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Posted on Feb 22, 2019

America rolls down the wrong track: Column

By Don C. Brunell

America’s drift away from our market-based economic system is perplexing. Equally mystifying is the new push to replace entrepreneurs with government bureaucrats in planning and controlling services and products offered to us, the consumers.
Scrapping capitalism is a very bad idea. History shows that socialist and communist regimes dominated by strong-armed dictators, such as in Venezuela, and Soviet-style politburos are ripe for economic collapse and suppression of free speech and human rights.
Consider what existence was like in Poland when it was part of the oppressive Soviet communist bloc. A visit to the Solidarity Museum in Gdansk is a stark reminder of life in a police state under a system of rigid supervision, restricted freedoms and mediocrity. One of the museum’s displays is a series of empty grocery shelves, a haunting reminder of the time when poor working Poles had only a meager selection of rationed food, clothing and household supplies.
When Poland broke the communist shackles in 1989, economic and human freedom flourished. Free for the first time since World War II, Poland cast off its yoke of government domination in favor of an American-style free-enterprise system.
Today, Poland’s gross domestic product is expanding. According to European Union statistics, its GDP growth reached 5.1 percent in 2018, the fastest growth rate since 2007. Among the leading growth factors was domestic demand, especially strong private consumption. In fact, today it is hard to distinguish between bustling American and Polish shopping districts.
U.S. economic growth was 3 percent last year and unemployment logged in at 3.7 percent. In December, employers added 312,000 jobs and 2.64 million in 2018, the best year since 2015. Average hourly earnings rose 3.2 percent in 2018, their biggest full-year gain of the expansion.
Last year’s tax cuts combined with President Trump’s regulatory relief and reshoring of American companies are priming our economic pump. The problem is skilled worker shortages, with nearly 7 million positions unfilled – 278,000 in construction and 493,000 in manufacturing.
This isn’t a problem with our capitalist system. Our prosperity is the result of our creativity, innovation and competitive DNA. Hard work and ingenuity are rewarded in America.
Government intrusion doesn’t work, and as Poles and Venezuelans know all too well, it leads to stagnation, shortages, higher prices and lost opportunities.
Poles see Ford Motor Co. as emblematic of the way our system works best.
When Ford leaders recruited Alan Mulally from Boeing in 2006, the legacy automaker was heading for a $12.7 billion loss. Poor management and an uninspired model line had Ford on the verge of losing its No. 2 sales spot in the U.S. to Toyota.
Mulally immediately took a risk and led the effort to borrow $23.6 billion by mortgaging all of Ford’s assets. At the time, the loan was interpreted as a sign of desperation but is now widely credited with stabilizing Ford’s financial position.
Mulally’s leadership resulted in one of the greatest turnarounds in history, and it happened without a federal government bailout. Four years after Mulally arrived, Ford reported a $6.6 billion profit – the biggest in the sector that year.
It is puzzling to consider the path our nation may take in the next few years. Our elected leaders need to carefully study what is happening in Venezuela and what has taken place in Poland. As imperfect as America’s system is, it is still far better than other alternatives. The Poles are proving that.
Hopefully, Poland and America won’t be two trains passing each other heading in opposite directions. Government constraint of markets, government picking winners and losers, and government edicts to consumers is a recipe for disaster.

Don C. Brunell is a business analyst, writer and columnist. He can be contacted at theBrunells@msn.com.