On the Contrary

As I sit here on a cold and snowy Wednesday in Camino (it was 20° last night), some idle thoughts run through my mind.  Most of them are focused on the economy and our way forward.  What is most salient to me is how badly we have managed ourselves and that the way forward is going to take new thinking.  If you don’t think we are in trouble consider:

• A poll shows that 63% are already being hurt by the economic down turn (Washington Post)
• As people lose their jobs they lose their healthcare.  One woman schedule an early C-Section so she could have her baby while she still had insurance (Salon.com)
• All of the social services across the country are seeing more demand for their services while their budgets are getting cut (Washington Post)
• One in ten in this country are now either in default or in arrears on their mortgage.  Many of these are not those that bought in the boom, but have lost their jobs (Washington Post)

I want you to understand how we got here.  We all adopted a get rich for free approach to our economic life.  We bought into Republican economic promises.  We continued to cut taxes, increasing our deficit with no investment in our future (infrastructure, education, healthcare), believing that putting more money in the “Masters of the Universe’s” hands (cutting the taxes of the rich) was smarter than paying taxes to support government programs for the future.  Greed was good, and the accumulation of wealth was a sign of success and wisdom.  Group think and the belief we could get higher and higher rates of return drove the train.  Then it collapsed.  It was a nice promise:  Lower taxes, less regulation, and the economy will take off and there will be benefits for all.  Except it was too good to be true and here we are.  What we know is that there was no trickle down, greed took money out of the hands of the middle class and concentrated it with the wealthy, and we let our infrastructure and our human capital degenerate.  That is where we have been, but we have some really neat stuff.  Too bad we can’t eat it or use it to pay the rent.

There was an editorial in the Sacramento Bee on Wednesday from one of these conservative pea brains preaching the old religion in California.  “We can’t cut and tax our way out of this mess, we must grow our way out.”  And just what do you think she thinks will grow the economy?  It is less regulation and taxes on businesses.  Gee, haven’t we been here before.  I will give her that if we can grow our economy we might be able to pay our bills, but what part of this economic downward spiral doesn’t she get?  If you lower taxes and reduce regulations, businesses are not going out on a grand spending spree for new products because fewer and fewer people have disposable income to buy them.  The next step is to get the economy going by giving people jobs and money to spend through government spending.  And the jobs we give them have to be focused on jobs that benefit all of us, like rebuilding our schools or other socially worthy tasks and making sure our safety nets don’t rot.  Just as an aside, we have been lowering taxes and removing regulations, greed begot breed, and finally the giant ponzi scheme crashed.

I had dinner the other night with one of my conservative friends and he wanted to know what we were going to do about the deficit.  I said for the short term it doesn’t matter.  The only way out of this ever tightening spiral is to spend our way out, because otherwise demand will not be there to prime the pump.  He looked at me like I was just another liberal fool who would spend us into ruin, kind of like the people he voted for did for the last eight years.  It is going to take more than reason to convince people that the way out is “hair of the dog”.  That is, we are going to print money and spend it so that people have jobs.  Only this time we will spend it on things that not only stimulate our economy, but that build a bridge to our future.  The first step is to prime the pump.  The second step is when once the water is flowing, start siphoning off some to pay down our debt (yes, it is called taxes).  Both concepts are going to be a tough sell to the people who got us where we are today.  They are hard wired to hate government spending or anything government.   We may have to drag them kicking and screaming back from the brink.