Even those who don't know anything about economics have that sinking feeling that the powers that be have no clue what they are doing and that all of the bailouts and stimulus plans will only result in making things worse in the long run.
Despite what the talking heads are trying to convince us of, one does not need to be too smart to realize that, yes, our leaders are only making a bad situation worse. As we slip from recession into depression, unless they cook up a real clever whitewash, anyone who utters the phrase "In the long run, we are all dead," will be laughed out of every economic circle.
The aforementioned phrase is the motto of the neo-classical or "Keynesian" school of economics, which believes that all economic problems can be resolved with the short term answer of throwing money at the problem. Sort of like the guy who has a radiator leak and thinks he can keep running his car day in and day out so long as he puts water in the radiator every once in a while. Magically, he can't figure out what he did wrong when his head gasket finally blows.
After the great depression Keynesian economics was all the rage. No longer was there any faith in an unregulated free market. (Even though those who have actually done any sort of research into the causes behind the great depression know that it was mainly caused by massive increases in interest rates by the Federal Reserve Bank -brought on by market booms in the 20's- that caused a major panic in consumer confidence, and thus causing the crash in the stock market.)
And this idea of allowing the government to have more direct control over the market was sold to us as a means to control inflation, prevent boom and bust cycles, and prevent economic recession and depressions.
With the grand job these douchebags have done at delivering all that they promised, why the hell are we turning to these same people that put us into this mess with the expectations that they will get us out of it?
The path to true economic prosperity will probably not be seen for a long time, as that would require quite a few prominent people relinquish the power that they have. If you think giving up heroin is tough, try asking a politician to give up any degree power they have.
So here are some ideas that I have come up with that could help the economy without shaking up the system too much.
1. The 35 hour work week.
The first objection here will be that of a reduction in pay to the American workers. With many people living paycheck to paycheck, having 70 hours on each check will probably require quite a bit of adjustment in personal budgets.
This is mild in comparison to the idea that many American workers are having hours cut back to less than 30 hours a week and many are just plain being put out of work.
If the American workforce across the board would commit to the 35 hour work week, without coercion from government, we might find that the modest adjustments in household budgets will be a much softer blow compared to the tire iron in the gut that is layoffs and major hour cutbacks.
The American population at large would also find that they have gained a commodity more valuable than money...time. With more time on their hands I'm sure that the budget adjustments that every household will make will seem to find more money for leisure and entertainment. Thus we would see a boost to that sector of the economy.
Of course there is the argument that, lord forbid, the hours that one works will be expected to be more productive. For those fortunate enough to have a job where you just waste most of the day, I'm sure your employers would not wince at all at the idea that you'll have to get your W.O.W. fix at home. Those who are expected to keep busy all day will probably appreciate the hour break each day.
There is also the argument that employers would have to hire extra staff to make up for lost productivity.
The latest trend we are seeing is that many companies are trying to say that they see increases in productivity not by a reduction in hours but generally but cutting staff and than increasing their work days to 10 or 12 hour shifts. This is what has come to be called the "Death March."
The reason for this is that both businesses and economies will find that short term models provide unreliable data and eventually wind up in the death spiral that comes from lost efficiency in constantly slapping band aids on gushing wounds.
Short run gains turn into long run losses as worker fatigue and diminishing morale sets in. The natural response is to demand even more hours to make up for the dropping efficiency.
The Challenger disaster has been attributed to the Death March cycle with one account stating that some engineers worked 12 to 18 hour shifts for as many as 50 days in a row with no days off.
If working 10 hour shifts proves more efficient in a long run model than 12 hours, and 8 hours more efficient than 10, could 7 hours prove to be more efficient than 8?
Timothy Ferris' "The 4 hour work week" illustrates how by means of automation technologies and outsourcing; he cut his work week from over 80 hours to less than 4.
If by working smarter instead of harder, one man can cut his work week from 80 hours to less than 4. Than it stands to reason that we could go from 40 hours to 35 while at least maintaining the same level of productivity.
2. Unregulated Microcredit Loan Programs
The current trend in both Federal and State government is a crusade against predatory consumer lending, in particular, postdated check or "payday" loans.
While many arguments can be made about these types of loans the question remains, what better alternatives exist?
For many this is the only source of emergency funding attainable, and while they may be signing away their first born sons to these payday loan sharks; I would contend that the answer is to allow competition into the market that drives out predatory lending rather than setting up prohibition.
Truth be told, the easiest way for the government to grant a monopoly in any business is to simply prohibit a certain product or service. Thus, all who engage in this specific enterprise will have all unholy terror rained upon them... that is except for the one black-market enterprise that fights the unions or sabotages small independent economies on behalf of the CIA.
One option for establishing microcredit loan programs would be to provide tax write off incentives for investors to buy shares in microcredit loans. Since these loans would be targeted towards those of lower incomes or nebulous credit standing, the interest rates would be higher than standard personal loans (possibly 24 to 30%apr.) The shares would provide a high rate of return yet there would be significant risk involved. In order to offset the disincentive provided by the significant risk that would be involved, every dollar invested into the shares would be tax deductible, and no taxes would be levied against gains or dividends from these shares.
Your typical microcredit loan would range from about $500-$2500 for personal loan, but concessions could be made for up to $10,000 for starting a small business. The amount lent would give no regards to current income as repayment time could be stretched out as far as necessary in order for the debtor to be comfortable with the monthly payments. It would also be in the interest of financial institutions, in regards to these types of loans, to provide deferment and forbearance options if necessary. Then again, if more financial institutions provided deferment and forbearance options for all of their loan programs, then there would be a significant decrease in the amount of defaulted loans. Naturally, deferment or forbearance would not come without penalty, as financial institutions would need some sort of incentive to institute these options. Therefore, additional fees could be added to the loans in the event of deferment or forbearance.
By means of free market competition in this particular field, predatory lenders would be encouraged to either "get with the program," or get out of the business entirely. Not a single piece of legislation would be required to end these predatory lending practices.
3. Reduction in tuition rates at vocational schools and community colleges and/or reduction in college text book prices.
In our current economic climate, even individuals with a Masters degree or PhD, cannot be guaranteed a successful high-paying job. Current market trends are calling less for individuals with a well-rounded education, and more for individuals with mastery in very specific fields. Therefore, I predict that vocational training programs and certification programs (particularly "fast-track" programs,) will begin to take precedence over your typical university education.
Naturally, the biggest obstacle in pursuing higher education is the cost involved. Historically, tuition costs and textbook costs have always risen well beyond the rate of inflation. While those with more liberal sensibilities may scoff at this notion, the myriad of government grants and subsidized loans for education that are available to the public may be part of what is fueling the ever rising price of tuition and textbooks. This is great for people who are maybe still living at home with their parents, who can dedicate themselves to going to school full time and have few bills to pay. But for those who have financial obligations that require them to hold down full-time jobs, funding for school is very hard to come by, particularly if they have bad credit.
The easiest route to reducing the cost of education would be to simply destroy the textbook monopoly. Just out of curiosity, at one point I looked up the cost of every book that was mentioned in the bibliography section of one of my economics textbooks. I compared the cost of what each of these books would cost used from Amazon.com as compared to the cost of the actual textbook. The end result was that if you were to buy every one of the books mentioned in the bibliography used rather than pay the cost of that single textbook you would still have $35 in your pocket.
My greatest appreciations go out to the professors that I had in college that rather than forcing us to pay for an overpriced textbook decided to use technology to the advantage of the students and had online resources available (e.g. notes and PowerPoint presentations.) All college curriculums and all professors would be wise to follow suit.
It is not uncommon for some students to spend upwards of $800-$1000 a semester on their textbooks. Of course any rational person would have to ask the question as to why a book containing the same information could be purchased at your local Barnes & Noble for less than $40 brand-new but because it's been labeled as a college textbook they can sometimes fetch prices upwards of $250? One rather weak excuse that was given to me for why textbooks cost as much as they do is that you're paying for the level of professionalism and the amount of research that goes into these books. I'm sorry, but I have many of books on my bookshelf with a greater degree of professionalism and a greater amount of research put into them than many of my college textbooks, and they carried a significantly lower price. The only reason why textbooks cost as much as they do is because there is little competition in the college textbook industry. With current technology where it is, there is really no reason why anyone should have to lug around a 10 pound college tome. All of the information contained in these books could easily be put online, on a $.25 CD-R, or in other more portable formats.
Educational facilities that completely do away with textbooks altogether would likely find themselves increasing their revenues as enrollment would increase, being that the cost of college textbooks is no longer in the equation. This is simple supply and demand economics, the more affordable you make a product of the more people will buy it.
In regards to the cost of tuition:
Every educational facility on the face of the planet always complains about how under funded they are. Rather than honing in specifically on programs that are geared towards helping their students find profitable careers, we still have the option of pursuing fuckoff degrees like art history and music therapy. How about we streamline programs for career fields that are in demand? This way we turn a profit by increasing student turnover. In other words: get them in the door, give them all the info they need to know, and get them a degree as fast as reasonably possible so that we can get the next person in the door. Than we charge a novelty price for novelty classes. There is no reason why a yoga class should be significantly cheaper at the college than at a health club. Anything extra made from the cost of novelty classes could go right back towards lab equipment or professor salaries.
Conclusion:
So there you have three ideas that could help this current economic crisis, and not a single one required anyone in government assuming dictatorial powers and firing CEO’s in the private sector. Nor do any of these require any bailouts or any sort of increased federal deficits.
This 21rt century Krugmanian/Neo-Keynesian notion that Government should be the first to step up and fix the economy has been the catalyst to all of the events of Ayn Rand’s Atlas Shrugged jumping from the pages of fiction into real life. It will continue to do nothing but halt the gears of industry and give rise to demagogues and dictators.
Until we take back the independent American spirit and turn to ourselves instead of Government intervention, we will see a further decline of our economy and our way of life.
Do not ask what your Government can do for you; ask what you can do for yourselves.
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