Monday, November 3, 2008

Devolution aka A Big Steaming Bowl of Not Good

Only today have I felt able to spend a little time and return to the blogosphere, but I've come not with mirth and humor, but in all seriousness with a warning - our country is in a critically tight spot and no amount of hope or change will return us to the way it was. In fact, my generation (commmonly known as Generation X) as well as Generation Y, as predicted back in college, may be the first to actually recognize a drop in standard of living from the previous generation. A 'devolution' if you will.

We need to realize that a new reality already exists and the sooner we accept and deal with it, the sooner we can get beyond the tough times coming. You may wonder if this view is accurate or if I've succumbed to panic. You are allowed to hold your opinions just as I, but as a friend, I feel the urgent need to tell you that we are going to need our friends, families, and communities more than ever. To think things will ever be able as good as they were six, four, or even just two years ago will prove to be a tragic waste of your valuable time. I don't mean to create or foster panic, but the alarms are going off everywhere and I'm looking to government for anyone who appears to know what to do.

You may or may not know that my collegiate schooling left me with a Bachelor of Science in Business Administration. It also included minors in Economics and Marketing. Economics at it's best is dry and relatively lacking in vitality and passion. That's because, as you would note from my degree, it is a science. The science which studies the creation, production, and maintenance of material wealth. This includes how business and government interacts with material wealth.

While some people may be simply put off by the term 'economics', I see it as a vital science and very much akin to how the laws of Physics affect the physical world in which we live. This science is fairly rigid and no amount of tweaking or bending of the rules seems to be tolerated (at least not permanently). From the early 1980s through the 1990s, a new attempt at economic growth in this country (supply-side economics a.k.a. ... anyone? anyone? "something-D-O-O economics... voodoo economics.") attempted to defy some long-standing truths held by traditional (Keynesian) economics and actually with some relative success. Studying this in college as it was happening, my concerns were then focused on the next step.

While supply-side economics focused on incentives to produce goods and services (largely via tax rate reductions for those with wealth to invest in a growing economy), it had the effect of jump-starting the economy from recession, but a shift to more traditional economics did not come once the economy had seen the intended effects of reduced inflation, investment, and job growth. This economic model was just allowed to keep on spinning and soon, the spurred economy began to produce increasing tax revenues to which the government had quickly spent on the defense budget and impending Savings and Loan bailout (sound familiar?)...

Now, a contraction in the economy is happening and at a quicker rate than what has been seen previous due to the unanticipated and rapidly changing commodities prices (oil, fuels, foods, etc.) coupled with dropping equity in real estate (land, home values, etc.), and over-zealous lenders in credit markets. With the ever-thinning skin with which we are financially able to protect ourselves, I am trying to show how we are ill-equipped to go through this again and how we (each and every one of us) need to become more responsible consumers. It is apparent that this country and its government cannot dutifully manage the economy without allowing or failing to see circumstances which continue to pillage the gains of efficiencies and prosperity. We must support congressional candidates who are fiscally responsible, whose spending will fall in line with the most conservative estimates of revenues, not inflated targets. Only when spending is moderated can we consider providing added services.

I also believe we can best weather the storm by developing a 'we together' attitude. Supporting local economies and markets, buying locally, spending locally, supporting locally as much as possible. If buying an auto, look at domestic solutions first before considering imports. If buying a home, buy what fits your immediate needs and not what panders to your desires. When buying clothes, look for locally produced goods or resales. When buying food, shop local or fresh markets whenever possible. Eliminate the unneccessary items and those from whom our nation's trade balance is unfairly skewed, specifically with regard to those whose labor laws are significantly less than ours (#1 offender importer many would say is China - household goods, toys, games, clothing)

What I've said may sound like protectionism. It is a term that may conjure images of xenophobic isolationist beliefs, but the plain fact is this country is in economic trouble and we must rely on ourselves to forge ahead. Believe not that any country is sympathetic to our downfall. We have the abililty to survive and thrive. We cannot rely on others to help us. It will be, and always has been, up to us to survive. We can do it, we must do it, and we must learn from our mistakes to pave a better path for tomorrow.

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