Wednesday, October 5, 2011
Economic prosperity is heavily dependent on one primary factor. That factor is confidence.
We don't have it – the economy sucks. When we had the Great Depression there was more than enough misery to go around. People were hungry, they were cold and they waited for a miracle to bring about a recovery that could once again sustain themselves and their families. Not merely one measure was employed to bring about the change of direction that eventually led back to a level of existence where people could live without wondering from where their next meal was coming. A lot of spending bills were passed by Congress. A lot of programs that did something tangible were implemented and people worked. Most of all they were lifted by a sense of confidence that there was indeed hope for the future and people strived to get there. The government channeled money to workers, who worked then spent that money up the chain to the wealthy at the top. Some of the money was taxed and send down to workers once again. Hope was strengthened and money moved. The economy recovered.
In the 2008-2011 stagnant economy there is little hope for the future. There is no consensus for what to do to get everything moving again. It is like a bunch of college Freshmen trying to push a car out of the soft sand with some leaning on the front bumper and other pushing on the rear. Still others are standing on the sidelines calling one group or the other a bunch of idiots for trying to push in the wrong direction. Meanwhile the middleclassman behind the wheel is spinning the wheels and shifting the gears from forward to reverse and back in an attempt to rock the car out of the rut. Nobody is instilling confidence that the car will ever get out of the sand.
Here in the latter part of 2011 we have the two houses of Congress at odds with each other and with the Executive Branch of government. We have staff economists who support one agenda and others who support the opposite. We have banks who received billions in taxpayer funded bailouts who paid bonuses to executives rather than make loans to people who wanted to buy a house, expand a business or fund an education. Those banks had so little faith in using that money for the business they were in they decided to give it to themselves.
Nobody wants to make any big purchases when they are being told that tomorrow the EU might implode. Business is off when China might not be able to ship product to America because Americans have decided that food and heat are more important than Plasma TV, yet another pocket phone, or toys that might have lead paint, melamine or mercury in them.
Every time the news media tells us another round of mortgage foreclosures in about to happen, the housing recovery gets pushed back another fiscal quarter or two. When there are millions of vacant foreclosed houses on the market, most buyers will not buy a newly constructed one. When state and local governments are laying off public sector employees and the Republican media calls them leeches on the taxpayer, few of them will be able to engage in economic activity above subsistence level.
All the activity that was the hallmark of the American economy has been strafed and left as scorched earth. Republicans and their uber-conservative Tea Party arm have undermined the hope that Americans have for economic prosperity. With out hope there will be a further decline in economic activity.
For the GOP and its supporters this is a good thing. Our economic prosperity was funded by taxation and the incurring of debt, both of which can only be paid off by the very wealthy who still have money. Meanwhile the middleclass taxpayers continue to pay the current operations costs of society.
Government jobs require government funding and that means taxes. If public sector employment is decimated, then so is the need for taxes. Less need for taxes means no more to be paid by people who still have money. When one is counting their money, they cannot see the people who were supported by the funding that used to be available.
Whether the fragmenting of hope of economic prosperity is an agenda item or merely the collateral damage of fragmented policy and conflicted opinions, the outcome is stagnation. The people who have retained their wealth are also victims of the loss of hope in the system the have come to rely upon. They sit on trillions of dollars of wealth waiting for the dove to return with the olive twig that signifies that there is solid dry land out there to land on. Until then they float without a captain and rudderless at the whim of the currents.