Every society must make fundamental decisions regarding how its people will live and work. Investments in people, our "human capital," must be balanced against the need to ensure that sufficient incentives exist to ensure that our private sector economy produces enough wealth to pay for these investments and other government expenditures. Because we have done a fairly good job of balancing these priorities in past years, we are the wealthiest society in world history. North San Diego County and its adjacent areas share in that inherited good fortune.

With George W. Bush's second inauguration upon us, the administration is preparing to push an ambitious policy agenda that will significantly affect all of us locally. Rules really do matter. How well or poorly we fare in the coming years depends to a large degree on the wisdom of those we elect.

In its first term, the Bush administration brought to fruition an ambitious agenda centered on massive tax cuts —— primarily for the wealthiest Americans and large corporations. One predictable effect of this was that yearly federal budget surpluses became huge, rising deficits. To restore budgetary balance, the administration will push aggressively to effectively privatize Social Security while rapidly decreasing funding for most other government social welfare programs. The avowed intent of this administration's social and economic policies is to undo Franklin Roosevelt's Depression-era "New Deal."

Since the poor lack the means to pay much in taxes, and the rich and large corporations have already had their tax burdens slashed, this means that the burden of investing in our people will fall ever more on our hard-pressed middle class. Our local area is preponderantly composed of middle-class Americans, so this increased burden will fall more heavily upon most of us reading this newspaper.

At the same time, according to the San Diego Association of Governments, the number of retired people in our area will nearly double over the next quarter-century. We will become ethnically more Latino and Asian-American. And, of course, housing costs will remain sky-high. So a smaller percentage of people, who are even harder-pressed to pay their own mortgages, college expenses for their kids, etc., will be asked to shoulder a greater tax burden.

On the more positive side, our area has the highest new job growth rate in our region, and unemployment is fairly low. The administration's policies certainly won't do anything to deflect this trend in the short term.

However, a highly educated work force is the key to our success at attracting new jobs. Failing to invest sufficiently in education for all will increasingly erode this regional asset. Regional job growth could easily stall in coming years.

Our area is also heavily intertwined with the military —— not only because of the presence of bases such as Camp Pendleton, but also because of the presence of a large retired military population. Although Pendleton is unlikely to be closed in the foreseeable future, the Fallbrook Naval Weapons Station could well face closure in the near-term. This would be a significant blow to the Fallbrook-Bonsall area economy.

Also, one clear objective consequence of this administration's foreign policies is that there will be more veterans in general, and more disabled veterans in particular, living in our area. Our economy will become more sensitive to administration policies that affect military retirement and disability pay. Given the persisting federal deficits, we can reasonably expect per capita, inflation-adjusted payments to this group to decrease somewhat in the coming years. This will have a depressing effect on the local economy.

Overall, the policy decisions coming out of Washington this year will likely increase job growth here, at first. However, in the medium- to long-term, decreasing investments in our human capital, particularly the education of our children, will override this trend. This trend will be reinforced by our state government's policies, which are compounding this oversight. High-paying, high-skill jobs will migrate elsewhere. Retirees, both military and civilian, will be here in substantially greater numbers, and will be relatively poorer than is the case now. We will be more of a two-tier society, with disproportionately Latinos and the elderly on the bottom tier. Our rich will get richer while our growing numbers of poor remain poor, and our struggling middle-class wage earners get stuck with the bills for both groups. Local politics will consequently become more polarized, even as Democrats increase in numbers.

We have rapidly gone from excessive state intervention in our economy to the opposite extreme. Balance and moderation are needed.

Mike Byron, Ph.D., teaches political science at Palomar and MiraCosta colleges. He ran unsuccessfully as a Democratic challenger in the 49th Congressional District in 2002 and 2004, and is president of the Democratic Club of Carlsbad-Oceanside.