Thursday, January 17, 2008

Economic Realignment

According to the press, we are in the middle a global environmental catastrophe that will wreak greater havoc than WWI, The Depression and WWII combined. This catastrophe is happening because of wanton, idle American spending.

This little economic slowdown we are experiencing at the moment is precisely the type of thing that has to happen if we are to avert global catastrophe.

I just don't know what to say about the mouths that scream that we have to have a 50% drop in our consumption, and scream even louder if any economic slowdown occurs.

The US economy has been way out of sync for decades. We have a bloated service and housing sector and declining manufacturing sector. The little economic realignment that we are facing is addressing some of that imbalance. If the re-balancing happens without Congressional action, we would see a leaner economy with more exports and fewer imports.

Interestingly, the market took a nose dive on hearing the stimulus plans offered by Obama, Clinton and cacklers in Congress. The borrow and spend stimulus simply magnifies the imbalance.

Congress wants to do something to show that they aren't the big waste of taxpayers dollars that they appear to be. If they want to do something, then it should be on the line of reducing fuel consumption (ie conservation). My little plan is simply to allow a six month period where we cut the taxes people pay on installing insulation in houses and on tuning up cars. If we tuned up a million cars, we would have a temporary drop in oil consumption that would employ thousands of car tuner uppers, and insulation installers.

My clever scheme aside, all of the plans I've heard emanating from politicians would actually do worse for our economy and the environment than doing nothing and letting the market realign itself on its own.


Scott Hinrichs said...

One pundit on the radio yesterday said that the stimulus packages being bandied about by both parties are tantamount to giving steroids to athletes. Not a good idea.

y-intercept said...

It is this absurd politics of fear that is killing us. We are supposed to be fearing excessive consumption in the US, and now we are supposed to fear a drop in consumption. The left wing press plays people for fools. Dammit, people need to realize it.

Unfortunately, the left dominates the schools. So no-one knows basic logic.

The fact that energy prices are high has people thinking about conservation. There is also a growing realization that we are not getting an adequate return for our high consumption lifestyles.

Recession is part of life. We should make some effort to make sure the most vulernable in our society are not destroyed by the recession. Other than that the balancing that would occur during a natural recession is not all that bad.

Scott Hinrichs said...


Anonymous said...

I wish I'd seen your post before I posted on the same basic topic today. I think your post was much better than mine.