While watching on TV the donnybrook regarding the "fiscal cliff," it occurred to me that apparently all parties are missing one significant aspect of the problem, i.e., the recession. (Yes, Virginia, there is a recession -- at least in my opinion, because any time the economy does not grow rapidly enough to absorb new workers, we have a problem known as a recession.) It seems to me the principal reason the various stimulus packages did not work well was that they were primarily associated with non-recurring demand. It seems self-evident that a recession occurs when recurring demand drops off and people are no longer able to sell their products. Therefore, any government effort to alleviate a recession should be associated with recurring demand. I have some ideas, such as a relatively small stimulus package aimed at increasing recurring demand (for example, a package that would increase sales of consumables) and replacement of the current health care law (Obamacare) by a simpler, more pragmatic plan. But then, who is going to listen to a crotchety old curmudgeon.
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For a crotchety old curmudgeon, you're not far wrong.
ReplyDeleteHere in Bangkok, Christmas sales are down, and the BBC reports Chinese factories which produce 50% (yeah, 50%, I know, I know)of THE WORLD'S artificial Christmas trees are going through a slump. Smaller trees, fewer factories, big discounts. I want one that opens like an umbrella.
Such is life in the People's paradise.
Yes. And Yes!
DeleteLike so much of what happens in Washington, the politicians get to write the definition of a "recession". But the US and much of the world is actually, really in a recesssion. Jobs are tough to get, (by the hours, no benefits) and people are cutting back on buying goods AND services. Obamacare makes it worse, not better, and is a lousy medical-care plan to boot, a real twofer. Meanwhile, representatives are deciding whether to spend a lot more, or a very lot more. The fiscal cliff. Ha! I hope they fall over it.
I'm certainly not tuned in to economics and financial stuff, so I have no intelligent comments to add to your subject. However, I know how knowledgeable you are regarding this subject, so whatever you say, I agree!
ReplyDeleteMaybe demand for goods slackens when there is a saturation of things. When cars last longer, people buy fewer new cars.
ReplyDeleteDemand for services can grow with the invention of new services that we didn't know we needed till they were created.
I also received the following comment from Nick Plodinec via e-mail:
ReplyDeleteYour observations on the recurring recession are right on. Not only is the economy not growing fast enough to absorb new workers, it can't even absorb the old (layed off) ones.
The stimulus package should certainly be for recurring demand. The non-recurring (shovel ready ) projects didn't do much good after the projects were completed.
I don't believe that the Obamacare health care law will be replaced by a simpler one, since the average citizen may actually be able to understand the simpler one. The Washington bureaucrats wouldn't like that.
Congress is full of young and old curmudgeons who don't listen to each other, so why should they listen to you?
Finally, I was extremely upset about the ban on live Nativity Scenes in DC this year until I heard why.......they couldn't find three wise men and a virgin.
Nick
To all of those who have commented on this posting, thank you very much. It is encouraging to know that other people feel the same way.
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