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With the recent news that the unemployment rate ticked down and that hiring for a month was reasonably healthy, we have gotten an enormous amount of boasting from both sides as to who is responsible for it, and that it alone is a sign that everything is all better now. To me however, it is just another indication of how short term thinking we have become. That isn't to say that the news itself is bad, it isn't, but quite frankly it ignores the more serious problems that we face which are much more structural in nature, and we, as a society, haven't even addressed these problems and we really need to start addressing these issues.
Some may think that this is a party issue, and it isn't NEITHER party really seems equipped either policy wise or attitude wise to start the transformation that we need, with the Democrats being more interested in trying to bring us back into the 70's, with more 'spending' that seems to be a bandaid (payroll tax cut, extend unemployment benefits) and the Republicans even more devoutly interested in spending that follows the pattern that got us into this mess in the first place, with the obvious result that we are going to be further into the hole at the end. WIth both parties, we can describe it as insanity, you know the definition that says insanity is doing something over and over again with the expectation that the result will change. Our government, in its attempt to constantly appease short term 'feel good' desires, whether that desire be social program, new military adventure, the desire to split us all apart, has sacrificed our future.
Where am I coming from in this? Well our biggest problem is that as a nation, we seem to be totally focussed on the amount of money we make, instead of the amount of money we CAN make. We continue to make the short term and short sighted decisions that have brought us down this path of economic ruin. Can we get out of it? Who knows. Right now, it doesn't look good. Of particular not, it is really sad that when I go over the math/economics of the problem with the structure of the taxes and how it is doing more harm than good (I refer to my particular pet peeve, capital gains taxes and how having them lower than income taxes with the reality that low capital gains taxes does NOTHING to create jobs or improve our economy's ability to create wealth), and the response is more often than not 'I don't care if what I want does long term damage, I will have an opinion then' or something to that effect.
The problems we are facing are the result of a lack of longer term thinking over the last 30 years, creating a boom & bust cycle that we have been able to largely get around by effective use of monetary policy. While I personally believe that the monetary system we have now is largely workable, one of the things that it does do is to create the impression that we can stop the running of our economy with prudent economic and industrial policies, and instead deal with everything as it comes. Here are the highlights of this insanity, chronologically :
We start with the leveraged buyout frenzy where conglomerates are bought up and gutted, to be pieced off to the highest bidder. The only real beneficiary being the short term profits for the financiers (I won't call them investors because they aren't). Connected to this was a bubble that was created by leveraging these transactions within mature industries with very low growth potential using junk bonds which pretty much guaranties failure because the carrying costs are higher than the ability of the business to pay for. To my national shame (me being a Canadian), I point out two prominent exhibits to this, though they aren't alone, Campeau and the Reichmanns, both of them taking two well established real estate companies and burning them into the ground with ill fated, and most importantly ill advised business transactions.
Then, after the dust settles, we migrate into the dot coms, where the idea of a business plan is to make the statement, we are going to build a company that generates no income and then sell it so we can make it big (now THAT is insanity, though I am not sure who is more insane, the idiots doing the selling or the buying), and with it, we have yet another proud Canadian company being run into the ground by it, NORTEL, though many others carry the same fate, SUN never having really recovered from it, though in the case of NORTEL, even though it was a Canadian company, it had LONG been infiltrated and put on the path to destruction by an insistence that American management was better than Canadian management, so that little bit of insanity is shared. The fundamental problem here was that instead of actual investment in technologies to create more wealth, money was spent, and destroyed on nothing of value.
Then we come to the latest debacle, people again thinking that real estate is the sure thing, so we create yet another bubble by pushing people to keep up with the jones by 'utilizing our new found asset value in our homes' by mortgaging ourselves to the hilt, with the BIGGEST difference with this latest bubble is that for the first time in the last 30 years of bubble gum economics (hmmm maybe I should push that as a new term to replace voodoo economics) is that this particular bubble has seriously affected EVERYONE.
We have pretty much hit our limit now, and we are seeing the result of it, with consumers too indebted to drive us out of this, business knowing that consumer spending growth is going to be limited so they don't invest, and everybody bitching to high hell when the government tries to spend. WOW, this one is going to be easy.
Now we get to the part of how to get ourselves out of this mess. Well, that is obviously much easier said than done. Whining and bitching at each other passing libtard & rethuglican insults at each other, while it may be considered fun, stress relief, or justified, doesn't get to the problem. We have a sick economy, an economy that right now is not really able to contribute to the creation of wealth (and I don't mean money, I mean valuable assets that can create money, not just money). We need to get the 'short sighted' crap out of the discussion because if we don't, in a generation we will be like Rome. It took Rome more than 400 years to become nothing, we are WELL ahead of that right now.
Lets put aside our differences and start to come up with idea's and solutions to solve our problems instead of dicking about with the political bull@!$%# (and most of it really is bull@!$%#) and start thinking about the future.
And that my friends is Jonathan's rant for the week.
