accumulation of capital, and to the acquisition of the skills needed for its successful deployment, the presence of this elite sub population will serve as a catalyst to help a nation develop. The presence of such a catalyst can lead a nation to develop in spite of the fact that the majority of the indigenous population continues to hold dysfunctional values. In less complicated terms, people who live in close proximity to an example of successful development begin to see the advantages of adopting certain "non-traditional" values, and they actually have the opportunity to adopt these values. In turn, the adoption of these values by larger segments of the native population provides a basis for eventual industrialization. India is a case in point. Because of its willingness to adopt certain non traditional values and practices, which are partly legacies of its colonial past, India is more well positioned for development than many other undeveloped nations.

There are vast inequalities in the standards of living between nations chiefly because there are vast inequivalencies in the degree to which their value systems are "functional" or in the degree to which they are conducive to industrialization and production of the goods and services on which a high standard of living depends. In practical terms, this translates into differentials in the degree to which given peoples hold a work and an education ethic. The nations of southeast Asia stand a very good chance of rising to first world status, "if they can contain their population growth," principally, because their preexisting value systems are highly compatible with the tenets of capitalism. By and large, Asians tend to work harder and to be more devoted to the ethics of learning and education than do people in many other regions of the  world which have been slower to develop. Holding a strong work and education ethic gives these people the advantages they need to raise their standards of living.  Standards of living between cultures are not equivalent, because peoples, cultures, and values are not equivalent. Relative to the attainment of universally valued goals, such as a high standard of living, some value systems work better and are "more functional " than others. Certain value systems are more conducive to production and the efficient utilization of capital than are others.

In addition to values, there are other important reasons why we should not expect the pattern of development of the typical third world nation to follow the pattern of development that has taken place in Western liberal democracies. First, when the industrialized nations developed, their natural resource base was considerably greater (relative to demand) than that which exists in most third world nations today. Secondly, the population pressures in the developed nations were not what they are currently in the third world. During the period of its greatest development from the 19th to the 20th centuries, and despite periodic downturns such as the Great Depression, the United States economy was expanding at such a rate that it was generally able to quickly provide employment for those who were available to enter the labor force, either as a result of immigration, or as a result of natural increases in population. This tended to exert upward pressure on wages in the United States which meant that the purchasing power of Americans was sufficient to provide markets for the new consumer goods which were produced. Consequently, there was much less dependence on exports to provide a primary market for the goods that were being produced domestically. This same pattern of development has not unfolded in the third world today. In the majority of third world countries, the wage base is not sufficient for most workers to be able to easily afford many of the very products they produce.

The same dynamics which led to the development of the developed nations are not present today in many parts of the third world.  Despite a massive increase in the number of its manufacturing jobs, as a result of investments from the developed nations, the proportion of industrial to non industrial workers in the developing nations is significantly less than it was in the first nations to industrialize. This is primarily due to the fact that labor was less productive at the time when the industrialized nations first industrialized. Due to significant gains in productivity from technological advances over the past 50 years, it simply requires far fewer people to produce a given quantity of products. This means that as a percentage of the total population, in a given third world country, the labor force that is engaged in production is considerably less than it was in the United States and other industrial nations prior to 1950. Consequently, the process of industrialization contributes relatively less to the overall economic health of the developing nations than it did to the developed nations. As a result, industrialization provides less of an "uplift factor" for the developing nations than it provided for the United States or other developed countries.

At the same time as there have been important transitions in the labor forces of third world nations, fertility rates in these  nations have remained high. Up to this point, the prediction that fertility rates of third world nations would drop dramatically with rising living standards, has gone largely unrealized. Thus, the potential labor force is constantly expanding at a higher rate than employment opportunities are being created in the relatively high paying industrial sector. This means that there is little or no upward pressure on wages in many developing countries. Some modest degree of upward pressure on wages is necessary to sustain and to expand the middle-class in these developing countries. If wages continue to remain at or near current levels, or if they are depressed further, the nascent middle-class in many third world nations will come under increasing threat from their own population increases. In the meantime, with their expanding populations, these countries tend to literally eat up any small incremental gains they may be making in their GDP.

Thus, the claimed benefits to the middle-class in the developing countries, which comes about as an unintended consequence of exporting our production jobs to the third world, tends to be offset by continual additions to the labor force due to natural population increases. The benefits of third world industrialization are real enough, but they are also small when compared with the drain on GDP which results from continual population increases. The small incremental improvements to the third world economies which result from industrialization are just not sufficient to bring about the renaissance of the third world which most globalists and free traders have predicted. Any gains that are made tend to be very tenuous and subject to reversal with the slightest change in the economic climate in the developed nations. These gains are not sufficient to significantly raise the living standards of the vast majority of the people who live in third world countries. Until employment in these countries begins to significantly outpace new additions to the labor force which occur through natural population increases, there will be only minimal improvements. And these improvements will often prove transitory and reversible. It is quite likely that when an economic slowdown occurs, it will tend to eat up the gains in GDP which occurred when employment was higher. Third world labor markets will prove extremely sensitive to changes in consumer demand in the developed nations, because this is where most of their products are sold. When an economic slowdown occurs and when demand for the products that they export to the developed nations declines, population increases in the third world will threaten to consume any recent gains that have been made in GDP. Personal incomes, expressed as a per capita figure, will tend to fall. Thus, the claimed benefits to the third world which come from globalization remain tenuous, as long as the populations of these countries continue to grow.

If population growth in the third world slows or comes to a complete halt, as long as consumer demand in the developed nations remains strong, it will tend to result in the upward pressure on wages. This incremental increase in the upward pressure on wages is necessary for the standards of living to improve in these countries. But, even if economic growth in these countries continues to take place at a moderate pace, GDP in these countries could easily fall. That is, population increases can be expected to add more to the unutilized labor pool than new jobs created, thereby tending to depress wages. The only way to forestall such occurrences is by population control, and by a high degree of cooperation and coordination in the economic policies of all the various governments involved. In short, economic engineering on a global scale is needed to achieve successful third world development.

For their part, the industrialized nations must act together and deal with the non industrialized nations as a block. The G8 nations could easily mandate certain measures that would allow third world nations to make real progress. Most importantly, these measures would include WEDs, and incentives for the adoption of population control programs. WEDs can help level the playing field between domestic and international labor markets. Properly structured incentives can be used to reward third world nations for the adoption of effective population control measures.

The socialist continuum theory held that in response to certain exigencies, industrial economies of the developed nations would come to resemble one another in their economic operations, whether they were avowedly socialist, or capitalist.  In other words, their economic systems would tend to converge to occupy a middle range of the socialist continuum. The key point of this illustration was that whether they were nominally capitalist or communist, industrial societies would be forced to more closely resemble one another because they had to deal with similar economic, organizational, and structural problems. They would adopt similar economic institutions to deal with these problems. And while present day Russia has largely failed in its attempt to make the transition to a free market economy, since its collapse, its formal economic arrangements have come to more closely resemble those of the market economies of the West. The collapse of the Soviet Union serves as a testament to the flaws of a completely planned economy. Even so, the Soviet Union never practiced a particularly orthodox form of socialism. More accurately, the economic system of the former Soviet Union was a form of state capitalism.

Economic systems cannot generally be so easily assigned to neat categories of socialist or capitalist. Invariably, economic systems of all kinds involve some mixture of characteristics which are more or less closely associated with one or the other end of the socialist continuum. It would seem that socialism is a matter of degree, as much as it is a matter of kind. Any social order which redistributes even the smallest amount of wealth for the benefit of its least privileged citizens is de facto socialist in some degree. By this measure, socialism in one form or another has been with us for centuries, dating back to the Roman Empire. Similarly, any economy in which a large percentage of GDP is devoted to government activity clearly shows signs of being socialist. And yet, the kind of socialism which is practiced in the United States today is clearly closer to the "capitalist" end of the socialist continuum than is the kind of socialism which is practiced by many Western European nations.

The kind of socialism practiced by the leading nations of Western Europe, including France, Britain, Germany, and the Scandinavian countries, is at the left of the workable range of the socialist continuum. And though these systems are viable, in the degree that they are closer to the left of the continuum than we are to the right, they are inherently more unstable, and more prone to gravitate towards the center of the continuum than we are. If we use some Western European nations as our benchmark, the United States does not qualify as an extreme form of socialism.  However, by virtue of the size of its public sector, and the nature of its confiscatory and redistributive policies, the United States is clearly a socialist economic form. But, in comparison to its Western European counterparts, the form of socialism that it practices falls closer to the center of the practical range.

When the economy is particularly strong, a point further to the right of the socialist continuum may prove to be more stable. Under such conditions, the size of the public sector can be reduced without generating a state of disequilibrium. Conversely, if economic conditions were to worsen considerably, our Western European counterparts could move even  further to the left than they are now, and could devote an even larger portion of their GDP to government spending (for the purpose of redistribution and make work programs), without generating disequilibrium. But, under normal circumstances, and under conditions of only modest economic growth, the point of economic equilibrium will tend to occupy a relatively narrow range near the center of the socialist continuum. And, in the degree that either the United States or its Western European counterparts make a move further to the left or further to the right of this range, under normal economic conditions, the resulting economic form will tend to be transitory, unstable, and subject to easy reversals.

If the economic systems of certain Western European nations went much further to the left, or if these nations were to more fully embrace the ideal of socialism "in practice," it would mean that the government share of GDP would become much larger. If this happened for any sustained length of time, these nations would clearly suffer from some of the same dynamics which contributed to the disintegration of the Soviet Union. Conversely, because the United States is much closer to the capitalist end of the socialist continuum, it runs a similar risk if it moves too far to the right. Pictured in these terms, the socialist continuum is nothing more than the practical range of economic systems which falls between the ideals of pure communism and pure capitalism.  Neither of these ideals has ever existed in practice, with the possible exception of a state of primitive communism which could be said to have existed in some prehistoric tribal societies.

If neither communism nor capitalism are optimally functional, or even workable, in their pure forms, then what terms could we use to describe those systems which are workable, and which are practiced either in Western Europe or in the United States? Some economists have used the term "mixed economy" to describe our economic system. This term refers to a system which basically features a free market economy on the one hand, in combination with a comparatively large public sector on the other. Alternatively, if it were not for the unfortunate connotations which the term carries, we could call our economic system "socialist." Yet, to use the term socialist to describe the economic system of the United States would seem to be misleading. For once again, by Western European standards, we clearly emerge to the right, or closer to the capitalist end of the socialist continuum. And because of our national heritage, and our long standing affinity for the free enterprise system, most of us would find the term capitalism to be far preferable to socialism. But even as we continue to hold a certain romantic affection for the ideals of capitalism, if we continue to think of ourselves as capitalist, it means that we are ignoring some very important facts about our government and our economy. Most conspicuously, it means we are ignoring the size of our public sector, and the unprecedented scope of government activity. The size and scope of our government's activity are enormous by some relatively recent historical standards. Currently, government spending represents some 40% of our GDP. Given this figure, we may as well admit that our economic system is socialist, and that our preference for the term "capitalist" is purely based upon some sentimental attachment we have to certain ideals associated with our past. By virtue of the size of our public sector alone, measured as a proportion of GDP, we are forced to admit that it is not only inaccurate to use the term capitalist to describe the economic system of the United States; but, it is an outright anachronism. At the same time, we are not strongly inclined to want to adopt the term "socialist" to describe our economic system.  For this term carries certain connotations which are in conflict with various aspects of our national character. Americans have traditionally prided themselves on such values as self sufficiency, individual responsibility, and free enterprise. These traditional American values would seem to be at odds with core socialist values

To reiterate its purpose, the socialist continuum is a model designed to help us visualize where we are in terms of the conflicting ideals of capitalism and communism. The socialist continuum is an economic model in which communism, or complete state ownership of the means of production, represents one end of the continuum; and capitalism, or complete private ownership of the means of production, is at the other end. As a practical matter, the range between these ideal forms of ownership of the means of production not only translates into who owns the means of production, but is also a function of the size of the public sector more generally. The size of the public sector is expressed by the common measure of the percentage of GDP which is devoted to government spending. These are generally accepted proxy measures for the extent to which an economic system can be thought of as coming closer to the communist end of the continuum, versus the degree to which an economic system is characterized by private sector activity, or is closer to the capitalist end of the continuum. Once again, as a practical matter, all economies involve some mixture of the two. There are no economies which completely conform to the ideal types represented by the poles of the socialist continuum. All practical variations involve some mixture of features associated with both poles. Consequently, the practical range falls between the two poles of the socialist continuum, because it involves varying degrees of socialist measures, or varying degrees of public sector activity. We could just as easily have called this practical range the "capitalist continuum." The choice of the term socialist to denote this continuum was dictated by the widely perceived notion that communism is an extreme form of socialism, and the notion that pure laissez faire economy is an extreme form of capitalism. Socialism is commonly regarded as an intermediate economic form which falls between these two extremes. And, in fact,  the term "socialist" continuum is used to denote the "practical" range of possible economic systems which all have "some" socialist features, and which falls in between the impractical ideals of pure communism on one end of the continuum, and pure laissez faire capitalism on the other end. Pure laisseiz faire capitalism, in which the government does not intercede at all in the economy, is impossible. We must always have some degree of government intervention in the economy to prevent a few of the most successful and powerful firms from monopolizing economic activity and from running the less powerful out of business. A complete command economy is not workable either.  The division of labor and the unequal distribution of natural talents insure that economic inequality will tend to naturally reassert itself, even under a command economy. Once again, the closer an "economic" form approaches either ideal, the more unstable it becomes. The socialist continuum is the practical range in between the extremes of communism and capitalism.

To be optimally stable, an economic system, (including a government run system of confiscation and redistribution) must assume a form to which the people give their consent. In the case of redistribution of wealth, if wealth is redistributed to people who have a genuine need, and if the people consent to this form, there is nothing wrong with it. The form is perfectly stable. But given our norms and values, it is unlikely that the citizens from which most of the wealth is expropriated will be willing to give their consent to a system of redistribution, unless the people who receive benefit from this redistribution also perform useful work. This applies to government employees no less than to welfare recipients.  As long as the people who receive government benefits (including all forms of government employment), perform useful work in the degree that they are capable; and provided that there is a high measure of public support for this work, a system of confiscation and redistribution may be legitimate. However, if a system of confiscation and redistribution does not require something of value in return, it is likely to generate the kind of resentment among the class from which most wealth is confiscated that grows on a nation like a terminal cancer. When wealth is expropriated and then misused, or when it goes to paying government employees who are engaged in projects for which there is not a large measure of support, it contributes to a growing resentment of the public sector more generally.

A government which systematically expropriates wealth from one class, in order to redistribute it to other classes, is even more likely to generate resentment if those who manage and support it attempt to deny the extent of its expropriation and redistribution activities. Yet, there can be no denying that any nation with a public sector as large as that of the United States, and any system which confiscates and then redistributes as much wealth as does our own, is "de facto" socialist. There is simply no way around this conclusion. Yet, people in government, and our elected representatives in particular, continue to talk around or to deny this reality, even as they pick the pockets of the taxpayers for the purpose of redistributing wealth, either to those employed in the public sector, or to those who simply qualify for its receipt by being poor. To the extent that our government's socialist practices are not firmly grounded in the consent of the governed, to the extent that the vast majority are not knowledgeable of the scope of our government's socialist practices, or to the extent that these practices are not firmly grounded in the "informed consent" of the people, our government is not a "social democracy" despite being socialist. In order for a government  to qualify as a social democracy, the vast majority of its people must know about and approve of its socialist practices. In short, they must give their "informed" consent.

Despite the fact that our form of socialism is illegitimate, because it is neither openly acknowledged by our representatives, nor accepted by our people; we need to be reminded, a government is not inherently evil, just because the scope of its activity is large. If the people assent to its activities, if they want these activities, if they believe that by and large, they derive useful benefits from these activities; and if, once established, the government remains accountable to the people; then, under these circumstances, a "relatively" large and powerful government is not bad, just because it is big. Whether or not a large government sector is good or bad ultimately comes down to a few basic questions: Does government largely reflect your values in its activities? Does it largely do what you want it to do?  Is it largely accountable to the will of the people? Or, conversely, is government largely engaged in activities which do not reflect your values, and is it largely unaccountable to the will of the people? As long as a government is honest about its socialist characteristics, and as long as the people know about and approve of its confiscatory and redistributive practices, there is nothing inherently wrong with a socialist form of government. But, when a form of socialism is so extreme that it destroys incentives for investment; when it destroys incentives to work; and when the extent of its confiscatory practices are so severe that it instills an absolutely destructive sense of injustice in that segment of society from which the most wealth is confiscated, then, that form of socialism is illegitimate and unstable.

The system of confiscation and redistribution under socialism should assume the form of an unwanted necessity, rather than an intolerable injustice. But when the class from which the greatest amount of wealth is confiscated begins to regard the system as inherently unjust, when the system of confiscation and redistribution begins to breed a deep and chronic resentment against both the government, and against the classes who are the principal beneficiaries of this redistribution of wealth; that system of redistribution, and the government which sanctions it, become illegitimate, and a threat to the stability, if not to the life, of a nation. For under such circumstances, capital begins to see itself in an antagonistic relationship towards the state, and towards the rest of society. Capital becomes alienated, and potentially disloyal and subversive. In its alienated form, capital becomes much less willing to act for the benefit of society as a whole. This attitude of capital poses an increasing danger which is confronting America today. For given a state of complete alienation, capital will either leave, or it will become a threat to the state through its subversive activities. In either case, it will endanger the economic health of the nation. And yet, there is a way that we can have a government which is large by historical standards, without alienating capital. The way to have a large government without alienating capital is by informed consent. If the people know about, and approve beforehand, the form and extent of the government's activity, and the form and extent of its confiscatory and redistributive activities, the alienation of capital can be prevented.

The size of our federal government can be kept relatively large by historical standards, and can continue to provide employment for millions of Americans, even as our government spending is reduced. There are many ways we can reduce government spending and lower taxes which will not immediately translate into unacceptable numbers of lost jobs for Americans. For instance, we could begin to incrementally abandon our practice of contributing massive quantities of foreign aid to the developing nations. Proper economic policies and private sector initiatives will do far more to help these nations develop than foreign aid, in its present form. Admittedly, some of the foreign aid we dole out eventually comes back to us in the form of purchases of goods and services. But, more commonly, foreign aid ends up subsidizing dysfunctional social and political systems. Foreign aid should be so structured that it provides incentives for the recipients to reform their social, economic, and political systems, when and where necessary.  In addition, we should be far more aggressive in coordinating our grants of foreign aid to coincide with the movements of international capital.  Coordination between government and private investment capital can be used as a lever to encourage a certain course of development within selected third world nations which will coincide not only with our own national interests, but with global interests. The most obvious concession that we should ask for in return for both private investment and foreign aid funded by U.S. tax dollars, is the adoption and implementation of effective population control programs.

Finally, there are certain obstacles to our becoming a social democracy which we should be aware of. Nations with highly homogeneous populations, such as certain nations in Western Europe, Africa, and Asia, are naturally better suited to evolve social democratic institutions and practices, than are nations which are more racially or ethnically diverse, for the following reason. In racially or ethnically heterogeneous nations, the possibility exists that the class from which most wealth is confiscated will be of one race or ethnicity, while the class which receives the most benefit from the redistributed wealth will be of another race or ethnicity. This immediately renders the issue of confiscation and redistribution a racial issue. This is obviously not the arrangement which would be maximally stable or desirable. The most stable arrangement would feature a set of conditions in which the race of the group from which wealth was taken was largely the same as that to which it was given. For under such circumstances, a system of confiscation and redistribution can take full advantage of the natural affinity which people share on the basis of their perceived similarities. This natural affinity that people share on the basis of their similarities helps promote  a sense of "noblese oblige." Noblese oblige is the term used to refer to the feeling of obligation for the welfare of the lower classes which is held by the upper class.

Conditions of racial heterogeneity in a society do not make for a high degree of noblese oblige,  Because Western European nations tend to be more racially and ethnically homogeneous than the United States, ( this is especially true of Scandinavian countries which, not coincidentally, tend to be the most socialist) the upper classes in these countries tend to display a higher degree of noblese oblige. This is strong argument for these countries to structure their immigration laws so that they can retain a high degree of racial and ethnic homogeneity. In a nation with a high degree of racial and ethnic homogeneity, it is relatively more likely that the upper classes will be able to see the lower classes as reflections of themselves. In short, it is more likely that the upper classes will empathize with those in the lower classes who share their culture, values, race, and ethnicity.  In practical terms, this translates into less private resistance towards government attempts to confiscate and redistribute wealth.

The existence of a high degree of noblese oblige is a requirement for a true social democracy. A true social democracy is based upon consent. The upper classes are less likely to give their "unconditional" consent to a system of confiscation and redistribution in which the class from which most wealth is confiscated tends to be of one race or ethnicity, while the class which benefits most from the redistribution tends to be of another race or ethnicity.  Consequently, a true social democracy is considerably less likely to emerge under circumstances in which there is a relatively high degree of racial and ethnic diversity, as there is currently in the United States. There is simply less of a "natural basis" for its emergence. In an environment of extreme racial and ethnic heterogeneity, the upper class, to the extent that this class is itself racially and ethnically homogeneous, is less likely to develop a strong sense of noblese oblige. Therefore, it must be compelled by the state to give a portion of its capital through confiscation.  And, to the extent that there is force and compulsion involved, as opposed to willing and voluntary compliance based upon feelings of noblese oblige, there will tend to be instability and an unfriendly tension between capital and the state. Once again, under such circumstances, the state will tend to alienate capital.

By Western European standards, the United States is destined to remain closer to the capitalist end of the "socialist continuum" by virtue of its racial and ethnic composition. Even so, simply by virtue of the size of our public sector, and by virtue of the number of people who have come to depend on it for their living, a strong case can be made that we have in fact already made the transition to a social democracy, even though this term is largely absent in our political rhetoric. But, in the degree that our system of confiscation and redistribution is not firmly grounded in consent, and in the degree that capital is alienated, our system is not a social democracy, nor is it likely to become one, for the reasons cited.

As a first step towards reaching consensus on the issue of the proper scope of government,  we need to acknowledge the need to maintain a public sector which is relatively large by historical standards. Just as importantly, we need to understand how this large public sector came about. A number of conditions had to converge before our public sector could grow to its current size. As a result of tremendous gains in productivity, proportionately fewer people were required to participate in the productive process. Dramatically increased productivity displaced workers and made it possible for fewer people to produce vastly greater wealth. The government was in a position to extract some of this wealth from industry for the purpose of redistribution, to achieve near full employment. When productivity has reached the point where relatively few people are engaged in the productive process, and in the production of vast sums of wealth, some mechanism would seem to be needed to redistribute this wealth on the one hand, and to provide more employment on the other. These functions naturally fell to government.

At the same time that industry was achieving an unprecedented level of efficiency, and was creating vast sums of wealth, conditions arose which would provide government with justifications to expand the scope of its activities. The Great Depression provided government with the justification to begin confiscating and redistributing wealth. In the same time frame, World War II provided our government with additional justifications to expand beyond all historical precedents. And finally, the Cold War provided a continuing justification for a high level of government spending. Primarily due to the convergence of these three events, the public sector grew well beyond its historical limits. Simultaneously, large numbers of people began to look at government differently. They began to see government in terms of its ability to provide jobs, and not just as the provider of a few services which it had historically been left up to government to perform. To pay for this enlarged public sector, it was necessary to increase both personal and corporate taxes.

The emergence of government as our largest single provider of jobs, and our resultant dependence on government largesse, has all the outward appearance of a brand of socialism. Indeed, how can any nation in which roughly 40% of its GDP is represented by government expenditure not be regarded as socialist. And yet, the defenders of free enterprise continue to hail the vitality and extol the virtues of our capitalist system. In fact, we have become a distinctly socialist nation, even if it makes us feel better to compartmentalize this truth, or to deny it completely, because this truth conflicts with some of our more cherished values. In today's political environment, no politician wants to come out in favor of socialism, or in favor of a larger public sector. For generally speaking, we detest our own reliance on government largesse. We continue to hold up the ideals of capitalism and free enterprise, even as we have become increasingly dependent on government to provide us with jobs, either directly, or indirectly. We are hopelessly mired in the contradiction between relying on the government on the one hand, and wanting to be free of it on the other. And the issue of the proper scope and extent of government activity is the major theme that continues to divide us as a nation, and to animate us politically. The question of the proper scope of government activity has been the most fundamentally dividing issue that has confronted us since the time of the founding.

Over time, we have simply come to expect too much from our government. The more we expect from our government, the more we are obligated to pay for it, and the higher our tax burden. Our government has not reached its current size without either our knowledge, our consent, or our apathy.  Thusfar, we have not been inclined to take to the streets en masse, to protest the oppressive size of our government. On the contrary, as a people, we are far more inclined to take advantage of the many benefits it offers. Presumably, most of us have come to recognize the need for many government services. And while we might like to shift a larger portion of the tax burden needed to pay for these services on to other groups in society, we do not typically object to government doing more for us. As a consequence, the "legitimate" scope of government activity has expanded considerably. We are thus left with a public sector which is relatively large by historical standards. And yet, the extent of our social welfare state should be a matter of constant concern to us. We must recognize the need to avoid constraining the private sector with the oppressive taxes which are needed to pay for such a state. We can only accept the need for a government which is large by historical standards, without corrupting the values which continue to stress the importance of individual initiative and responsibility, if we can prevent government from growing substantially from its present level.

The bulk of people employed by the government are in the United States military. Considering how often they are called upon to fight wars, one might be inclined to look upon the military as our largest social welfare or "make work" program. But, before reaching this conclusion, one must carefully consider the nature of the service that our military renders. One must consider the military's level of preparedness, and the amount of work that goes into maintaining this preparedness. A high level of preparedness is needed to pose a credible threat to our adversaries, and to our potential enemies. A prepared military is needed as a deterrent, to help preserve the peace. Wars tend to be very expensive. In addition to catastrophic loss of life and property, wars can result in great loss of productive capital. Most of us would rather pay the taxes needed to maintain a relatively large military complex in exchange for remaining at peace. Thus, on the one hand, the military is our largest make work program. On the other hand, it provides us with a service which most of us are willing to pay a premium for, if we carefully consider the alternative.

In an effort to reduce the size of our government, we could drastically reduce our military budget, we could embark on a program of isolationism, and we could abandon our prominent role in world affairs. This would have the more or less immediate effect of throwing hundreds of thousands of people out of work in the both the military and in the defense industry. It turn, this rise in unemployment would exert downward pressure on wages. It would be a net loss to the economy as a whole. GDP would fall.  By employing millions of people either directly or indirectly, the government exerts its own upward pressure on wages by reducing the available labor force. Moreover, where the military and international affairs are concerned, if we do not play policeman now, we will eventually pay the price later. For other nations which aspire to become major players on the world stage (principally China) would rush in to fill the power vacuum that would be left from our withdrawal. Thus, even though an increase in military spending above current levels will exert modest upward pressure on domestic wages (which in turn will exert upward pressure on prices of goods produced domestically and will thereby tend to decrease some of our exports) such an increase makes good sense from both a strategic and an economic standpoint.

According to Keynesian economic models, in general, when economic conditions worsen, and when near full employment conditions no longer exist, it is appropriate for government to step in to provide economic stimulus.  At the same time, government benefits should not be so enticing that they lead people to unnecessarily opt for public assistance. And, some expenditure of effort resembling "labor" should be required in return for the receipt of any government benefits designed to provide subsistence for those who are thrown out of work, or for those who are genuinely unable to find work. The nature of the labor should be so distasteful that it provides individuals with continuing incentives to seek other employment as an alternative to the work required for receipt of unemployment benefits. And, when individuals submit to receive these benefits from the state, it should be with the understanding that they give the state certain increased control over their lives. In addition to mandatory labor, this "increased control" would presumably take the form of mandatory job training.

As it has come to be known to us, one of the primary functions of government is to insure our economic security, or to provide us with a safety net. Under circumstances in which we have large urban populations which could not possibly support themselves in times of economic crisis, such dependency on government would seem all but inevitable. Whereas, if we had become the large and sparsely populated agrarian society that Jefferson envisioned, we might have been able to avoid such a relatively high degree of dependence on government. But, the cultural and technological development of mankind has long since interceded to destroy Jefferson's vision of a society composed mainly of independent and self sufficient citizen farmers. And, as a major step towards reconciling ourselves to the economic, organizational, and technological realities of our own interdependence, we must face the fact that whether they are employed by government, or by the private sector, most of our citizens must depend upon some form of "employment" for the necessities of life.

Again, in Jefferson's vision, the United States would have become an agrarian society which predominantly consisted of farmers who owned their own land. In such a society, Jefferson believed that the creation of dependent urban populations could be largely avoided. This particular Jeffersonian idea is not without a certain nostalgic appeal. But, the reality of life in the 21st century and beyond is considerably at odds with this idea. Technological and economic realities have converged to prevent its realization. Like it or not, we have become a nation which is somewhat dependent on a large public sector to provide us with jobs and benefits which the private sector seems unable to provide alone. Yet, the extent of our dependence on the public sector for employment and benefits is variable. This dependence should bear a close relationship to fluctuations in the business cycle. When economic conditions are favorable, we will have periodic opportunities to reduce both our tax burden and our dependence on government as a provider of jobs and benefits.

This dependence on non farm consumer based employment means that a large portion of our working population is constantly vulnerable to economic dislocations. Consequently, it is incumbent upon the state to offer certain minimal assurances of economic security to safeguard the propertyless masses. By extension, we must recognize the occasional need to provide some assistance to those who are left without work due to the vagaries of our labor markets in times of great economic disruption and change. By extension, we must accept the necessity of certain forms of public assistance in cases of demonstrated need. But, to reiterate an earlier argument, as taxpayers, we are entitled to some assurances that the resources which we allocate for this purpose will be used efficiently. We have the additional right to require that recipients of public assistance provide us (the taxpayers) with the equivalent of labor, in return for receiving public assistance. And, failing this, we have the right to withhold resources in the form of public assistance. In other words, we have the right to request that the recipients of public assistance "expend energy to perform marginally difficult tasks" in return for a basic living wage. And, the recipients of public assistance have the corresponding duty to perform such tasks. Towards these ends, the government is under the obligation to establish a public works corps which affords individuals the opportunity to perform meaningful activities for which there is an acceptable measure of public support, in return for a living wage. At the same time, employment in this public works corps should be an opportunity of last resort.  And, to avoid its use for other than intended purposes, no type of public assistance should be allowed to become too enticing. The stigma which is attached to the receipt of public assistance should remain. The work performed by the public work corps should be of such difficulty that most people will continue to hold a natural aversion to it, except under the most dire economic circumstances. And, employment in the public works corps should be widely perceived as a more distasteful form of work than the vast majority of private sector employment alternatives.

Understood in light of such requirements, it is not the principal aim of our social welfare system to redistribute wealth to achieve some egalitarian ends. Rather, the principal aim of the redistribution of wealth is to meet the needs of our unemployed during periods of economic distress. Towards this end, public assistance should be so structured as to discourage people from wanting to take advantage of it. And yet, it should be available to any American citizen who is able to demonstrate a genuine need. The program for distributing this aid should be so structured as to provide badly needed basic subsistence to vast numbers of people on an intermittent basis, primarily during periods of economic distress. The aim of such redistribution should not be to equalize the social and economic status of the recipients, or to achieve parity with the living standards of the rest of society. No one has a birthright to either social or economic equality. These are privileges that must be earned. As a matter of public policy, we are only obligated to offer assistance to those who meet certain standards which are designed to confer maximum benefit to the nation and to the American people. Stated simply, we have the right to specify that certain conditions should be met in return for the receipt of government assistance.

Under the economic conditions of slow to moderate growth that are likely to prevail in the future, there is simply no other way to insure near full employment, than by employing large numbers of people in the public sector. Ideally, a much larger portion of our economy would be devoted to production rather than to either services or government employment. But, until the living standards in the third world reach such a point that their labor forces are no longer significantly more attractive to capital than our own, this will not occur. In the meantime, it will occasionally be necessary for government to take up the slack.

At the same time that we agree to the need to share the burden for the welfare of our own people, we must recognize that we do not incur any similar obligations to provide for the needs of the citizens of other nations.  We are under no moral obligation to subsidize the poor of other nations through foreign aid, when one of the primary reasons that these people  are poor is because of their failure to adopt value systems which are maximally conducive to their industrialization and economic development, or due to some inherent deficiencies in their cultures vis a vis those of the developed nations. We are under no obligation to subsidize dysfunctional value systems, and we do so at our peril.  And, in those cases where we do grant foreign aid, we may attach certain conditions to its receipt. We may and should request that the recipients of foreign aid give us an active hand in shaping their government and policies.

A similar situation in which economic status does not correlate closely with social status applies in the case of the nuveau riche.  Generally speaking, the nuveau riche are those who have wealth without the commensurate levels of education, refinement, or even upper middle-class values. If wealth comes about as the result of practicing upper middle-class values related to the work and education ethics, then the correlation between one's economic status and social status tends to be more or less perfect.  But, it is the possession of upper-middleclass values that is the major determinant of one's "social" rank, rather than one's net worth. And just as a member of the nuveau riche can have a high economic status without a corresponding level of social status, so too can a person have upper middle-class social status, by virtue of their knowledge and professional training, without having a high income Thus, while the correlations between economic and social status tend to be close, they are not perfect. And, one should not automatically presume that because a person is relatively wealthy that the person ranks high in social status, or that because a person is relatively well educated that the person necessarily ranks high in economic status.

In general, it is the system of values that a person holds, and the outward signs of these values, which determines the person's social status. Outward signs of the values which a person holds allows others to reach a social judgment or to form an opinion about a person's social rank.  Admittedly, the process of social evaluation often involves a certain degree of stereotyping, and many mixed signals tend to be both sent and received. People frequently "get it wrong" when they  attempt to judge the social standing of their fellow human beings. Even so, it is the values that a person holds, and more importantly, the outward consequences of these values, which remain the best indicators of one's social rank. For instance, the values that people acquire earlier in life will dictate the professions they pursue, the priority they attach to knowledge and education, and the consequent skills that they will develop, which society "esteems" more or less highly.  The skill of practicing surgery is more highly valued than the skill of driving a cab. Practicing surgery requires more education and training than driving a cab. Consequently, society rewards the skill which is more rare and difficult to develop with a higher evaluation, or social status.

In the case of economic inequalities, economic status tends to be more purely a function of personal wealth. Economic inequalities arise from differences in  access to valued economic resources considered necessary for life and happiness. Differential access to valued economic resources is based upon the "realized" or developed traits and talents that a person possesses. Unfortunately, the particular talents and traits which are the most highly rewarded economically, are not possessed by all in equal degree.  The differential value that is attached to unevenly distributed traits and talents is at the root of both economic inequality, the socially necessary division of labor, and in some cases, social inequality. The result is that social and economic inequality will remain in human societies in some form until the most functional traits and talents (and the most functional values which lead to the development or expression of these traits and talents) are uniformly distributed throughout the population. In other words, social and economic inequalities will remain until everyone possesses the most valuable traits and talents in equal degree, and until everyone adopts the values which make them equally esteemed by society. The values which make people equally esteemed are the same values that are maximally conducive to the development and expression of their natural traits and talents. Until there is rough equivalency in the genetic propensity to develop these talents, we should expect substantial levels of "social" inequality to remain. And even under circumstances of "social" equality, there will continue to be a need for some level of economic inequality to provide individuals with differential inducements to develop the skills needed to enter certain occupations.

Radical egalitarians believe that everyone should have a roughly equal entitlement to economic resources (wealth) and social resources (status), and that differential rewards for differentially valued traits or talents should be kept to a minimum. And yet, there is no denying that certain traits and talents are more rare than others. Consequently, the more rare a trait or talent is, the more highly that it is valued. It is natural that higher rewards should accrue to those who possess traits and talents based upon their relative scarcity. The laws of supply and demand apply to human attributes as much as to anything else. In order to successfully participate in economic life, one must offer something that others attach a value to. By the act of participating in economic life, human beings must market certain traits and talents which they possess for the benefit of others. In so doing, they must inevitably compete with other human beings who have or lack these traits or talents. This competition is natural.  And to the extent that differential value is naturally attached to certain traits and talents, to the extent that these traits and talents are naturally scarce, the resultant inequalities are natural.

The radical egalitarian will also assert that it is mainly "ascribed characteristics" or social conventions and structural arrangements which are responsible for economic inequality. In other words, differential opportunities and availability of resources are mainly to blame for social inequalities, rather than real differences in the traits and talents of men. The radical egalitarian argues that economic inequalities are primarily the result of an uneven playing field, and that if all people are given the same opportunities, they will all have an equal chance to perform the most socially and economically rewarding jobs.  To these egalitarians, it is differential opportunity that is mainly responsible for economic inequalities, rather than any differences in undeveloped latent abilities which result primarily from innate differences between human beings. But the egalitarian's conclusions  are flawed. The egalitarian chooses to focus on only part of a complex chain of cause and effect, to the neglect of other factors. The model of causation which the egalitarian employs to explain social and economic inequality is incomplete and only partly true. The model of social and economic inequality is only complete when both innate and environmental variables have been factored into the chain of causation.

The "synthetic" model of causation to explain differentials in the distribution of natural talents involves both environmental and innate variables. For example, people self select their professions on the basis of underlying predispositions and capacities. But they also select their professions on the basis of values. As the primary instrument of socialization, it is primarily the responsibility of the family to impart those values which are maximally conducive to individual success. And even when this is done, some will not succeed in the competition. A certain number will be washed out in the process due to the fact that they possess abilities which fall short of what the market demands in their chosen profession.

In the case of mental abilities, the differences between human beings are far more subtle, complex, and more difficult to identify and observe than mere differences in visible physical characteristics. And yet, the differences are real. Any brain scan reveals different areas of the cerebral cortex will show different levels of activity between individuals. These differences occur naturally. These differences translate into different abilities to perform certain socially valued tasks. These differences represent the physiological or the raw cognitive differences between human beings which translate into different abilities and aptitudes for the development and expression of certain talents. Having a natural aptitude for a rare talent does not automatically translate into the expression of that talent. But, it reduces the threshold for the expression of that talent, and makes it more likely that the talent will be expressed, if the individual is exposed to the proper developmental environment. The proper developmental environment is a culture which facilitates the development and expression of diverse talents. This is the kind of environment that our system of education "attempts" to create.

Even our worst school systems provide enough diverse instruction to activate "exceptional" latent or dormant capacities. On this account alone, the egalitarian's argument begins to loose some of its idealistic luster. Because all must typically go through this myriad of diverse subjects designed to bring out and help develop a broad range of underlying diverse talents, the educational system is highly egalitarian, even as it is highly inefficient. Given current "applied" technology, no one can know beforehand which students are most likely to excel in which areas. And when attempts are made to track individuals, or to place them on a path of development that is considered best suited to their "natural" abilities, many will be misrouted. Given such limitations, the best solution is to follow a broad developmental approach which gives latent talents the "opportunity" to express themselves. In general, our educational system does this quite well. In the course of our normal primary education, we all have to tolerate subjects that we dislike, or that we are no good at, in order to give those of us who do have interests and abilities in these areas a better chance at realizing their talents. In this sense, our educational system is extraordinarily inefficient. For our general educational philosophy dictates that all must go through this maze as part of their normal education. In the course of running the maze, natural talents have an opportunity to develop and to manifest themselves. From this point, educational opportunities present themselves largely irrespective of one's economic class, in the form of scholarships, grants, and even student loans.

Having the proper values reduces the threshold for development and expression of certain talents still further. Thus, there are at least three groups of factors involved in the differential expression and development of talents and traits to which differential economic rewards are attached. 1) Natural talents- in the form of  differences in raw cognitive ability as a function of brain development, which translates into a cognitive predisposition towards a certain kind of mental activity and into the expression of certain kinds of skills to which greater or lesser economic value is attached. 2) Values- which encourage or retard the expression and development of certain talents, which are largely a function of the socialization one receives from one's immediate family. 3) The larger cultural and educational milieu that one finds oneself in- which either encourages or retards the development and expression of certain abilities and skills. Two of these three groups of factors are currently largely beyond society's control. Society can attempt to even the playing field, by making educational opportunities widely available. But society can do little to instill the initial values and discipline that are needed to achieve academic excellence. And, short of practicing eugenics, it cannot enhance raw cognitive ability either.

Given this set of circumstances, and given the continuing need for a division of labor which demands greatly varied talents, the very concept of radical egalitarianism is unjust, unnatural, and unrealistic. The best that can be done to address the ideal of equality is to guarantee individuals a living wage if they are thrown out of work, and if they demonstrate a willingness to work. In other words, society establishes a level below which it will not allow individuals to sink, in their competition over scarce resources. By providing some cushion in the competitive process, we are in effect ameliorating competitiveness by consideration of other values.  This also can be expected to exert some modest upward pressure on wages, by artificially decreasing the pool of available labor. Thus, government employment and provision of assistance would seem to artificially restrict labor markets and to artificially inflate the cost of labor. But, it can be argued that this effect is minimal, and that in the absence of government assistance, many people would not be participating in the economic competition anyway. Rather, they would just be beggars or thieves.

At its most basic level, our economy involves competition over scarce resources. Certain scarce resources are universally valued. Unfortunately, people themselves are not universally valued for their traits or talents. The differential value placed upon the traits and talents of individuals translates into differential entitlement to the resources which are universally valued. These traits, and their uneven distribution in the population, are at the root of economic inequality. They are also at the root of the socially necessary division of labor. Arguably, if everyone possessed the most highly valued traits and abilities in the same degree, the less demanding work of society would not get done. This is not a necessary outcome. For people with exceptional abilities can perform the most menial work in society for a portion of their work lives. There will always be a basis for the division of labor, based upon life stages alone, even if we were to genetically engineer ourselves to the point where virtually everyone possessed the raw cognitive ability and other traits needed to perform society's most difficult work. Even in a situation in which all possess more or less equal potential to perform the most difficult and economically rewarding work, different stages of development and maturity will to some extent serve to maintain the division of labor in society. Young people with little education would continue to be recruited to the jobs which required the fewest skills.

The egalitarian stresses the importance of education and other state measures to improve the lot of the less fortunate. This is undoubtedly where part of the focus should be, but not to the exclusion of other equally important factors. The egalitarian argument focusses on the structural defects of society and places responsibility for individual inequalities on the system of economic distribution, or on society at large. In particular, radical egalitarians tend to blame the individual's failure to achieve social or economic equality on a particular social or economic system. They make little or no allowance for failures at the primary level of socialization, or at the family level. And yet, this is where first responsibility lies for insuring social and economic equality. Failures at the family level are largely to blame for the failure of individuals to adopt the values that will predispose them to take full advantage of their educational opportunities. Equalization of educational opportunities will do nothing to correct deficiencies in values. The possession of certain values and habits is necessary for people to take full advantage of their educational opportunities. It is primarily the responsibility of the family to instill the values which predisposes people to take advantage of educational opportunities.

The egalitarian will suggest that proper intellectual and social development will naturally follow from an infusion of the proper economic resources. In fact, this does not take place. The values which conduce to proper development must be in place beforehand, or the material resources which the government allocates to assist individuals will merely go to consumption, rather than to the improvement of their life chances. Resources that are given to individuals without proper normative development will generally be wasted. These individuals will typically spend the resources in accordance with their preexisting dysfunctional values, which will typically not lead to an improvement in their economic or social status.

At the same time, society has a responsibility to provide people with a living wage. In return for a living wage, society is entitled to some assurances. By agreeing to provide subsistence for these people, society deserves to have some say in their patterns of normative development. Society is entitled to some assurance that its investment in public assistance is not wasted, and that the greater part of this investment will be designed to facilitate the recipients' future employment. Taxpayers deserve some assurance that the recipients of public aid are not not freeloading. Consequently, as a condition for the receipt of public assistance, individuals must work and or submit to compulsory education and training for which an acceptable measure of performance is required. If the prospective recipients of public assistance cannot demonstrate either discipline, attentiveness, or a willingness to work, they are not entitled to public assistance, unless a legitimate case can be made that they are physically or mentally unable to perform useful work.

Our current pattern of economic growth is critically dependent on the availability of the physical resources needed to sustain the production process needed to maintain a high standard of living. The ability to satiate a seemingly endless supply of consumer wants is one of our economy's greatest strengths.  But, in an environment of increasing scarcity of the natural resources on which it has grown critically dependent, this strength could easily turn out to be one of our economy's greatest weakness. Most people tend to be complacent towards the prospect of a decrease in their standard of living, for there is little evidence today that we live in an environment of impending scarcities. Technological innovations have continued to yield  productivity increases. Productivity increases have led to a greater material abundance and a higher standard of living in the leading industrial nations than ever before. The "overall" standard of living has continued to increase, even as certain natural resources have grown more scarce. Yet, despite such advances, there remain some disquieting signs that our current consumption patterns cannot extend indefinitely without running into some "natural" sources of resistance.  In fact, it can be argued that our "quality of life" has already begun to decline in measurable ways, even as there have been some improvements in our "standard of living." For despite an abundance of consumer goods, particularly, a vast array of consumer electronics, there are examples where our technology has run into natural limits, and has failed to produce a higher standard of living. As a major aspect of our standard of living, consumer electronics are a notable exception. Consumer electronics and software technology derive the greatest part of their value (and cost) from the human intelligence and labor required to produce them, as opposed to the actual physical resources of energy and raw materials required for their manufacture.

There are even examples of aspects of our standard of living that have declined, while the overall standard of living continues to remain high. It would seem that no matter what your technology is, you can only grow so many trees, or so many bushels of corn per acre. Similarly, you can only extract so many barrels of oil from the Earth, or get so many fish out of the sea. These are what are known as "hard limits" on the availability of certain resources on which our standard of living has become critically dependent. Once these hard limits have been reached, additional technological advances will be less and less able to result in productivity increases. It should be recognized that technology has "some" ability to expand these hard limits. But, at some point, this ability will yield diminishing returns which cannot be overcome. For there are natural limits to crop yields and petroleum production, because there are hard limits to both the amount of oil that can be extracted from the earth, and to the amount of land which it is practical to make arable through technological enhancements.

As populations continue to expand in some of the developed nations, and in virtually all of the undeveloped nations,
these population increases will begin to place greater strains on a variety of resources. Most immediately, this includes water, food, and energy resources. Examples of growing scarcity of these resources can already be felt, even in the United States. For instance, over the past 35 years, as our cities have grown, our water resources have come under increasing strains. Consequently, mandatory water usage restrictions, most commonly in the form of outdoor watering bans, have become far more frequent in large urban areas. The need for such conservation measures is an indication that the relative scarcity of water resources has increased.

In the case of food resources, the seafood industry is running up against hard limits. The demand for seafood products has increased significantly over the past 25 years, while the supply has decreased. An estimated 75% of the world's fisheries are under pressure from over fishing.  As a result, seafood is significantly more expensive than it was just a few years ago, even adjusted for inflation. The "relative" scarcity of seafood has increased.

To site yet another example of hard limits on the availability of certain resources, over the past 35 years, the availability of timber has come under increasing pressure from over harvesting. As a result, many forest products have increased in relative scarcity and cost. In home construction, this increased scarcity has led to the common practice of substituting particle and wafer board products of lesser quality for lumber and plywood products of higher quality. Particle and wafer board products can be made from younger, inferior timbers, while lumber and plywood require larger, older trees for their production. The decline in the availability of certain forest products, and an increase in the relative costs of these products has occurred, despite technologically related productivity enhancements in the timber industry. The resultant need to substitute building materials of lesser quality for those of higher quality represents a case of "decline" in living standards.

To cite yet another example of ways that our standard of living has actually declined over the past 35 years, the size of the average family automobile has decreased, primarily in response to an increase in the relative scarcity and cost of the natural resources needed to produce and to operate it, principally, petroleum. Despite the current popularity of SUVs, there is an unmistakable trend towards smaller, more fuel efficient vehicles. This trend is due to the fact that the "relative" cost of producing and operating these vehicles is more than it was in 1965. The relative cost of producing and operating automobiles has increased over the past 35 years, despite technologically related productivity enhancements, because the raw materials related to the manufacture, operation, and maintenance of automobiles have become more scarce and costly.

These all represent measurable ways that our standard of living has begun to decline in the face of growing scarcity of certain natural resources. These are examples of  "hard limits" on some of the key resources on which our standard of living depends, and which technological advances will be unable to expand indefinitely. More and more, population increases and related consumption patterns are placing increasing strains on available resources. Under these conditions, even the citizens of developed nations like the United States are being compelled to tailor their lifestyles to deal with certain material scarcities (or, to the optimist, a reduction in the amount of abundance). Whether it is to deal with a decrease in the relative abundance of drinking water, or petroleum, we live in an environment in which our expanding populations are imposing increasing costs on our way of life, which technological improvements have not been able to offset. And, as the developing nations attempt to raise their living standards, they will begin to emulate many of the consumption patterns of the developed nations. This will place additional demands on available resources.

Looking ahead a few years, we can see that as more "hard limits" make their presence felt, it will have an impact on both consumer demand for certain products, and on the standard of living more generally. Many of the non-essential products which consumers buy today because of their relative affordability will tend to become relatively more expensive, and relatively less desirable, as the resources needed to produce these products (such as petroleum) become relatively more scarce and expensive.

Energy resources, particularly petroleum reserves, represent the most critical "hard limit" which technological improvements are unlikely to substantially alter. This future hard limit has not yet made its impact felt in the same way as  scarcities relating to water, fisheries, and forest products. Despite the fact that the international demand for petroleum has increased steadily over the years, so far, our ability to find and produce petroleum has roughly kept pace with demand. Supply and demand for petroleum have remained in a state of tolerable, if not always comfortable, equilibrium. Periodic increases in the cost of petroleum and petroleum based products have not been sufficient to dramatically and irreversibly impact consumer spending patterns. The increasing cost of petroleum has not been sufficient to result in a dramatic lowering of the standard of living. Rather, petroleum shortages have tended to be the result of either transient political events, or they have been artificially engineered by the OPEC itself. But, in the foreseeable future, there will come a point at which petroleum consumption will begin to run up against "hard limits" of its availability. This point will be reached when the "ability" to produce oil will consistently fall short of demand. This is the point at which the natural limits in oil production have been reached. These limits are tied to the availability of the known reserves on the one hand, and to the technology which is available to extract these reserves on the other. Once the dynamic of hard limits related scarcity sets in, oil prices will begin to follow an upward curve that is not due to transient  political events or the whims of OPEC. These higher prices will be essentially irreversible. These prices will translate into increasing costs for everything which in any way depends upon petroleum for its manufacture or distribution. In short, the relative cost of everything will go up, which will tend to put a brake on consumer demand.

Known coal deposits are expected to last for several hundred years, at current rates of consumption. But, the petroleum reserves on which our consumer economies are the most critically dependent are expected to encounter hard limits within the next 20 years, even taking into account significant discoveries of new reserves within this time period. Hence, its relative cost will increase. The inability to meet the world demand for petroleum can be expected to have serious ripple effects on consumer based economies throughout the world. The costs of goods and services of all kinds will experience a relative increase, for virtually no category of goods and services are immune to the impact from increasing petroleum costs. As products and services become relatively more expensive, basic economic logic dictates that they will tend to become relatively less desirable. A period of robust economic growth will inevitably give way to a chronic economic slowdown which is not related to the normal fluctuations of the business cycle. Rather, this economic slowdown will be related to the increasing scarcity of one of the principal resources upon which the production process in consumer societies has grown critically dependent. The threat of increasing material scarcity of a critical resource such as petroleum is just one of the material threats against consumerism. Now is the time to begin to assess the possibly dramatic effects which such scarcities could have on our patterns of economic growth and development.

There are basically three curves which are important for designing a model to predict when consumption patterns and standards of living will come under pressure from material scarcities related to hard limits on resources. One curve depicts the productivity increases which are yet possible due mainly to improvements in technology.  The second curve is the actual "hard limits" curve itself. This curve is based on the actual depletion schedules of critical resources that it is practical to exploit, given current technologies. This curve pertains to basic resources needed to produce a wide variety of consumer products, such as petroleum. To some extent, the resource availability curve is itself influenced by technology. For technological innovations can make it practical to exploit certain resources which are currently inaccessible. Thus, to some degree, technology has the potential to expand hard limits, or to make it economically feasible to exploit certain resources (principally oil) which were previously uneconomical to produce. The technology which will make the production of shale oil economical is an example of this. But, again, you can only squeeze so many drops of oil out of a ton of rock. Once the law of diminishing returns takes effect, and despite continual improvements in technology, the particular resources in question will run into hard limits.

To counter the "hard limits" argument, you could claim that, in fact, resources are infinite, because "at some point" we will be able to exploit extraterrestrial resources. But, as a practical matter, and until we develop the technology which will make space flight truly "practical" and cost effective, the critical resources that we depend on for our productive processes and our standard of living, are finite. The predictive model of consumption induced scarcities presumes a closed planetary system of resources. Necessarily, the model excludes the possibility of the practical utilization of extraterrestrial resources within the immediate time frame.  The ability to economically exploit resources on other planetary bodies is not likely to be within the range of technological capabilities for at least the next 100 years. Even when we are able to use extraterrestrial resources, we are unlikely to find any petroleum reserves on other planets.

And finally, there is the population growth curve. This curve represents the increase in the demand for resources that will come about as the result of continuing population growth.  This curve is a function of both increasing world population, and the rising standards of living in the third world. The demand for consumer goods around the world will lead to a per capita increase in the consumption of resources. To the extent that population continues to increase, and the living standards of the most populous nations continue to rise, this curve could be relatively steep. Conversely, to the extent that population growth slows or becomes negative, and standards of living in the developing nations remain low, the curve could potentially be shallow. Consequently, this curve is critically related to the rate of economic progress in the developing nations, and to the cultural practices which will determine the rate at which these nations are able to adopt consumption patterns similar to those in the developed nations. Depending on the steepness of this curve, we will have more or less time before resource depletion threatens our way of life. The only realistic possibility we have of forestalling an unacceptable reduction in our living standards is through population control.

Given the nearly static population growth that future scarcities will compel us to accept, we can still expect continued incremental gains in economic growth to flow from technologically related productivity enhancements. But, as for the prospects of  a high rate of generalized economic growth, we will have to look beyond the Earth. That is, we will have to reach a point where it becomes practical to exploit extraterrestrial resources, to provide the major source for continuing economic growth. This being the case, the next big economic expansion will be critically linked to a certain group of technological advances. Specifically, technological advances in propulsion systems which are currently under development, on the drawing board, or which have yet to be proposed, promise to make space flight economical, and "commercially viable" in the near future. It is mainly the absence of a truly economical payload delivery system, or propulsion technology, that is the key obstacle to the practical utilization of extraterrestrial resources. Making space flight  economical, by means of advances in propulsion systems, is the last major technological hurdle to be overcome in the quest to open the heavens to human exploration and exploitation. Once the long awaited technological breakthrough in propulsion technology has been made, the solar system becomes not merely a group of planetary bodies which we admire from a distance for their beauty and their mystery; it becomes a real sources of raw materials to fuel interplanetary colonization and travel.  Once this technological hurdle has been overcome, it will unleash a renaissance of space exploration, technological development, and economic growth. It is interesting to note that this renaissance will not be limited to the Earth, but will also include our nearest planetary neighbors; principally, the Moon and Mars.

What is so significant about this pattern of economic development is its implications for Earth's own standard of living and quality of life. For once space flight has become practical, it will be possible to shift the productive process upon which extraterrestrial colonization depends to extraterrestrial locations themselves. And, to the extent that the exploitation of materials necessary for interplanetary exploration and colonization can be carried on independently from Earth, and in a self sustained fashion, it actually poses a diminishing threat to our terrestrial environment, and to the availability of diminishing terrestrial resources of Earth. In short, this pattern of economic development can be conducted in such a way that it does not pose an ecological threat to the terrestrial biosphere. Once initial bases have been established for the manufacture of essential raw materials needed for building materials, we will no longer have to depend on the terrestrial industrial infrastructure for space exploration. Earth will become a net importer of manufactured goods produced on other celestial bodies, or in space itself.  In principle, extraterrestrial development provides a potentially endless horizon for economic development, without the prospect of ecological catastrophe, and without any of the prospects of resource depletion of the kind that we are currently faced with on Earth. And, this is potentially the kind of economic development that will not pose a serious threat to Earth's ecosystems, to the extent that it is fueled by extraterrestrial resources, and to the extent that the externalities from the extraterrestrial production process are "contained" and remain extraterrestrial.

The ability to contain the effects of extraterrestrial production doesn't mean that we have a license to trash the solar system. Rather, it suggests that the resources critical to the exploration and colonization of space will be principally extracted from extraterrestrial sources which (presumably) do not have ecosystems which could be damaged in the first place. But, in order for this scenario to unfold, and before this next economic boom takes place, we must hold the line where Earth's sustainable development is concerned. As a temporary expedient to deal with our own terrestrial problems of resource depletion and environmental damage resulting from the production and disposal processes, we must be willing to take aggressive efforts to reign in our excesses of consumption. The best way we can achieve this aim is by limiting the numbers of consumers themselves, or by the adoption of effective population control measures.

As a source of economic growth, space exploration will mean some important changes in the composition of our domestic labor force. First of all, it will mean more jobs for American aerospace workers, and for industrial workers more generally.  And even at the point where the manufacturing base needed to support space exploration largely shifts to extraterrestrial locations, there will still be a continuing need for Earth based resources, principally personnel. For once the renaissance of space exploration begins, Earth will begin to function as an information services hub and an educational center. Earth will become a net importer of goods, and a net exporter of services. The relationship between Earth and the "developing planets" will begin to remotely resemble the current relationship between the developed nations and the undeveloped nations. But, before this stage is reached, we may expect a new industrial revolution of some duration.  This initial phase of increased terrestrial industrial production will be required to manufacture spacecraft and the initial components of basic industry which extraterrestrial settlements will require to become self sustaining communities. This period of post-industrial reindustrialization will lead to the increased demand for workers in the fields of communications, information technology, the aerospace industry, and basic industry.

As space flight becomes truly practical for the first time, due to advances in propulsion systems, many of those currently employed in the defense industry will be well positioned to make a smooth transition into jobs in the greater space industry. For many of the skills required in the production of defense implements will be transferable to the production of spacecraft and habitations for extraterrestrial settlements. The development of practical propulsion systems and other technological developments promises to fuel a new industrial revolution which will rival the magnitude of the one generated by the automotive industry in the early 20th century. And while the public sector will initially be the largest player in the exploration of space, as it has been up to this point, its role in space exploration will eventually be eclipsed by the private sector. Hence, for the most important source of our future economic growth, we need only look to the stars.
 

COPYRIGHT 2001 BY ALEX VAN ALLEN