Former U.S. Secretary of Commerce William Daley sounded off on federal and state economic issues, while outlining future reforms for the public sector at a meeting of business leaders.

“We are at a point where people are looking for some solutions to problems that are not being solved by the private sector alone,” said Daley at the Elgin Area Chamber Speakers Series, held at the Elgin Centre.

Daley denounced the theory of supply side and trickle-down economics, noting that although it created 40 million jobs in the 1980s and 1990s, it is having a negative effect on the current economy.

“I believe that trickle-down economics may have run its course,” he said.

Daley pointed out that there are more than 400 billionaires in the U.S. alone and that CEOs now make 300 times more than the working class on average; 40 years ago, CEOs made only 30 times more than front line workers.

“Meanwhile,” he said, “many of our middle class citizens and working class people are losing their homes, denying themselves health care and delaying retirement from borrowing to pay for education for their kids.”

And while the rich get richer, a fear of recession has prompted Congress to implement a $146 billion economic stimulus package for middle and lower-class workers.

“We’ll see if they spend that money in a way that helps our economy along or just goes to buy Chinese-made goods,” said Daley.

The country would not be in such a state of financial crisis, noted Daley, if it weren’t for the $12 billion-a-month cost of the war in Iraq. These expenses are only worsening the rocketing national debt, which is now more than $90 trillion, or $30,000 per American.

In addition, the government’s focus on illegal immigration and a border wall, according to Daley, is misguided at best.

“The tallest wall will not stop the flow of low-wage workers from Mexico as long as American businesses continue to employ them,” he said. “If we learned anything from the war on drugs, it is that more enforcement and tougher laws are no match for the law of supply and demand.”

In 1994, Daley played a key role in the passing of NAFTA, which has been under fire recently for the negative effects it has had on the manufacturing sector, an issue that gets worse the more the economy changes. But in Daley’s opinion, those changes were coming long before NAFTA.

“Putting a hold on free trade with places like Columbia won’t change the fact that manufacturing jobs will continue to move to lower wage countries,” he said.

“In some ways, the true issues of free trade and immigration raise one core question. Do we believe in political freedom as much as we believe in economic freedom? The fact is, our behavior suggests that America is both pro-immigration and pro-trade, we’re just a little uncomfortable admitting it to ourselves.”

Daley, who currently serves as Midwest chairman for JP Morgan Chase & Co., believes that the current financial policies of the government are harmful and outdated.

“When Americans finally understand the implications of the national debt, I believe we will finally demand fiscal discipline,” he said.

His answer to the economic instability in the U.S. comes in the form of what Rep. Rahm Emanual (D-Ill.) has termed “the new deal for the new economy” and is based on four key areas: health care, retirement, education and energy.

Currently, health care accounts for roughly 15 percent of the economy, with costs rising faster than inflation. As a result, the average retired couple spends nearly $200,000 on health care over the course of their retirement. Additionally, Medicare has reached crisis levels and Social Security may soon follow suit.

Daley noted that the cost of higher education has hit its peak and many elite colleges are now dropping tuition costs with the realization that they are pricing themselves out of the market. Also, education at the elementary and high school levels has fallen far behind our global competitors.

“We’ve got to strengthen our education system for this century and not the last one,” he stated. “Kids (in the U.S.) go to school nine months a year. That’s crazy. The rest of the world is going to school year-round.

“We’ve got to look at the technology, look at what the businesses are of the future and get there before other places get there.”

On a more comprehensive level, Daley believes it is necessary for a fundamental restructuring of American governments at the state, city and federal levels.

“Governments today are basically structured as they were in the 1930s, for an agricultural society,” he said.

He called for more consolidation of government, essentially copying the mergers of the private sector. In theory, these consolidations create stronger organizations.