Forgive me if I'm not doing cartwheels for it was my money to begin with. And yours.Too true, Michael.
My colleague Matt made an excellent point today: we've for too long been an economy that rides the strength of consumer spending. We'd be wise to adopt policies that focus on strengthening the business base of the economy (think durable goods and manufacturing) to complement and diversify what makes our economic engine hum.
It wasn't that many years ago that everybody and his dog were overjoyed that we would henceforth enjoy the benefits of a "service economy." No more grimy industrial districts and wage slaves on assembly lines. The service economy was so much cleaner and nicer.
We have our service economy right enough. Everybody is selling things made in China and Sri Lanka to everybody else. We outsource everything we can -- back office financial record keeping, programming, manufacturing, customer service -- to coolies abroad who will work for pennies on the dollar.
Most of the services that are left, if only because it isn't feasible to send them via computer networks, are grindingly menial. These are jobs that indigenous Americans aren't keen on doing -- who in their right mind would be? At the least, many Americans still have enough backbone that they would organize for collective bargaining strength, just like workers did a hundred years ago until unions were recognized in the '30s.
So companies that need service workers have taken a new tack: what they can't outsource, they "insource" -- bringing cheap labor into the country instead of sending the work to cheap labor out of the country. Thus the voice of big business, The Wall Street Journal, sings arias for immigration.
But what happens when the economy consists largely of cheap laborers selling things to cheap laborers? It can only be done with credit on top of more credit. Selling people things they can't afford and putting off the day of reckoning.
Now that the day of reckoning looks like it might actually be here, the politicians (a very big category that includes appointed ones, like Federal Reserve Board members) have no choice but to stuff the channel with funny money created by deficit spending and inflation. And so the game goes on, the stack of champagne glasses piled on one another grows higher still. And we pretend it will reach the stratosphere and beyond.
We need a recession, if not a depression. Millions of minds must be forced to grasp the idea that they can't indefinitely go on living beyond their means and expecting to be hoisted out of the quicksand. Consumers have to learn some discipline.
And on the macro scale, business and the government should start rebuilding an economy based on something other than consumer-goods price competition pegged to cheapjack labor. That doesn't mean we return to smokestack industries, but investment in innovative businesses employing brainpower and knowledge, not immigrant peasants. The economy needs once again to be based on creating value, not just flogging merchandise and selling carwash franchises.
Yeah, if Dumb George wants to hand out cash, I'll take my share. And add to my gold and commodities ETFs.