The New York Times writes about how jacked the economy is and how partisan politics is screwing all of us. What no one is mentioning is how we got here in the first place.
Economies run on two things – goods and services. Your economy is providing goods and services or, guess what, boys and girls – IT IS NOT AN ECONOMY.
First off, back during the 1970’s we started exporting all the manufacturing jobs. Making things is a dirty process and, WOW! we could do that overseas for less and with less regulation about trash, pollution, etc. So we exported almost all of our manufacturing. So there go all the manufacturing jobs – no more making goods. Go visit the so-called “Rust Belt” if you want to see what that looks like. Whole cities have dried up and are going rotten because all the jobs got sent overseas. We retrained all of those people to take jobs in the service industry.
Then, during the 1990’s we started exporting the service jobs. Service jobs were cheap and easy to relocate. We could put call centers in India. We could put programmers in India. We were outsourcing and “helping the global economy”. We exported the service jobs. Ok – so now we’re not providing services either. The dot-bomb bubble was part of this phenomenon. A lot of the development and engineering jobs have been shipped off shore, leaving experienced IT professionals in the dust because they’re “too expensive”. I have to say that from personal experience, if you hire an $8/hour programmer, you’re getting what you pay for. You have no idea where the person is. They may have access to your most sensitive internal data but you’re paying the guy a pittance and he’s probably in a country where it’s not illegal to stream the name, address, phone #, SSN, etc.of every person who works for or does business with your company through every chat room on the Internet. And you want to know why identity theft is rampant????
You want to know why we’re in an economic slump that shows NO and I do mean absolutely NO signs of letting up – it’s because we are not producing goods or providing services. Many of the indicators say that we’re going into the worst “recession” since the Great Depression. Some of the indicators say that our economy is actually tanking harder *now* than it did prior to the Great Depression. That’s some serious shit, people. Think bread lines and soup kitchens and millions out of work. Think guys fighting, physically, for day labor jobs so that they can feed their families. And our ecnomy is tanking harder and faster now than it did then…. hang on to your hats, kids…. it’s gonna be a rough ride.
Without goods and services there is not a viable economy. Anyone who is even passingly familiar with economics will tell you that you must have goods or services in order to generate this wonderful thing called INCOME. Things have to be changing hands for the cash to be flowing. Well, things are changing hands….. just not here in the USA.
The car makers are having problems – BIG surprise there. Who can afford a $20,000 car when they’re making $8.00/hour working at Wal-Mart??? That’s a whole $320 a week or $1400 a month. Take out $700 for rent. The payment on our hypothetical $20,000 car is $404 at current rates. That leaves a mere $396 for insurance, gas, groceries, and other necessities. Easy to see why that gets passed on by most. They just can’t pay for it. Given a choice between car or food…. most people will choose food.
Credit card companies are in a lot of trouble. When people get laid off, what’s the first thing to go? Credit card debt. It’s high interest and since you already got what you put on the card, there’s no real incentive to pay for it. Big guess as to why they are in trouble. When your service jobs gets exported and you get laid off, you stop paying your credit cards.
The home industry is another sector that’s in serious trouble. They wrote out a lot of “sub prime” mortgages. What “sub prime” really means is “that we know damn well you can’t afford this but we’re hoping you have a better job or that you’ve sold this house before the balloon payment comes due.” Well, with the service jobs being exported, the “better job” is out of the question and as the market gets flooded with houses for sale, well… that makes it a little hard to sell the house and starts driving prices down.
Travel and tourism is another sector that’s hurting. Well now… Einstien…. let’s see if you can figure out why. That’s right… If you’re not working, you sure as hell aren’t going on vacation. Or out to eat. Or to the hair salon. Or shopping for clothing or jewelry or anything else “non-essential”. Or any one of another zillion “extra” things. And guess what happens as *that* spreads out. People stop going out to eat so restaurants close. They stop getting their hair cut so salons close. Then the people that worked in those restaurants and salons are laid off so they also stop spending money. The effects just continue to ripple.
I’m still trying to figure out why ANY of this is a news flash to anyone who has even the most rudimentary understanding of economics. OH… WAIT… I forgot… Economics isn’t taught in public school any more. It was “too hard” and too many of our students were failing it because, if your school district is anything like DISD, 26% of the graduating seniors are “functionally illierate” which means that they can’t do math well enough to balance a check book or read well enough to fill out a job application. That’s 1 in 4. That’s shameful in a modern developed country. But hey, that’s kinda why we’re in the shitter now. Stupid and short sighted actions, right????