There are two problems with the economy that the politicians don’t often mention and they are hard to fix. First, we are a “want to have” society not a “need to have” society. The second, is our political system. Let’s look in our garages first.
We are a “want to have” society. Much of our spending goes to eating out, entertainment and purchases that make us happy. If you don’t believe me just ride around town and see how many cars are parked in the driveway because there is no room in the garage. We have stuff. Having stuff is the problem. Many of our baby boomers grew up in an economic wonderland. They made money on houses and stocks, had jobs due to low unemployment and basically had it pretty good. We had the money to buy things we wanted but did not need. Do you know anyone with a toy hauler? This demand fueled the economy. Unfortunately, it is also part of the source of our problem. Baby boomers have all the net worth and they have plenty of stuff. They also leveraged their household balance sheets to buy their stuff. They have been scared by the housing and stock markets. Their “want to have” lists are short, being shortened or thrown out. They are scared of the reality of retiring and they aren’t forced to buy things that are not necessities. They want to get out from under their debt. Unfortunately, this is a problem for their children and those that worked in manufacturing. The boomers are keeping their cars longer, not buying the boat, spending less on vacations and saving more to make up for the lost decade in stocks and drop in home values. Many are also helping their underemployed children and aging parents. Boomer confidence is shot. This means that money isn’t moving. Money needs to move to create both wealth and taxes.
How can this be fixed? Low interest can’t stimulate demand in this scenario. It may help lower bills through loan consolidation or mortgage refinancing but it doesn’t fix the fact that the garage is already full and the kids need help. Bernanke doesn’t have the solution for this problem. The President and congress need to help create jobs. Putting folks back to work and getting them off the government dole and the parents’ dole is what needs to happen. Can they do that? It has been done before during the Great Depression.
Shouldn’t we taxpayers get something for our investment? I think so. If we look at the infrastructure of the United States as part of our “net worth” as citizens of the country then we are all richer when we have safe bridges, good highways and reliable and efficient electricity and water. Is it better to get something than to just pay unemployment and get nothing? I think so.
Government also needs to provide incentive for businesses to hire and invest. No business will make a hire unless they expect to make money on that investment. If the government can help create jobs rebuilding the infrastructure it will help with household creation (the kids will move out!) and they need stuff. This will create the demand but business still needs to make money on it to invest. We can’t expect business to invest more and make less.. Government needs to create the proper business environment, not bash those making a profit.
Secondly, politicians from both parties are less interested in making a good decision than in making sure the other side doesn’t get credit for making it. This partisan voting and gridlock is making us a laughing stock. Politicians from both sides bemoan our profligate spending habits then make sure that they follow their party line in funneling money to the supporters of their party. President Obama bashes the millionaires and billionaires while the Republicans bash the entitlement programs. It is always the other side’s fault. If we can fight our wars together could it be possible that we could pass a workable budget together? It truly looks as though the congress has stopped being Americans and started being solely Republicans or Democrats. It is an embarrassment to all our citizens.
Mark Laurora
Manteca
Source http://www.mantecabulletin.com/
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