Wednesday, February 1, 2012

More Simple Economic Thoughts

After posting I realized I had left out another point of tension and that is the effect of debt on an economy, both personal debt and government debt. Most believe that the current debt crisis was triggered by the debt incurred by real estate sales and the collapse of the complex instrumentation that grew up around those transactions. It is not the only cause, but it's an important part of the equation. Clearly, it was a bubble, and it broke dramatically. I think everyone can agree it was a bad thing for so many to be over their head in real estate debt.

However, not all agree that government debt is to be universally feared. Some feel that the debt incurred during a stimulus from the central government, along with the various types of payment programs will move the economy in a positive direction. Others strongly feel otherwise. If debt is seen as bad, needing reduction to prevent it from hurting the economy, two schools of thought show up yet again. One group says reduce taxes and the scope of government, even to the point of eliminating entire federal departments, and the economy of the private sector will grow, generating jobs, income, consuming and taxes. The other group sees tax increases, particularly on higher incomes, and unearned incomes (capital gains and such) as the way to cut the debt. These folks go back to the idea that too much cutting and austerity will keep the economy down.

I think we are dealing with unique times, and old recipes may not work. We need to look at everything and we need to compromise and talk to each other, not at each other. I also think we need to admit that much of the time during this crisis, we don't have a clue what will really work.

One other thing: I was chastised by conservatives when I suggested those receiving unemployment should be put to work on behalf of the country. I still think that if we are going to have the government cutting checks for people, they might as well get some service in return. Especially in the laboring trades; God knows there is enough infrastructure to fix. Is this a viable thought?


Bob G. said...

I think we can take a page from Ben Franklin...he mentioned about making those in poverty UNCOMFORTABLE in their a motivator into productivity...and that worked (when allowed to occur).

Much the same can be said for unemployment.

We barely used to get twenty weeks (dependant upon time at last job), let alone NINETY-NINE!!!
(or more)

And during the depression, men would travel clear ACROSS the nation (which was a harder chore then, than it is today) to seek work...and GET it.

Pride took a backseat when it came to such things as FOOD..and SHELTER.

When given a CHOICE between WORK...or NOTHING at all...they will invariably take WORK.
(unless the gov't is GIVING them everything).

Good post and thoughts.

Stay safe out there.

Anonymous said...

Our son-in-law is looking for an employee. It would be casual labor, paid by the job. He has several friends who are out of work and collecting unemployment who have declined his offers for a job. Collecting unemployment for 99 weeks is more attractive.
Speaks about our society.