Surviving The Ruling Class
Economists tell us a recession is when the economy is receding. Growth is obvious. What is a depression? The anecdote goes something like – it’s a recession when your neighbor loses his job, a depression when you lose yours. A lot of people are in a depression and the question is what is their government doing for them today?
In some ways it is not the responsibility of government to run the economy, yet people look to government to take care of them and so expect something from government. Unfortunately, at this point in our nation’s history, government is so intrusive in every part of our lives there is every reason to expect it can do something to help. Of course, just getting out of the way would be a big help.
An instructive exercise would be to attempt to count the ways government hinders the economy. In general, it does this by making rules which either slow down the economy or cost the economy money for no return of production. Being very familiar with the trucking industry, I’ll use it for example. Over-the-road truck drivers have to use a logbook to keep up with how many hours they work. There is a good reason for this; nonetheless, the rules are more counterproductive than necessary. Because of the way the law is written, some drivers either have to lie about what they have done or do less than they could safely.
The result is it takes more trucks and drivers to provide transportation services than necessary. In addition to that cost to the economy are the people required to keep up with the paperwork that logbooks require. Since the government exacts onerous punishments for not complying properly with the logbook rules, even small companies keep full-time people on the payroll just to maintain compliance. In essence, the government requires the companies keep a private police force on the payroll. This is another cost to the economy.
Then there is accounting. Untold thousands are paid to company and private accountants just to make sure the company is compliant with the IRS and the various state’s tax codes. Then there are the requirements for equipment manufacture which don’t have a good cost/benefit ratio, but that is because the EPA and other government entities don’t care what something costs, if it imagines the results are even slightly beneficial. Notice the actual taxes are not mentioned. Then imagine it is as bad or worse in every other business there is.
The point is that government intrudes everywhere, which would then give it opportunities to help everywhere. All it need do is get out of the way. Yet it won’t. Our President is discussing ways to help the economy by changing some tax rates for this business or that. You can be sure he is doing it in a way that is helpful to his political supporters and harmful to those of the opposition. And there, in a single sentence, is the problem with government in our society and economy: those in charge use the power of government to enhance the economic position of their friends at the expense of those they consider the other team. And restated: Politicians use the power of government to distort the economy to their own, short-term benefit without concern for the long-term results to other people in the society. Because of this we can expect government to continue to be a problem, as politicians are not going to change how they do business.
The real question is whether we can survive the damage the Ruling Class has done and will continue to do. If it is even possible it will be difficult.
Two years ago and counting, a large part of our economy was focused on construction. Millions of people were employed building houses and commercial buildings; demand for housing was high for various reasons, some, it turns out, artificial. Similarly, demand for commercial buildings was high, but for somewhat different reasons. Due to the collapse of the construction economy the largest part of those involved in this building boom are now without work. These include not only actual construction workers and businesses, but also many in the associated trades and services who lost their jobs and businesses as well. The question is what is it going to take to put these people to work.
Construction will not soon, if ever, return to the levels it was at before the collapse, so those involved should seriously look at other types of work. Even then, for the millions of jobs required, industry will have to grow substantially in other areas to employ these people. But for industry to grow, demand must grow. Causing demand to grow will require people to purchase the output of those who produce. The question then becomes how to increase demand to a point where increased purchases convince industry to produce more and finally, to hire more. This, in itself, will be very difficult and of long term.
One of the problems is that manufacturing had enough capacity to supply the needs and wants of the people, even when full employment occurred during the building boom. So more manufacturing capacity is not needed for the products we now produce and consume. In fact, it is hard to imagine people needing more than they have now. We have built houses larger than we need and filled them with furniture, refrigerators, televisions, etc., and have three cars in the drive for two people. My point is proven by the number of storage units in existence. The attic is full and so the storage unit is rented. When you’re putting what you purchase in storage, it should be obvious you don’t need more.
But there is a bright ray of hope pointed out by a new industry, which offers an insight to what could be the future. That industry is computers, the Internet and radio communications. I combine the three because they cannot be separated easily. In one manner of looking at them, they offer nothing of material value, outside the computers and telephones, yet we spend a substantial portion of our income paying for them. A few decades ago we didn’t even know the words cell phone or Internet. Yet now thousands make their living supplying the demands for the services and machinery of this industry.
There are other new industries that can offer similar demanded benefits and employ a substantial number of people. The way this will happen will be an evolution from some person’s imagination and hard work. The way to encourage that evolution is for government to get out of the way. Lower taxes and fewer restrictions will benefit us all. If we want the economy to grow and give people jobs, government should be limited – not the people. Our current state of affairs should prove that beyond a doubt.
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