Sunday, June 17, 2012

No solution in sight

During this presidential campaign, the million-dollar question remains:  Which of the presidential candidates will be able to fix the economy?

The short answer is that none of them -- Barack Obama, Mitt Romney or Ron Paul -- will.  For that matter, neither will Congress or any other lawmaking body.

The slightly longer answer, however, is that the rotten economy isn't primarily a political problem anyway -- it's a cultural one going back to the 1980s, when the nation was sold a bill of goods called "supply-side economics," the idea, of course, being that if government regulations were removed from business the economy would improve.

It didn't work, but you could argue that it really wasn't supposed to work.  Because the cultural change that it spawned proved to be "bottom-line" economics, where the focus is almost exclusively on short-term profit at the expense of long-term investment.  And that, more than anything else, is sabotaging the economy.

How so?  Well, let's start with the assault on the "welfare state" and unions, which began in earnest in the late 1970s, the former amid complaints about "big government" and the latter, corrupt union bosses.  Now, these were subject to debate; however, the ultimate goal, really, was to concentrate power in fewer and fewer hands -- in essence, to build an aristocracy.

We also saw "merger-mania," which -- far from creating jobs -- actually destroyed them, especially in middle management, which fueled the recession that pushed George H.W. Bush out the door (though Reagan should have shouldered the blame).

We now have an economy based far more on speculation than trade and manufacturing; let's not forget that the recovery that took place under Bill Clinton was largely on paper, thanks to the "dot-com" boom.  Why, for example, would drug companies make their products virtually unaffordable and health-insurance firms cut service and raise rates?  Simple -- to keep stock prices up.  (And the CEO's would be fired for not doing so.)

Anyway, look no further as to why the business community is doing virtually nothing to cause change -- it's already gotten what it wants.  That's what President Obama meant when he said, to the consternation of some of his critics, that the private sector "was doing just fine" -- it actually has a lot of cash on hand that it simply refuses to release.

A few months ago on "60 Minutes," a merchant in Iowa complained that he couldn't get a bank loan to finance his business because the banks just won't lend.  That shouldn't surprise.

Bottom line, there is no solution coming on the horizon.

1 comment:

Mark said...

The Whole Going Public concept that is pushed on growing businesses is full of hidden risks, that should be obvious. Once you issue Stocks you lose the option of"Satisfaction with Market Saturation". you must aways increase stock valuation even if you have 100% of the market share. This leaves you with options like cheapening your product, taking it from the employee, higher prices. Although I know some people don't want what's fixable fixed; it will be. We are off of the Gold Standard, Money is Digital; numbers wired from one computer to another, honored as Legal Tender. A Digit is easier and cheaper to print than paper currency. And it has the same value as gold. If I take 2000 dollars in gold to a bank, and my debit card with 2000 dollars. How much paper money should I get in exchange. Of course, for the Christian the oibvious question will be , How far behind that will the RFID chip/mark be? For some , it would be 2014 if the Obama Care requirement is upheld; containing all your medical records in that chip.