Wednesday June 2, 2021
The other day a fellow posted in the neighborhood listserv comments relating to the economy.
Some tried to tell him that was not the place. His response, “Why not?”
Geez, because it’s a place to post about lost dogs, and where to find a “reasonable” electrician, carpenter or plumber. (Why do they always ask for “reasonable”? Why not outrageous?)
Well, in response to his economic questions I will respond here.
He made two points:
1 – Why don’t we have a balanced budget?
2 – People need to stop getting handouts and get a job.
Okay, I’m simplifying his comments, but that’s the gist of it. Many agreed with him.
Both cases miss the point. They are both based on fundamental misunderstandings. The first on economics. The second on economics, politics, and social.
Let’s go with the balanced budget question. Why don’t we have a balanced budget? Well, sometimes we do, normally when Democrats are in power, and sometimes we don’t – always when Republicans are in power because they always have an excuse why they don’t balance the budget and then howl and scream when the Dems don’t balance it. But it goes deeper than that.
Let me start with a thought experiment. Let’s say we pass a law saying we need a balanced budget every year. Then let’s say something like World War II happens. We need to go into overdrive to make lots of bullets, tanks, and airplanes. But we can’t because it will ruin the budget. Sorry, no bullets for you!
Now, you may also say, “Yeah, well that’s different and ‘It won’t happen here’ “ but you’d be incorrect because it already happened here.
Have you seen the picture of the boat loaded with Jewish people fleeing the Nazis? They were looking for asylum. They weren’t allowed entrance into the U.S. because back in the 1920s we had passed a law that only allowed so many from those countries into ours. What happened? They had to go back to Europe and be slaughtered by the Nazis. Yup, We had laws.
Imagine if we had a balanced budget law and something like WWII came up. What are we going to do break the law or not make bullets?
The point is that a balanced budget makes sense for a household but not necessarily for a Federal government. In fact, it could be detrimental as is the case of WWII.
The Federal government is different than your household budget. They also have another trick up their sleeve. They can make money by printing it.
Now, you may say that’s not a good idea – Inflation!
And you’d be right – kind of.
Most economists agreed that a slightly inflationary economy can be a good thing. The trick is to not go up too fast or too much. In other words you want to be able to pay off some of your debt via inflation but not have it rise so fast that those on a fixed income can’t pay their bills.
Let’s move on to the second point. People need to get a job. They shouldn’t be getting a handout from the government. They need to work!
Okay. Fair enough. But is that the problem? Do people not want to work? Would they rather get a handout from the government? Interesting question. I’m sure there are folks who would rather watch TV all day and not do anything. In any system you implement there will always be exceptions; things you didn’t count on, didn’t expect, and show the opposite is true. There are also false claims too. Remember Ronald Reagan and his concern about “Welfare Queens”? You might have been able to find a few fat black women with five kids living in a double wide, but the reality was it was mainly white folks in rural America. And were they really not willing to work, or was there no work to be had?
Well then the solution is they should go somewhere else and find another job, right? Remember Grapes of Wrath by Steinbeck? In that novel he described people picking fruit. They got handbills saying there were better paying jobs in another place. They went there and discovered that no, it wasn’t true. The hand bills had been distributed to make sure that they had plenty of workers and then could force people to accept a lower paying wage.
What are you going to do if you live in a small town and there’s really only one place to work? What if they say they are only going to pay so much and you can’t live on that? You move. To where? Another town with another single industry. Same deal. How many times you gonna move? What if it’s the suburbs and Walmart? Same problem.
Currently, the restaurant industry is experiencing a problem finding help. Why? Can you live on $2.13 an hour? That’s what they pay. Plus tips. Problem is people aren’t tipping for take out.
What’s the solution?
The rules of the game need to change. How do you do that? You even the playing field. A single worker can’t effect change with a big company. Either they need the ability to strike (ie strong unions) or the government needs to change the laws. Maybe that’s increasing the minimum wage, not letting goods made in countries with cheaper labor into the country, or here’s a idea that many people have a problem with but I’ll ask you in the form of a question, “What’s the quickest way out of poverty?”
I’ll put that another way. “If poverty is defined as having no money, what would be a solution to poverty be?”
If you said, “To have money.” You’d be correct. Does it matter how you got the money? Not really. So one way to eliminate poverty is to give people money. If that’s the solution the only question is, “How do you do that?”
I’ll leave it there for now.
Have a day: great, nice, or otherwise.
The first thing Al said when I made a worrying comment about the national budget, “simple the government will just print more money.”
One of the things in the infrastructure budget was money for child care.
Someone made the comment that we don’t need child care in infrastructure budget. I asked if women weren’t supposed to be able to work. He did not answer. Women have played a large part in the workforce of this country. I remember when my son was in daycare. It was $75/month. He is 54 years old now and childcare is closer to $750 or more ‘ month. It’s a new day, a new dawn and we should be feeling good.