After a year in which it seemed that the new administration was merely an extension of the old, many people are waiting to see some of the “change” they were promised. Others fear that change, seeing it as moving us down a road to Soviet-style destruction, and therefore, they oppose the initiatives of the new administration.
In my own view, the new administration came in with too many expectations. It was expected that the President would be able to walk on water and to cast out evil & selfish bankers. In fact, the President has worked hard not to offend the banks and insurance companies, a much more moderate approach than his most extreme backers expected. He was expected to put millions of people back to work. It is likely that his ’shovel-ready’ public works programs had the effect of using federal funds to pay for projects that would have been built anyway, with state and local funding. It was expected that he would bring a surge of assistance to the urban areas where low-income minorities have been left out of the productive side of the economy. He has actually been a little preoccupied–it isn’t just White people that sometimes ignore the needs of the inner cities–with other parts of his job. There are other areas such as these, but the point has been made that many Americans thought they voted in the Messiah, and are finding that he is just another man.
This year has barely even started, but I see it being a time when everything we thought was so secure will be exposed as being built upon sand. The idea that the government and its various regulatory bureaus can provide for us and protect us from the cold, cruel world is likely to be shown as false. Back in the 1930s, Herbert Hoover and then Franklin Roosevelt tried interventionist “let’s do something to put people to work” policies. They did not succeed at ending the Depression. Congress tried to reduce oversupply with the Smoot-Hawley tariff act, putting up barriers to a wide variety of imports. The result was predictable: our trading partners retaliated with their own trade restrictions, and the economy sunk even lower. The thing that finally brought an end to the Great Depression was war: World War II, with its nearly unlimited demand for munitions and weaponry.
I’m trying to point out that government intervention isn’t going to save us from this mess. Because this isn’t just a recession or even just a depression. This is a time of transformation, similar to the one we experienced at the beginning of the Industrial Revolution. This has been going on underneath the covers for some time, but with the massive job losses and the wholesale nationalization of the auto industry, we can finally see it clearly. The government cannot save us, because the government does not know what is going on, nor does it know what is going to arise to replace the big industrial companies. None of us know what is going to arise.
That is why we’ll face challenges getting the economy started–putting people to work again–as we learn that allocating money for “shovel-ready” public works projects mostly shifts payment responsibility for projects that were already going to be built away from state and local governments (the taxpayers of that area) onto all of us who pay federal taxes. We’ll find that this isn’t just about big make-work programs. This is about the de-industrialization of America, coupled with the export of the high-tech jobs that we thought were going to be the replacement for the manufacturing jobs being lost. America is at a crossroads, and no one seems to know where to go next.
The challenge, then, for you and I, is going to revolve around building and maintaining our small, locally-owned businesses. We need to be the ones who reshape our communities. One way that we can do this is to local-source most of our products, services, and labor. By doing this, we can help our own towns and cities to regenerate some of the jobs that were lost. Now, I have to be clear that you won’t find everything you need in your local community–at least, not if your community is like mine–but you can expand that to cover in-state production or in-country production. Do not forget that not every product produced nearby is sold out of a storefront. Sometimes, you may need to buy online–don’t forget to look for PayPal or Google Checkout instead of giving your financial information directly to every vendor–in order to get goods and services that are being produced relatively close to your homebase.
The econolypse isn’t just about the recession. Your challenges aren’t either. Get ready to face your challenges and do not let yourself be cowed by the howling and noise of the large out-of-area corporations (LOOACs) who are even now lined up to request special favors from the government. You have a job to do, and your town or city is depending on you (even if they don’t know it).
If you liked this, and you’re a member of one of the following sites, don’t forget to bookmark it there!
This is a pretty amazing animation that shows just how widespread and how deep the recession has been.
The only thing is, this is not just a recession. It might not even be just a depression. It seems to be a permanent inflection point in the national economy. If you look at the job losses, for example, most of them are gone forever. Chrysler, for example, will probably close entirely in 2010. The current and former employees are not going to get their jobs back. Ever.
Unfortunately, the government’s recovery efforts are focused around two things: protect the banks and get state governments (and their contractors) spending, so that their employees will spend, in the hope that we can return to the conditions of recent times. We all know that the conditions of recent times were an illusion, that America has been losing industry after industry and exporting its middle-class jobs since the late 1970s. Thus, we all know that the government’s efforts, as the now stand, are doomed to failure. We, and most other nations, are ignoring the lessons of this econolypse.
Do not get me wrong. They very well could convince enough consumers that things are better so those consumers will be willing to take on debt to buy more stuff. They could very well convince enough bankers and business managers that things are better so they will be willing to make more loans, make more products, and hire more workers. But it will not last. The economy has fundamentally changed, and we would do better to face the facts and act accordingly.
In many ways, this is equivalent to the Industrial Revolution, when farm labor dried up and factory jobs arose to replace them. Many people decried the end of their traditional employment, but their complaining had no impact on the eventual replacement of their whole economic basis. That base was replaced with one focused solely around the exchange of currency, with the use of mechanical equipment to replace the human and animal labor that had previously powered the whole world’s economy. The only thing is, it is not apparent what the new model will be, nor what business structures will arise to exploit it.
Still, we do know that hyperglobalism [PDF] has made every community very dependent upon the choices of strangers in remote places. We know that information assymetries of the type that brought down the financial industries will continue to exist. Therefore, we ought to try very hard to “close the circle” in our communities. Do you have a local banker, local baker, local butcher? Does your local baker have a nearby miller to supply his flour? Does that miller and that butcher have a local farmer to supply the grain and the meats? Does your local construction guy get his lumber from a locally-owned hardware store, and does that hardware store have a nearby lumber mills to supply its own needs? We need to build networks of small, locally-owned businesses (SLOBs), whether they are family-owned businesses (FOBs), minority-owned businesses (MOBs), owner-managed businesses (OMBs), woman-owned businesses (WOBs), or community-based groups (CBGs).
At least until things start to gel, and we can understand what the new world will look like, your best bet is your nearby community. If you are betting that your future economic lifeline will come through some large, out-of-area corporation (LOOAC), you will probably be disappointed. It is up to YOU and your family members, friends, and neighbors, to work in “coopetition” and help trap a larger fraction of your area’s income within the community. Close the circle or prepare to starve.
The foreclosure crisis likely will persist well into next year as high unemployment pushes more people out of homes, pulls down housing prices and raises concerns about the broader economic recovery.
The latest evidence was a report Thursday that a rising proportion of fixed-rate home loans made to people with good credit are sinking into foreclosure. That’s a shift from last year, when riskier subprime loans drove the housing crisis.
The report from the Mortgage Bankers Association also found that 14 percent of homeowners with a mortgage were either behind on payments or in foreclosure at the end of September. It was a record-high figure for the ninth straight quarter.
This news means that it may be a while before most people can look to large employers for jobs that will help their personal recessions end. Instead, we should be looking around us to see what needs are not being met in our local communities. Providing some needed service that is currently missing in the local area is going to be the best thing that any of us can do to get something going right now.
As individuals, family members, and small business owners (or prospective and hopeful small business founders), we have to stop telling ourselves that some large, out-of-area corporation (LOOAC) or government agency is going to save our bacon. It is going to be you and your family (and any employees) working together to meet your individual and collective needs, not big corporations, big banks, or big government. While the government is telling us that the recession may even have already ended, the data does not agree. Unemployment is rising, as are foreclosures. Almost one in seven homeowners is in the foreclosure process or behind on payments. In addition, there are a lot of commercial rental properties that are considered in danger. If retail sales this holiday season do not recover from the depressed levels of last year, landlords (who typically get a percentage of gross from tenants as part of their rent) will have even less money to pay their mortgages. The first half of 2010 could see a wave of bankruptcies, foreclosures, and bank failures. Recession ending? I wouldn’t bet on it.
When I say this, I am not taking a political stance. I am not for or against any politician. I am for smaller, locally-owned businesses (SLOBs) and against whatever I perceive to be against SLOBs (and their owners, managers, employees, and investors). The government is not really going to advance the needs of small business over those of LOOACs and big banks (LOOABs), nor will it subordinate the urge to pull more power and funds into each agency to the need of smaller businesses for less control and lower taxation (or at least less complicated taxation).
As with any other LOOACs, we cannot depend upon the MSM (mainstream media) to give us accurate information about what we need to do to survive the crisis. It is my suggestion that you develop a network of information sources, individuals and smaller, localized organizations (SLOs), including SLOBs, which are “on the ground” in the areas that interest or affect you. You will surely find, as I have, that whenever I know about a subject or event, the news media consistently gets it wrong. How are you supposed to decide when to invest, when to expand, when to hire, when to relocate, if your information comes from biased and controlled outlets? Answer: You cannot do so with any expectation that your decision is based on the best information. Instead, turn off organizations like ABC News, CNN, MSNBC, and Fox News. Get yourself connected with those who are most likely to supply accurate and timely information.
Finally, do not be a knucklehead. One of the things America did in the 1930s and 1940s that helped our nation survive the severe hardships of those years was pray. Get to know the God who is in control, the one who made you and the universe in which you live. Depend upon him to give you the intelligence to properly use the information you obtain, and the empowerment that enables you to actually perform the tasks you need to do in order to get through. Do not waste your resources on Cadillacs and expensive living. Try to live for the long term.
And the unemployment rate doesn’t include people without jobs who have stopped looking, or those who have settled for part-time jobs. Counting those people, the unemployment rate would be 17.5 percent, the highest since at least 1994.
Economists had expected unemployment to rise to no more than 9.9 percent, up just a tick from September’s 9.8 percent, and the surprising jump added to fears that the recovery could fizzle if Americans don’t spend.
Already, consumer confidence for October came in well below what analysts were expecting. Shoppers’ sentiments about the state of the economy are the gloomiest in nearly three decades.
If you have been listening to the news coverage of business and the economy, you probably thought that things are really getting better. After all, the banks and other financial industry companies are reporting profits again, and even some of the tech industry companies are seeing gains. But the reality is different.
The biggest part of the gross domestic product–somewhere around 70%–consists of consumer purchases, which in recent years was primarily financed through debt, including refinancing of residential real estate. In other words, the level of purchasing we saw in 2003-2006 wasn’t supported solely on personal incomes, but on borrowings, including loans against home values that were far too high. How do we expect to repeat this when between 10 and 22% of the workforce is unemployed?
With layoffs and foreclosures continuing at above-average levels, I would expect that the overall economy will remain at a lower level for at least the next six months. After all, real estate prices still have not fallen to sensible levels, and even if they had, every state in the union is trying to squeeze more money out of its residents. California, for example, raised its payroll withholding rate by one-tenth, as an interest-free loan from its employed citizens.
So I ask you, how does any supposedly competent economist expect things to pick up soon? Is money supposed to fall from the sky? Indeed, I am surprised that economists and financial analysts did not notice that the economy’s underlying fundamentals changed some time in the past twenty years or so. If they had noticed, they would not have been surprised when the debt-fueled growth stopped. And they wouldn’t have supported economically-illiterate moves like the bank bailouts, because they would realize that the overly-expansive financial industry had thrown common sense out the door in the pursuit of ever-increasing profits.
This irresponsibility of finance industry companies hurts families, small businesses, and municipalities, primarily because it hides their need to dramatically constrict spending, and to save up for larger purchases. Irresponsible finance companies make it too easy to spend now, even when the better way would be to defer spending and save. Naturally, fiscally-aware families soon find themselves left behind as overspenders continue to pile up more and more new “stuff”. Finally, even many fiscally-aware families have to take the dangerous course of living on credit just to avoid divorce.
In finance classes, they talk about “financial leverage”, where using debt to finance a part of a company’s capital needs can increase the return to (a reduced-size group of) shareholders. The other side of this, of course, is that the firm’s profits become much more sensitive to changes in sales. In other words, returns can be increased at the expense of making those returns more risky. This kind of financial education is badly needed in every corner of our society, from the White House on down to the guy living in the shack downtown.
Perhaps the media chooses its pundits based on the desired message. It surely cannot be choosing them based on any rational criterion related to understanding the impact of continuing job losses and lender paralysis on the largest part of the economy. For then they would not be seeking out the “the crisis is ending” group. This is not a “jobless recovery”. It isn’t a recovery at all. In fact, it is only the constant promotion through the mainstream media (MSM) that has kept the economy from going into full free-fall.
What should you do? Well start by turning off the media, going to the library, and reading history, economics, political science, and related books. Learn to understand the knowledge gathered by many generations of curious and independent thinkers before you. If you have a back yard, plant a little vegetable garden. This isn’t an attempt to become a subsistence farmer–if things get that bad, your neighbors will kill you and take your food–but an a way to help you feel a little bit of independence. Start cutting your unnecessary spending, so you can save something just in case things get hard.
It might never get harder. In that case, keeping your spending in check and saving up funds can put you in the group we call “investors” instead of the group we call “consumers”. You can be one of the ones who rejoice when the Dow Jones Industrial Average goes above 10,000. But if things do get harder and you have an extra three months worth of income saved up, you might get to keep your home when your neighbor loses his.
Important: I am not a financial advisor. If you take financial advice from some random person on the Internet, you’re being foolish. Instead, consider this an opportunity to start thinking for yourself.
And it was a welcome opportunity for us to realize, well, yes, it could be a very good time to start a business. In fact, we can now think of at least four compelling reasons why.
We can, that is, if and only if the business you’re hoping to start passes one major test.
It can sell more for less.
To be clear, we don’t mean a little bit more for a little bit less. In these recessionary times, a new business doesn’t stand much of a chance unless it provides a demonstrably superior value proposition than the market’s current offerings. Sure, not that long ago, you could still take a competitor’s service or product, tweak it or slap on a new feature or two, and persuade customers to buy it at a premium. But with everyone in hunker-down mode, the days of marginal up-selling are gone, and could be for some time to come.
I think there is even more to it. Right now, big, hierarchy-based organizations are frozen in fear. A smaller, locally-owned business (SLOB) is going to have to be more responsive to its customers or it will shut down even in the best of times. Now, this is the difference that can zoom you from worst to first in your local area.
Does your main competitor have to get someone in headquarters to approve of changes in the product, its pricing, or in services offered around that product? Is your competitor’s product imported? Can your locally-produced product present improved quality or a better feature set as compared to the competitor? (I’m talking about perceived quality: reliability, product lifespan. As for features, the only ones I’m talking about here are the ones that motivate your customers to buy your product instead of your competitor’s product.)
But that’s just my stories. For California as a whole I’m sensing that the whole state is primed for a major brain drain.
Why? Our state is bankrupt. What was the response? Lay off a bunch of teachers. Our education system is already in the toilet, but this will make it worse. Other states, like Texas, that aren’t bankrupt and aren’t laying off teachers, are looking more and more attractive to parents. It’s that, or spend 10s of thousands on private schools.
There’s a general feeling that crime is getting worse. That’s part a PR problem due to four Oakland police officers getting killed last week, but how will we solve those problems if we don’t have any money to hire more cops, build more prisons, etc, etc? Callers to KGO radio yesterday made it sound like the crime problem is getting worse. Rubbed into the wound is the fact that as a state we’ve decided to stop spending money on education and I predict we’ll see the problem get even worse as uneducated kids hit the job market and find no one is willing to hire them. The crime rate is about to head up big time because of this.
The truth is pretty simple. The Bay Area does not equal California. Given that most of the state’s resident live in the southern part of the state, I would argue that for most Californians, the Bay Area’s particular characteristics are unlike the state they know. We’re not suddenly aware that crime is here. We’ve known this for many years and aren’t freaking out because of the killing of 4 Oakland police officers. Since our state has gone to great lengths to prevent people from protecting themselves, we cringe whenever we hear of violence against our protectors (the police), but this isn’t anything we haven’t seen before.
Our education is in the toilet, but it isn’t because of lack of money. With a recent high school graduate in the house, I can tell you that the school system was the obstacle that almost prevented MJ and most of his friends from learning and growing into thinking adults. Why? Because the schools are political and environmental indoctrination machines, with Fascist-like dictatorial powers used in administering prison-like campuses. A well-educated person questions the answers and doctrine given by those in authority, but this very thing brings a young person into conflict with power-tripping teachers, principals, and counselors.
Let us talk about the money for a minute. A local superintendent is about to retire from a pay of $240,600 per year. He may be a very good school administrator (or not so good), but his work is certainly not worth $200k+ a year. One of the big problems with our schools is that local campuses and the districts themselves are too large. I would assume that a superintendent who makes over $200k per year will have a couple of $150k deputies, who would each have two to four $100 – $120k people reporting to them. Below that would be several school principals, deputy principals, and finally the actual teachers who do the work of education. Seeing that teachers universally complain that there aren’t enough resources at the classroom level, the thing we must do is get rid of the highly-paid administrators (smaller districts helps immensely by making it obvious to all that these guys are superfluous).
Remember that $1 out of every $2 of the state budget is spent for the schools. The schools’ voracious appetite for money is unquenchable, so much that school spending is slowly strangling highways, mass transit, and other essentials of such a populous state’s budget. We keep hearing that this is inadequate, that California must dramatically increase its school funding, even if this results in sharp increases in taxation for our working families.
California’s school situation is dire simply because we’ve centralized funding and control in Sacramento. Just as with the nation’s financial system, our problem is the dominance and control by large, out-of-area institutions. There are thousands of locally-owned banks, savings & loans, and credit unions that are not in need of bailouts. But the big nationwide institutions were mismanaged and our whole nation is suffering as a result. It is the same with schools.
Funds from outside the local community, coupled with a profound lack of parental control of the whole educational process, mean that the schools do not have to adapt or be responsive to the concerns of the parents who know their children best. For example, MJ used to spend 4 hours or more each night on homework, and frequently wasn’t finished even after that. After spending 6 to 7 hours at school, pouring on the homework that way is–in my opinion–unconscionable.
One of my nephews used to do his full week’s homework schedule in half an hour on Monday. When his mother met with the teachers to request harder work, they informed her that they were not allowed to deviate from their predefined grade-specific content. This child’s brother is more like MJ, and used to spend his entire after-school time doing homework. Do you see the point? Each child is different, and has different capacities for school-based learning. State-issued standards about homework and classroom content fail to take into account that some students in a typical thirty-student classroom are probably a year or more advanced over some others.
What is the solution? We need to make sure that school districts are smaller, and that parents have more control over them than do professional educrats. In fact, we need to make legal changes to our educational system so that are unresponsive to parent and students’ needs are denied permission to operate. Secondly, we need to change the way we fund schools, so that the majority of their funds come from the local community. This will probably necessitate changes to Proposition 13’s controls on property taxes. And thirdly, we need to stop trying to recapture what schools did in 1940 and 1950. The nation, the economy, and the world around us are quite different now than they were back then. We must also stop indoctrinating children. If it is true, let them figure it out because they are intelligent thinkers. I’m talking to you, anthropogenic global warming (AGW), also known as “climate change”.
Back then, we knew that many graduates would go into factory jobs where a fixed set of basic skills served as the entry requirements for a life-long career. For this reason, schools tried to give each student the same training, the same content, as any other student. Today, there are few factory jobs awaiting graduates. Instead, they are faced with retail (many graduates will work for the large discount chain we know as “Big Blue”), foodservice (the “Golden Arches” is the first employer for a huge number of people), and other low-wage service jobs. The best futures are available to those who go out and start their own enterprises and do something differently from the way everyone else does. However, this requires that schools stop being “education factories” and reform themselves around “boutique training programs” tailored to the needs and plans of each individual student.
To be sure, This is going to be time-consuming, expensive, and contentious. We can do some things to reduce the costs, however. Knowing what we know, why do students have to sit in classrooms every day, when much of their learning could be just as effective in an online format? I got my Master’s Degree online, so I know that it takes personal investment in one’s own success. But that is exactly what is needed for those who go on to start and run their own enterprises. Best of all, this kind of training is very amenable to personal research.
And, yes, I am among those looking into Texas and other states. California’s decision to raise taxes during a recession is going to hurt state residents more. This includes those who are already struggling, those who have no healthcare insurance, and college students.
The unemployment rate in Michigan was 11.6%, up 4.3 percentage points from a year earlier and the highest for any state, the Labor Department said. The unemployment rates in California, Rhode Island and South Carolina rose in January to top 10%. That was the first time those states had jobless rates in the double digits during this recession, which began in December 2007.
A number of people who still employed are working suchminiscule schedules that they are also, for all practical purposes, unemployed. Twelve hours per week is just enough to buy a couple of video games or rent a few DVDs each month.
I have a suggestion that may help California. Take all public officials statewide who collect $100,000 or more and cut their pay by 80%, using the savings to fund continued employment for lower-paid state and local government employees and grants for small business startups. The Pete Wilson horrendous tax increase during a recession trick is just going to make it worse and longer for Californians–again–the way that namesake governor Pete Wilson’s tax and fee and tuition increase prolonged and deepened that recession. (There was a campaign commercial for Ron Unz that made many Californians aware of just how badly this tactic backfired on us.)
What else? Abandon, at least until after the recession ends, the state carbon reporting and regulation plan. Consolidate state tax collections and funds custodian operations into a single “division of revenue”. Make it a felony for any state official to spend transportation funds (e.g., DMV taxes) for any non-transportation purpose. Kick off a comprehensive evaluation of the effect of state regulations and taxation on smaller businesses, the kind that produce jobs.
Obviously, the word comes from economy or economic, and apocalypse.
econolyspe
Economic apocalypse
And it seems apt, especially when you know what it means. We often think of apocalypse as in the end of the world. We look at the economy and we see the same thing. But that is the wrong idea. The word apocalypse comes from a Greek word and means to reveal something that was previously hidden.
I have recently written a lot about the econolypse. I am hoping that in the process I am helping you to see that these problems are not new–the only new thing is that now they are visible. What was hidden about the mismanagement of the banks and the entire economy has now been revealed for all to see. This is an economic apocalypse.
There is another point that is also important to see. Apocalypse entered our language because it is the Catholic name for a book of the New Testament, Revelation. The book of Revelation is full of descriptions of devastating events and death, culminating in the return of Jesus to stamp out humanity’s rebellion against God and his establishment of a thousand-year peaceful kingdom. In the present unveiling of our economic distress, we really need to stop depending solely upon our own wisdom and learn to lean on the God who made us.
Look at it this way:
Human Wisdom
New Wisdom
Rising real estate prices will never stop, buy now before you get priced out.
If the price is too high, maybe we should just wait, since it looks unsustainable.
Consumer spending drives the economy. Encourage borrowing, people spend more, economy grows.
Consumers’ ability to spend is limited by their earnings and savings. Reward increased savings and spending will also rise.
Let the big banks take risks if they choose. They are too big to fail.
A bank that is too big to fail is too big to exist. Break up those banks.
Econolypse is a good word for what is going on. But we need to know what the word means, because there have been a lot of unsavory things going on under the table. Now that all is being revealed, we are being asked to protect those whose conduct caused it all from the consequences of their actions. It makes me wonder what will be revealed in another five to twenty years, when the fruit of our fouled up response comes back to bite us.
econolyspe
Economic apocalypse–the unveiling or revealing of what has been happening in our economy, hopefully accompanied by solutions characterized by departure from failed human wisdom and openly acknowledged dependence on the Sovereign Lord God for wisdom and guidance.
Bernanke told Congress on Tuesday the recession might end this year, and that regulators aren’t planning to nationalize banks. The news alleviated some of investors’ worries about the economy and the banking industry, and lifted the Dow Jones industrial average and Standard & Poor’s 500 index off their lowest levels since 1997
The recession might end this year. True, it might. Or it might end in 2020. Personally, watching the way the government is still trying to bail out the bankers, I expect extended pain–on the order of years, not months–but I am not an economist nor a psychic. In other words, I could very easily be wrong, wrong, wrong.
Big increases the danger to innocent bystanders. When big banks, big investment banks, and big insurance companies make big bets with lots of money involved, mistakes hurt everyone. Wnen my granddaughter, Vi, is thirty, we just may have finally paid off all the funds we borrowed to keep the big, mismanaged banks in business. She’s 11/2 now.
The hope of America is not a particular politician, no matter what his ancestry, no matter what political party he represents, no matter how many people proclaim him the messiah. That man can fail, and he will fail, even as King David failed. President Obama can make the mistake of thinking that the government is like Astarte / Asherah the fertility goddess whose multiple breasts not only symbolized fertility, but provision–if you could not grow or catch your dinner, she provided mother’s milk. Indeed, his past and present speeches tend to indicate this belief.
Yet, the truth is that just as large corporations have their own agendas and are not to be trusted, so the government has its own agendas and is not to be trusted. Many have suggested parallels between the Reichstag fire and 9/11. Certainly our present financial crisis has parallels in the Great Depression. Just as FDR’s work programs did not fix the problems then, the present initiatives will fail to fix the problems now. In seeking to preserve the status quo ante, the government and these corporations are spreading the harm to all of us. Instead of acute, but intense pain that lasts a few months to a few years, they are loading us down with chronic pain that will last many years into the future.
A shift from an economy based on unrestrained spending and borrowing to spend more, over to an economy based on saving, investing, and independent business will be wrenching. Remember that about 70% of our economy in recent years was related to consumer spending. As the unrestrained spending goes away for the long term, I would expect that far less than 70% of the economy will be devoted to consumer spending.
Expect a whole lot of crying. Large out-of-area corporations (LOOACs) have had a lot of money and a lot of influence. They will call in every favor they can in an attempt to survive, sticking us and our children and grandchildren with huge debts in the process. The hope of America is not the government. It is not GM or any other large corporation. It is not the man in the White House. (Thankfully, as we’d be in trouble eight years from now when he is replaced with someone else.) No, our hope, our only hope, is in God above and in individuals and small, locally-owned businesses (SLOBs) acting with an eye toward the long-term benefit of the families and communities they are a part of.
I mention God above, because of the ant problem. When ants try to navigate through the terrain in your yard, they cannot see far enough to know that moving an inch to the left will help them completely avoid an obstacle. But I, standing overhead, can see this. I cannot communicate with the ants to inform them of this. But God is not limited like I am. In dependence on him, we can have some inkling of obstacles ahead, which potentially could lead us to avoid such obstacles.
Think about it. The economy was bubbling up, based on unsustainable prices for real estate, unsustainable amounts of debt, and unsustainable levels of spending. All of those things need to be reduced sharply and to stay down. Yet, the whole premise of the recovery plans is that spending, lending, and real estate prices are going to return to their former levels. This is madness, I think, madness.
The economy was based upon «… unsustainable prices for real estate, unsustainable amounts of debt, and unsustainable levels of spending.»
… and of course those special “I can’t see what you’re doing” glasses for our regulatory agencies. That also played a big part, because they should have known that letting the financial industry invest in opaque securities was dangerous both to the industry and to its customers, and ultimately to our whole society. This is the same government that regulates what kinds of end caps must be on a bicycle’s brake cable. Yet they allowed companies to play games with people’s retirement funds without similar scrutiny. Sounds very suspicious if you ask me.
One of the biggest challenges for the CCCDC to overcome as they work to get Cincinnati’s downtown and uptown revitalized is the lack of a dense enough and sufficiently socioeconomically diverse population. The stores wait for people to move downtown before they commit to providing services, while people won’t move downtown until there are stores so they don’t have to trek to the suburbs for groceries.
Chicken, meet egg. Egg, meet chicken.
This is where trying to draw in outside resources fall flat. Unless there is something else going on that is beyond your control, basing your town’s development plans on outside investment and population influx is going to be a rough, and not often successful, endeavor.
The key to reviving Cincinnati, Ohio, is their local residents, local businesses, and local resources. Outsiders are not interested. In my own local area of California, the local town and cities have spent thousands of dollars over the past twenty years promoting the area to outside businesses. The result is that retail stores, gas stations, and restaurants (including fast food restaurants) have proliferated, with their substandard wages. Our population is still unemployed and underemployed, with many commuting fifty miles or more to obtain decent pay.
Troy, the author of this blog post, often talks about the local businesses and other quirks of Cincinnati that make it a recognizable place, distinct from similar cities around the country. I believe that this is the key to building up that city, just as it is the key to building up California’s Victor Valley. We cannot allow our cities to become giant strip malls, full of dozens of chain stores and look-alike knock-offs. We have to build locally-owned businesses, encourage local citizen involvement, and devote local resources to solving local problems. We cannot depend upon federal or state funds, nor on large, out-of-area corporations (LOOACs) to solve our problems for us.
«We cannot depend upon federal or state funds, nor on large, out-of-area corporations to solve our problems for us.»
This is where local politicians have to have guts. When every other city is spending its money trying to attract still another chain store to open a branch in town, a smart, locally-focused politician will be working to build up small, locally-owned businesses (SLOBs) and local non-profit groups. He or she will be trying to get local citizens to become involved, and to actually give them a voice in the choices that affect their lives. The smart, locally-focused leader recognizes that the best way to attract outside investment is for local businesses to prosper. The best way to attract an influx of residents is to have relatively low housing costs, but a high quality of life, including sufficient well-paying local jobs to support your local population plus extra move-ins. And one of the best things to do is to have strong community-based medical and substance abuse programs, as drugs are one of the leading causes of criminal activity and a large segment of the population has no health care insurance. These things gradually improve the local quality of life, relative to similar areas around the nation.
Like so many other things economic, it’s all about volume. Here in Corryville we have a few abandoned properties. Not a huge number, but one is too many. A house across the block from us is reported to have had no utilities since the 1970s! This is one of many properties in Hamilton County with an absentee owner. This doesn’t help the density situation because the owner isn’t interested in renting or selling–if they can be found–and some of these buildings just need to be taken down in spite of the architectural loss.
Again, with locally-focused, active leadership, such problem properties can be pruned. Forty years is a long time for a house to be abandoned. It should long ago have been either torn down or turned into a museum. Perhaps the current downturn will finally cause municipal governments to wake up and recognize that LOOACs have little incentive to stick with the city during hard times, while SLOBs will stay, sometimes even longer than they should, because with SLOBs the key concept is locally-owned, while LOOACs’ key concept is out-of area.
One of the keys is building the local economy around local resources. Turn off the spigot of incentives that taxes SLOBs and local residents more heavily in order to subsidize LOOACs that come into town. If it does not make sense for a large company to be there, let them go where it does make sense. Otherwise, your town can end up stuck with an abandoned building, where the big company closed their local branch once the incentives ran out.
I believe that giving away the town treasure to attract hundreds or thousands of minimum-wage jobs is a betrayal of the local tax payers and business community. If we instead spend those resources to make the area better for the people and businesses that are already there, we will avoid many of the ills that go along with these giveaways.
