While California’s annual budget no longer makes the headlines that it used to make and Jerry Brown is crowing about the state being “back”, the bomb that is California’s public pensions has the state on a trajectory to fiscal ruin. This trajectory has the potential to completely remake the political landscape in California, to go along with the changing economic landscape.

Currently, the powerful public employee unions that have controlled the state government (and the California Democrat Party) have protected and expanded retirement benefits for public retirees far beyond the level of benefits available for the average California taxpayer. Over the last 40 years, the Democrats in California have controlled the state legislature for all but 2 years (when they only controlled one legislative house). What this means is that every law passed by the normal legislative process in an entire generation (California also passes laws through direct ballot initiative) was written by Democrats. Over the last 40 years, California’s Republicans have become largely irrelevant to the governing of California for a variety of reasons; an irrelevance that does not appear likely to be reversed anytime soon.

However, the coming pension crisis has the potential to at least, if not make the Republicans in California relevant, at least turn a large fraction of Democrats into fiscal conservatives in that they will have to support cuts to public pensions or see certain Republicans begin to gain a statewide hearing. Specifically, as the case of San Jose has shown in which 30% (or about $300 million dollars) is going to pay for public employee pensions, other public services that the tax paying public actually notices are going to get squeezed as pensions begin to eat up more tax dollars. In the case of San Jose, the city can’t even afford to maintain a burglary unit in its police department.

Simply put, California’s taxpayers are on a collision course with public employees, public employee unions, and the California Democrat Party as it is currently constituted. Not only will California taxpayers resent paying for lavish benefits that they themselves do not enjoy, but they will also resent paying taxes and receiving reduced public services as money is siphoned off to pay for those who are no longer working in the public sector. Even those who don’t pay taxes and consume public services will resent that there are fewer public services to consume. While the system as it is currently constructed can continue awhile longer, and while the government can attempt to stave off the inevitable by finding ways to squeeze more and more tax revenue from the population, eventually the government will become, in eyes of many people, little more than a private pension fund for lucky public employee retirees. When that point is reached, the government itself will lose legitimacy and public employee unions will not be entities that politicians will want to be associated with, as these entities will be vote-losers, rather than vote-winners. This will result in a political realignment. Whether that means a reshaping of the Democrat Party to put it more in line with political/economic realities or a resurgence of the Republican Party in California remains to be seen.

Currently, California’s business/regulatory environment can charitably be called ‘challenging’, and businesses and people (aka taxpayers) continue to leave the state. Piling more taxes on tax-paying Californians to fund existing public pension benefits while keeping public service levels constant will do nothing to alter this trend. At some point, there simply aren’t enough taxes, taxpayers, or public service cuts to maintain public pensions in their current form. The public pension ‘bomb’ is likely to ensure that the political alignment & political coalitions that exist in California 20 years from now will look much different than they do today.

As the labor market numbers have continued to be underwhelming and pundits have offered multiple theories as to why, one potential hurdle to a labor market recovery may be due to the fact that the U.S. labor market is not as flexible as many economists believe. Many on the right will point to the explosion of labor regulations to explain this, and certainly this is likely part of the story. However, another reason may be that the nature of work has changed over the decades leading to reduced flexibility, with the result that those who lose work have trouble finding new jobs and exit the labor force. At the same time, many companies are trying to find workers and can’t. In short, something strange appears to be happening.

Over the last 60-70 years, and accelerating over the last 2 or 3 decades, work has become increasingly complex. Two or three generations ago, a person with a high school diploma (or less) could go from a farm, to a factory, to a construction site, with minimal additional training. Sure, the worker might need to learn how a specific assembly line operated, but mostly the jobs required brawn and grit and also didn’t change too much.

Today, many jobs are much more highly specialized, even at what would be considered to be the lower end of the labor spectrum. For example, take a person sitting in a call center for Company A that produces and sells widgets to retail customers. The call center employee needs to have some knowledge of the business, the types of widgets that the company makes, what they do, what they can be used for, etc., to either answer the customer’s question, or to be able to direct them to the person who can answer the question. Furthermore, over time, the company may make changes to the widgets or certain regulations regarding the widgets may change, all of which the call center employee will need to be familiar with to continue to be a productive worker.

Now, suppose that the call center employee leaves after 10 years and tries to find work in another call center in a completely different industry, say a beauty products supply company. Their skills and knowledge that they obtained with the widget company (apart from working in a call center environment) are of no value to the beauty supply company. In short, this fictional person has been in a career field for 10 years, and going to a similar job in another industry means that he/she is essentially starting another career. Contrast this with a factory worker who, union rules notwithstanding, should be able to go from a car factory to a soup factory to a detergent factory with minimal additional training. In fact, one of the reasons that unions were formed was to protect incumbent workers from competition as the jobs were such a commodity that anybody with minimal training could do them.

Apart from the complexity of many seemingly simple jobs, another item that has reduced flexibility in the labor market has been the internet. With job boards like Monster.com and Careerbuilder, employers have been able to narrow in on exactly the job skills that they are seeking, rather than take on someone who has similar skills and train them in the additional skills that the employer needs. What I mean is that in the old days, the employer would put an ad in the local paper, receive a few resumes, interview a few people who kinda-sorta fit what the employer was looking for, choose one and move on with life. If you had say 3 of the 5 skills that the employer was looking for, you would probably land an interview. Today, you have to have all 5 skills just as a starting point, and even then you might not get an interview. The internet has reduced the cost of looking for an employee and so no matter what odd and unlikely combination of skills an employer may need (Master’s Degree in Economics, lived overseas, worked in the transportation industry and has agriculture experience), the employer can find someone who has it. What this does is lock people into a specific career path and makes them unsuited to any job outside of a very narrow range; in short, less flexibility. If somebody works for years in a specific career path and is let go, in many cases they are going to have to effectively start over somewhere else. This lack of flexibility means that a productive worker is likely to end up in a much less productive job, or as is becoming increasingly the case, end up being locked out of the labor force altogether.

Whatever is happening to the labor force that is causing the anemic employment numbers, part of the answer lies in a labor market that seems to be less flexible than it was. While the internet has changed the world, much as the internal combustion engine did, it is also causing massive economic disruption. While increasing economic complexity has coincided in the U.S. with increasing living standards, it appears to also have led to less labor market flexibility. It remains to be seen how this impacts the social fabric of the U.S., but the impact is not likely to be miniscule.

Recently, the RVI Group out of Stamford, Connecticut (www.rvigroup.com) put out a series of charts in their 1^st Quarter 2014 newsletter. One of the charts showed a trend for the seasonally adjusted unemployment rate (March to March) going back to 1997. A quick look at the chart reveals that the current unemployment rate is higher, 5 years after the recovery began, than it was at the depth of the 2001-2002 recession. When one considers that the unemployment number in recent years has “improved” in part due to the number of people leaving the labor force and therefore no longer considered unemployed, it is hard to shake the feeling that something fundamental has changed from an economic standpoint.

While Republicans may point to Obama’s policies as the culprit and Democrats may retort that Obama inherited an economic mess, some of the slow recovery is simply due to the fact that the recession was caused due to a financial crisis. Recessions caused by banking crisis’ are often longer and deeper than cyclical recessions. In this way, the experience of the U.S. since 2009 is not as abnormal as it may at first glance appear. That being said, the Federal Reserve has engaged in unprecedented activities aimed first at forestalling a financial collapse, and then propping up the market, all the while waiting for the economy to achieve so-called “escape velocity”.

While Obama partisans can take satisfaction the preceding paragraph, it doesn’t absolve him from the fact that his policies don’t seem to have had a really noticeable effect apart from “goosing” the numbers for a quarter here and there. In addition, as Obama enters his 6^th year as President, one cannot simply claim that the economic difficulties are currently still mostly the fault of the prior administration. At some point, one is forced to admit that whatever his economic policies were trying to achieve, this probably isn’t it.

So what HAS changed? While it is still really too early to say with any confidence, it appears that a fraction of America’s labor potential has been permanently put out of commission or otherwise seriously damaged. What I mean by this is that American productivity is not merely industrial machines cranking out products, but also the creativity, ingenuity, and industriousness of its population. While labor has been displaced by machinery in the past, overall standards of living increased as the displaced labor moved into other economically productive activities. As labor gained more and more experience in these new endeavors, it became even more productive. However, as evidenced by the decline in the labor force participation rates, the displaced labor is not necessarily being displaced into other economically productive activities. In many cases, we have people basically being forced to retire early. In other cases, others are leaving the labor market out of discouragement. In still others, college graduates are moving back into their parent’s home or they are taking “survival” jobs that do not require a college degree. None of these activities fundamentally improves the overall productivity of the economy.In addition, we now have the phenomenon of “downward mobility”, something that was largely alien to the American experience up until recently. One example of this would be a worker displaced by machinery in an industrial plant who then has to take a job flipping burgers. The worker has been displaced, but not into a more economically productive activity.

What should be clear by now is that the American economic landscape has changed to the point of being virtually unrecognizable to many who would have lived even 15 years ago. The policy makers appear to be focused on the same solutions that they would have peddled 15, 30, even 40 years ago, when the economic landscape is much different. Until policymakers let go of the past and the intellectual baggage that they carry from it, they will be unable craft appropriate policies for the new American economic landscape.

Ever since the end of the Cold War, certain segments of the U.S. elite has viewed the world as if it is just one big happy marketplace, and that economic policy is the only thing that matters in global statecraft. Wars and instability have been seen as things that happen in parts of the world that are meaningless, except to the extent that those places contain oil. In any case, whatever global shocks do occur as a result of political instability have been short-lived as markets have tended quickly recover and resume their “normal” path. In this view, Europe and Asia have come to be seen as a continents of political &economic stability. What instability there was here has been seen as a function of poor economic policies, with better economic policies being seen as the solution.

Recently, Vladimir Putin and Russia have intruded rather abruptly into this mostly happy narrative with actions in Crimea and the Ukraine. By bringing back specters of the Cold War, Putin has reminded everyone that Europe’s destiny as a fortress of political stability (like the continental United States) where war has, to quote one European politician, “been absolutely ruled out”, is far from assured.

To those who have followed Russia over the last 15 years, these developments are not terribly surprising. While Europe and Asia (and to some extent South America) have been liberalizing markets and crafting a liberal-market economic order, Russia has been operating along its own set of rules. While most states seem to see economic policies as a tool to improve the performance of companies and increase the prosperity of their citizenry, Russia appears to see its companies and economic policies primarily as a tool of global statecraft. For example, Germany has made itself so dependent on Russian gas (and Putin has shown no qualms about reducing or turning off the gas flow in other disputes) that it is inhibiting a united European response to the situation in the Ukraine.

Since the end of the Cold War, European states outside of Britain and France have largely tended to look at defense spending as a sort of welfare spending. Without an obvious threat and with the United States underwriting the security of Europe anyway, defense spending has not been a high priority. Consequently, European states have built up their economies, focused on trade, and enjoyed life (at least until the debt crisis). Going forward however, geopolitics is likely to have a more visible impact on the economic sphere. Firstly, as Europe increases defense spending, economic growth is likely to slow as defense spending tends to be economically unproductive spending, especially when you are just buying arms from another country. Secondly, with Russia appearing to be attempting to reconstitute the Soviet Empire is some form, they are likely to take (or threaten to take) economically disruptive actions from time to time, further hampering global economic growth. Thirdly, investments will now need to be made to counter or work around Russia, raising the cost of maintaining the global economic order and slowing economic growth.

Over the last 25 years, the field of economics and the policymaking elite appears to have forgotten the geopolitical aspect of economics. Economics is often seen as the interplay of market forces. To the extent that politics plays a role, it is often seen as secondary and being driven by market forces. What we have in the case of Russia may be a situation where politics is primary and economics is secondary. The Russian model of state capitalism appears to be organized along this assumption, in which many actions of its global companies appear designed to achieve political results rather than economic ones. Russia today is an actor that appears to be operating on a different set of assumptions than what has underpinned the global economic order. The surprise of the elite was expressed by no less a personage than President Obama when he stated that Russia was taking a 19^th century action in the 21^st century. Like it or not, Russia is determined to be a political player, and it appears that its actions are likely to have a negative economic impact globally.

Recently, comments from the Federal Reserve indicate that the Fed is concerned that low inflation is leading to the low economic growth that has been plaguing the country for the last 6 years. The Feds implied solution is to increase the money supply in order to spur investment and hiring. While these prescriptions follow basic Keynesian economic theory, there may be several problems with this line of reasoning.

The first one is that much of what we call macroeconomic theory has only changed marginally over the last 40-50 years or so, while the economy has changed a lot. Western economies are much more service oriented than they were 50 years ago, and there are many jobs today that didn’t even exist 30 years ago (and some that did exist that no longer do). While this might not matter much on a microeconomic level where issues of supply and demand determine price, it can matter a great deal on a macroeconomic level where the structure of an economy can impact how it will respond to various policies. In many ways, the failure of economic policy to engineer a solid recovery over seven years (The Great Depression last for 10) is a testament to an economic policy elite that has not yet figured out appropriate policies for the economic situation in which the country finds itself.

The second problem is that the Fed’s measure of inflation has changed over the years, and so economic policies that might have had an impact of ‘x’ thirty years ago, now have an impact of ‘y’ today. While deflation (negative of inflation) is highly contractionary and something to be avoided, even at the cost of stoking inflation, the Fed may not be using measurements that can be used in the context of earlier historical periods to determine the appropriate policy response.

Finally, while the Fed has generally been correct that historically, low economic growth and low inflation have tended to go together (except for that economic period in the 70’s in which stagflation reigned), the Fed may not be correct that high inflation causes high economic growth. It is not impossible that the causation works in one direction (high economic growth leads to high inflation), but not in the other direction (high inflation leads to high economic growth). If businesses don’t believe that the economy will be expanding they are not going to invest and hire.

Over the last 5 years, the Fed has been pumping money into the economy. However, due to limited investment opportunities, the money has been flowing into stocks and other securities. In short, while the stock market has increased, economic growth has remained sluggish. This is an indication that something has fundamentally shifted. Rather than simply trying more of the same medicine, the Fed should be trying to figure out policies that are more appropriate for the current economic situation, and not one that we faced 40 -60 years ago.

Another tax season is upon us, and with it roughly 6 billion hours in tax compliance that cost Americans around $168 billion (according to a Washington Post article done in 2013). While a complex and byzantine tax code can benefit those who make their living guiding ordinary mortals through it, or politicians who change it to reward favored interest groups, the tax code actually hurts the country as a whole.

Firstly, the country is hurt economically in that $168 billion annually in compliance cost is actually waste. This money and output does not produce anything tangible for society, and only enables Americans to do what most of them would do anyway in the absence of such complexity (i.e. pay their taxes). When one considers that $168 billion annually is roughly 20% of federal defense spending for fiscal year 2014, it is not hard to see that this amount is not insignificant and that these resources could likely be better spent elsewhere.

Secondly, the current tax code hurts the country from a transparency perspective. An opaque tax code allows politicians to reward certain interest groups by changing the code in ways that the public does not understand to the benefit of those interest groups. Many of these favors would not be politically feasible if the public truly understood what was going on, which is why the politicians don’t just write the favored interest groups checks from the public treasury. By keeping these changes and rewards hidden, the accountability of government is reduced.

Finally, a complex tax code hurts the country from a freedom perspective. In order for freedom to flourish, rules must be clearly defined and known in advance. A tax code where an individual is not sure whether or not one has broken the law, despite ones best efforts to comply, is not code that can be said to promote freedom in society.

Simply put, the American tax code is badly in need of serious overhaul. While certain proposals for flat taxes or national sales taxes in the past have sometimes been criticized on the grounds that they would not raise enough tax revenue or that they are inherently unfair (i.e. having the rich and the poor paying the same tax rate), such concerns do not require complexity to be addressed. For example, a ‘progressive flax tax’ might have 3 or 4 flat tax rates for various income brackets, and there is no reason that these rates could not be set high enough to raise the required revenue. While one can legitimately argue over exactly what the various tax rates should be and what an ideal tax system should look like, one would be hard pressed to make the case that the current tax system is the one that the United States should be using. It is long past time for a major overhaul of the U.S. tax system.

While Ukraine and other news items are grabbing the headlines, one long term problem that hits closer to home is that of Social Security. Although policy wonks are debating solutions to keeping Social Security solvent and political commentators are scaring people with specters of an insolvent Social Security system, a more pressing problem is when people should start taking it.

While one can argue (and some have) that Social Security won’t be there for them when they get there, the Social Security trustees are predicting that the system will be able to pay roughly 75% of promised benefits when the “trust fund” is exhausted sometime in the decade of the 2030’s. Although this not great news for those in my generation, it is not the same as looking at zero Social Security.

So, when should it be taken? Obviously, there is no right answer for everyone, as everyone faces different constraints and choices. But for most of those who can do it, the obvious answer is to wait until 70 to maximize the monthly payout. People who question the wisdom of this by bringing up objections such as “missing out on 8 years of Social Security payments that could be invested, etc., etc.” are, as many people do, mistaking the Social Security system for an investment program rather than an insurance program. The risk that most of us will face in retirement will be running out of money. As most of us don’t know how long we are going to live, it makes sense to go for the option that gives us that maximum cushion against that, which is the higher payout.

Sure, if you wait until 70 to take Social Security and then keel over at 72, you will be kicking yourself for the eight years that you missed out on. But seriously, if you go to the good place after you die, you likely won’t really care. And if you go to the bad place, you will have more pressing problems than missing out on 8 years of Social Security payments. And if it turns out that this life really is all that there is, then it doesn’t really matter because you will be just as dead and non-existent in either circumstance.

So go ahead and assume the best; that you will have many long years in retirement with your friends and loved ones. And do your best to make sure that you won’t be a burden on them by waiting until 70 to take Social Security.

Last week, the White House announced that only 1.08 million people in the age range of 18-34 had signed up for the ACA health care exchanges, or about 40% of what they estimate is needed for the exchanges remain financially solvent without a taxpayer bailout. Dana Milbank of the Washington Post recently wrote a column trying to explain why this demographic segment (aka “millennials”) has, in his words, “abandoned” Obama. While the article perhaps has some insightful points about this generation and some comments about how the Obama Administration did not work to keep the youth engaged after the 2008 campaign, his assertion that the youth are more liberal than earlier generations (a characteristic that has generally been true of people during the 18-34 time in their lives going back at least 3 generations) and that they are “abandoning” Obamacare because he didn’t fight hard enough to put the “public option” in Obamacare appears to be the work of someone who is trying very hard not to admit that his opponents were right about the law.

Simply put, by now the fact that Obamcare is not, broadly speaking, a good deal for young people is pretty well established. The law, financially speaking, depends upon young people over-paying for insurance so that their money can be used to subsidize the old and the sick. In other words, the law depends on young people getting ripped off. Consequently, it should be pretty obvious that it is not in the economic interest of young people to take part in a system that is not a good deal for them (the individual mandate recognizes that Obamacare is not a good deal for many people, hence they must be forced to take part).  Young people are simply responding to economic incentives the way that other people do (and always have), which appears to be a difficult thing for some people to accept.

Furthermore, the entire Obamacare structure was not even a workable piece of legislation. This is a fact that Obama himself continues to acknowledge as he unilaterally (and illegally) suspends and delays various provisions that either can’t work, or are horribly politically unpopular. The reason the structure can’t work smoothly (recognizing that whether something “works” or not depends upon one’s definition) is that it is trying to micromanage roughly 1/6^th of the U.S. economy (roughly $2.7 trillion); a GDP number that only 4 countries in the world surpass. Countries that have tried to micromanage their economies to this extent have all failed economically. That the wheels have come off of Obamacare is hardly surprising, as this is what usually happens when grandiose plans meet economic (and in this case, political) reality.

That people like Milbank feel the need to come up with alternate scenarios for why young people are fleeing Obamacare reminds me of leftists a generation ago trying to find alternative explanations for why the Berlin Wall came down and communism in Eastern Europe collapsed. Rather than accept the obvious lesson that economic central planning was not a prosperous economic system compared with free market capitalism (and that forcing people to take part in such a system as the Berlin Wall was meant to accomplish is hardly the way to happiness), they preferred to be puzzled instead. Perhaps the idea that they could have been wrong, while those that they had derided as wicked, intellectual inferiors could have been right was too much to accept. Or perhaps they were genuinely surprised that all of the laws and repression could not overcome market forces in the end. Whatever the motivation, economic reality will always eventually intrude. When it does, it tends to upend, sometimes violently, the plans and assumptions of those who thought that they could ignore it. The proponents of Obamacare are discovering that now.

This last week, Republican David Camp released a tax reform proposal that is one of the most serious ones put forward in a long time. In addition to reducing the number of tax rates and eliminating a raft of loopholes and deductions, the reform also saves middle class families from being ensnared by the Alternative Minimum Tax (AMT). The AMT was a reform put in place decades ago to ensure that rich folks would not be able to escape paying taxes. Today, because of inflation, the AMT traps thousands of middle class families who were never its intended targets. In short the reform lowers tax rates, broadens the tax base, makes the tax code simpler, and apparently raises nearly the same amount of revenue as the current system.

However, the reform itself has received a lukewarm reception on Capitol Hill. While politicians on both sides of the political aisle have largely eschewed the vitriolic, “this is the worst thing I have ever seen” rhetoric that many have come to expect, most of them have given the sort of backhanded, “we will study this proposal”, rhetoric that means that nothing will get done. Meanwhile, the lobbyists for various constituencies have been out in force arguing that the reforms will damage America’s economy, America’s ability to compete globally, etc. etc. Given that any tax system (including this one) has its winners and that those folks may be disadvantaged by a wholesale change in the tax code, resistance is hardly surprising. However, in a political system in which the two parties don’t even seem to be able to agree what color the sky is, it is interesting that neither appears too interested in this reform.

What this indifference may indicate is that the American political system may simply no longer be capable of making common sense reforms that most people (on both sides of the political aisle) realize need to be taken. The current tax system is an economic drag that costs Americans more than $100 billion a year to comply with (in economic terms, this is a dead-weight loss in that the money is spent simply to move money from Point A to Point B without creating any economic wealth). Everyone knows that if one were building a tax system from scratch, one wouldn’t build this complex, byzantine fun house of a system. Anything that simplifies the system and also raises the same revenue is an improvement that large segments of the political class should be able to get behind. The fact that they are apparently not is worrisome.

“Ideology is often used to think about issues without actually using their brains”-The Badass Economist

As the economy enters its sixth year of what appears will continue to be sub-par growth, the suggestions coming from the political-economic sub-set of chattering class do not appear to have changed much from what they were 6 years ago. Indeed, despite facing generational economic challenges, it really doesn’t appear that either of the political parties, the current Administration, or their critics/defenders in the press have many new economic ideas from what they had 5, 10, 15, or even 20 years ago.  While politics is politics and one would expect the politicians to advocate programs & policies that benefit them politically, it is the dearth of new ideas from the commentators and observers that is most puzzling.

The reason for this is that the (partisan) commentators appear to have succumbed to economic ideology. From the commentators on the left, we are told that government programs are the solutions to all ills, and we are told from the right that tax cuts and less regulation will unleash economic growth. Whether these prescriptions will help what ails us at any given time is not the point. The point is that these are the same economic prescriptions that are offered in all circumstances by the various parties. When the economy is expanding, the right offers more tax cuts and less regulation. When the economy is contracting, the right offers more tax cuts and less regulation. When the economy is stagnant, the right offers more tax cuts and less regulation. The left’s prescription for all three of those scenarios is more government expenditures. However, when the promised policy doesn’t deliver the promised result (such as the Obama stimulus not allowing the unemployment rate to exceed 8%), there is no reexamining the underlying premise of the policy. Instead, while the attackers point out that the stimulus didn’t function as advertised and added more to the national debt, the defenders (aka Paul Krugman) repeatedly argue that the stimulus would have worked if it had only been larger.

What these discussions reveal is that our political-economic institutions (including the media) are stuck in the past. It is not that there are no longer appropriate times for more government spending or lower taxes/less regulation, it is that our institutions have calcified around a couple of solutions that did work well once upon a time under certain conditions. Reagan’s tax cuts helped to spur economic growth, it could be argued, for the better part of 15 to 20 years. And increasing government expenditures helped to mitigate some of the worst aspects of the Depression.

However, the economy today is structured completely differently than either of those economies were. The industrial economy of the Depression years was one in which the level of specialization needed was much less than today. For example, an industrial worker could switch from an auto assembly line, to a furniture making assembly line, to a washing machine assembly with minimal difficulty. A person with a strong back was employable in a variety of industries. Today, the economy is much more specialized and the skills in a certain job in a certain industry may not translate easily into another industry. Even from Reagan’s day, there are large numbers of jobs that existed when Reagan first became President that no longer exist today, and there are large numbers of jobs that do exist today that didn’t in the early 80’s.

The point is that with an economy that is structured differently from when the economic ideology was formed, we cannot expect that policy prescriptions that worked well at a certain place and time are appropriate today when facing what may appear, at first glance to be similar economic challenges. Much of what appears today to be an elite with little idea of what to do is likely the effects of economic ideology. Until the political-economic institutions come up with a new economic paradigm more suited to the economic structure that we have today, the U.S. economy is likely to struggle and will not achieve the full potential that it has.