I've been hearing a lot about a potential government bailout of General Motors. Of course my first thought is, "We are winning!", but I don't actually think that is true. While I think that the vast majority of car drivers should be on their bikes far more often than they are, I do not think that cars should be completely eliminated from 'the system'. Even more importantly, I recognize that GM going under would not only mean that lots of jobs will be lost by car builders in Detroit, but car lots and mechanics across the nation may feel the impact. I don't like the idea of people losing their jobs, even if I think the products of their job is destroying the health of the world and it's people.
This is quite a situation we have here. The American automobile industry provides a lot of jobs, that is good. Evidently the American automobile industry is unable to provide a desirable product because they have been in financial distress for a decade or more (companies with desirable products are generally not in financial distress because they can sell them and make money). Is it worth pouring tax payers' money into a company to prevent jobs loss so they can continue producing a product that has a decade of demonstrating that they produce a less desirable product? You may find this hard to believe, but I would prefer that my tax money be used for something else. Lets convert Detroit into a city producing solar electric cells.... and then they can sell them from car lots around the country. OK, maybe that's not the answer. I don't have an answer.
This leads me to bigger concerns for the economy. One of the big messages going out is, "BUY, BUY, BUY!" That will help the economy. Well, I understand that more money going through businesses will improve the economy. I understand that. BUT, that happens to be against what I stand for. People don't need a bunch of junk that they don't need (That is the profound statement of the day). While the economy is tanking, I am glad to see more people out on their bikes and saving money rather then spending it on stuff that they don't need. Sure, it's contributing to the economy tanking, but isn't frugality a good thing? Isn't living within one's means a good thing? Isn't conserving resources rather then meaninglessly buying them and disposing of them a good thing?
So here's what we've got:
Economy tanking-Bad
People buying less- Good
Less Waste- Good
Job losses- Bad
Increased frugality- Good
More bikes- Good
overspent people- Bad... although it's their own fault
I'm going to call it a push. I think that we need to take advantage of this financial crisis and change the economy in this country. Lets run all of the little shops selling disposable goods out of business (Just to be clear, those shops would include Dollar stores, Circuit city, Wal-Mart, much of what is in grocery stores, and most of the other stores at your local strip mall). Remember that I really do care about people and I want them to have jobs that pay sufficiently. We need to replace those stores with businesses that sell durable goods. While we're at it, I think we need to redefine durable goods. $200 Dishwashers that will break in two years are not 'durable goods'. Appliances that last 50-100 years and then can be repaired are durable. Yes, durable goods cost more, but they also last longer. Since people will need to buy fewer things, fewer stores will be needed, but we will need more repair shops to keep these durable goods in tip-top shape.
I know, I'm dreaming; and that's the problem. People have become more conservative with their money so instead of investing in long lasting items, they are finding the cheapest (and most disposable). How do we move to an economy of durable goods and repair instead of disposable goods and growing landfills? Hopefully someone out there is better at economics than I am, but I see that we are in need of some drastic changes for the sake of the people, for the sake of the economy and for the sake of the environment. Our current economy is quite troublesome.
This is the first of a six part PBS program from quite some time ago. It's worth watching ( you know, like all six of them).
I'm done. This whole economic thing just keeps me in a state of confusion. I know about milk and my dissertation is moving forward (I hope), but economics isn't my thing. This entry was intended to flow much more smoothly than it actually did. Oh well.
Showing posts with label economics. Show all posts
Showing posts with label economics. Show all posts
Thursday, November 13, 2008
Thursday, October 30, 2008
A Real Life Parable
23 ¶ Therefore is the kingdom of heaven likened unto a certain king, which would atake account of his bservants.
25 But forasmuch as he had not to pay, his lord commanded him to be asold, and his wife, and children, and all that he had, and payment to be made.
26 The servant therefore fell down, and worshipped him, saying, Lord, have patience with me, and I will pay thee all.
27 Then the lord of that servant was moved with compassion, and loosed him, and forgave him the debt.
28 But the same servant went out, and found one of his fellowservants, which owed him aan hundred pence: and he laid hands on him, and took him by the throat, saying, Pay me that thou owest.
29 And his fellowservant fell down at his feet, and besought him, saying, Have patience with me, and I will pay thee all.
31 So when his fellowservants saw what was done, they were very asorry, and came and told unto their lord all that was done.
32 Then his lord, after that he had called him, said unto him, O thou wicked servant, I forgave thee all that adebt, because thou desiredst me:
34 And his lord was wroth, and delivered him to the tormentors, till he should pay all that was due unto him.
OK, so I cut and pasted a parable from the Bible (Matt. 18:23-34). I want to compare this to our current economic crisis. I think I should state that I don't agree with the approach the government is taking, but what is happening closely parallels the scripture that I cited.
So here is what is going on, in case you live in a cave. Banks got themselves into financial trouble by loaning money to people who were unable to pay the money back. Some banks failed and many more were on the verge of failure, so the government decided to intervene to prevent a complete fallout of the financial market. It was along the lines of $700 billion. For someone who makes under $20,000 a year, that seems like quite a bit of money.
The idea was that this would give banks some cash on hand so that they can continue to make wise loans and provide people with the money that they need to keep the economy afloat.
As we compare this to the above parable, this was the government (the Lord) forgiving the banks a debt. I know that they didn't really 'forgive' anything, but they pumped a bunch of money into the private sector so they didn't fail.
In the parable the servant then turned and demanded payment from one of his fellowservants. In real life, the banks took the money and are decreasing available loans on people who have always payed their bills on time so that the banks can make more money.
I am eagerly awaiting the moment when the banks get to meet their tormentors.
The parable may not be a perfect fit, but when I read what was going on in finances, I thought of that parable.
OK, so I cut and pasted a parable from the Bible (Matt. 18:23-34). I want to compare this to our current economic crisis. I think I should state that I don't agree with the approach the government is taking, but what is happening closely parallels the scripture that I cited.
So here is what is going on, in case you live in a cave. Banks got themselves into financial trouble by loaning money to people who were unable to pay the money back. Some banks failed and many more were on the verge of failure, so the government decided to intervene to prevent a complete fallout of the financial market. It was along the lines of $700 billion. For someone who makes under $20,000 a year, that seems like quite a bit of money.
The idea was that this would give banks some cash on hand so that they can continue to make wise loans and provide people with the money that they need to keep the economy afloat.
As we compare this to the above parable, this was the government (the Lord) forgiving the banks a debt. I know that they didn't really 'forgive' anything, but they pumped a bunch of money into the private sector so they didn't fail.
In the parable the servant then turned and demanded payment from one of his fellowservants. In real life, the banks took the money and are decreasing available loans on people who have always payed their bills on time so that the banks can make more money.
I am eagerly awaiting the moment when the banks get to meet their tormentors.
The parable may not be a perfect fit, but when I read what was going on in finances, I thought of that parable.
Friday, October 10, 2008
What if...
I was referred by minus car to a great post today, and it was along the lines of something I was going to write about. I have the time and interest, I'm going to write. First, you should go read the original post that I read today, here.
So the stock market is tanking. That's fine, I'm 'in it for the long haul'. I know that the market has 'normal fluctuations' and I know that historically, 'the market has always been a good investment over time'.
I'm not a dooms-day sort of person, but I want to think a little. Almost everyone seems to think that this is a dip in the market. We can call it a recession and it may develop into a depression; that's fine. The final assumption that almost everyone makes is that in the end (whenever that is), the market will return to 'normal' and our stocks will increase in value and go back to how it once was. But what if it doesn't? I think we should think on that point a moment.
We have some money in retirement accounts. We have lost $10,000 so far this year. That's OK, I'm quite content without it. Honestly, I don't feel the impact of this financial issue. If it weren't for the news I get from NPR and the internet and the fact that I checked my stocks recently, I would have no idea that Americans are in financial turmoil. How is it that I'm an American, and this is a really big deal, but I haven't noticed?
Next question. We have some extra money lying around. Should we invest it? I know that the stocks are currently 'on sale'. The big index funds are currently available for ~30% off previous prices. What a bargain, I should buy. I should take the $10,000 out of my savings account and put it into a big mutual fund, it's bound to go up if I give it enough time. Just think of the money I could make.
From my understanding of the stock market, now is the time to invest and history shows that I'll be glad I did in the future. But, what if the stock market doesn't increase in value? What if things continue to decline? What if financial institutions as we know them cease to exist? Surely the financial system that we have now has evolved from an ancient financial system that at some point came to an end. Who is to say that this evolution isn't about to speed up?
This is the point that I wanted to make and also the point from the blog I referred you to at the beginning; I don't think anything is a sure thing. While I think that things will likely return to 'normal' at some point, I have this little thought at the back of my head saying that it is quite possible that HUGE changes are in store. What would I need if the financial institution as we know it dissolves into nothing? I would need just a few things. Top on that list would be a home and some land where my family could live. Next on that list would be more knowledge than I currently have on how to grow enough food for my family for a year. I'd probably also need some equipment to do that much farming.
Maybe instead of investing in the stock market I should invest in a house on a couple of acres of fertile land with sufficient rainfall. Boy would my family think I was a freak if I sold everything I have in order to buy a farm in preparation for a financial disaster. (Don't worry family, I won't be buying a farm anytime soon).
What is the sign that it's time to buy the farm? How bad does the financial system have to be? I feel like I'm trying to predict the future, and I'm not good at it.
Don't take the wrong message from this post. I don't think that everything is going to fail, and if it does, I think it will put up a long grueling fight before it's ultimate collapse. The point that I want to make is that we shouldn't assume that everything is going to return to 'normal' (does anyone else think it's odd that we refer to prosperity as normal). If peak oil is real and banks are in as bad of shape as some people say they are and there are other major issues in the economy, things could get ugly. I certainly don't hope for that, nor would I predict that, but I think it's a bad idea to neglect to recognize it as a possibility.
Then if you really want to get the meaning of this post, go back to the site I have referred to several times and read about things of value and things that have no value. It's thought provoking.
I hate it when I post on the economy, I'm far from an economist. Next time I'll try to post more about the conference I attended. I'll give you a little glimpse into what it was about. It was about obesity and everything they said could be generalized to be either about eating less or exercising more to prevent obesity.
So the stock market is tanking. That's fine, I'm 'in it for the long haul'. I know that the market has 'normal fluctuations' and I know that historically, 'the market has always been a good investment over time'.
I'm not a dooms-day sort of person, but I want to think a little. Almost everyone seems to think that this is a dip in the market. We can call it a recession and it may develop into a depression; that's fine. The final assumption that almost everyone makes is that in the end (whenever that is), the market will return to 'normal' and our stocks will increase in value and go back to how it once was. But what if it doesn't? I think we should think on that point a moment.
We have some money in retirement accounts. We have lost $10,000 so far this year. That's OK, I'm quite content without it. Honestly, I don't feel the impact of this financial issue. If it weren't for the news I get from NPR and the internet and the fact that I checked my stocks recently, I would have no idea that Americans are in financial turmoil. How is it that I'm an American, and this is a really big deal, but I haven't noticed?
Next question. We have some extra money lying around. Should we invest it? I know that the stocks are currently 'on sale'. The big index funds are currently available for ~30% off previous prices. What a bargain, I should buy. I should take the $10,000 out of my savings account and put it into a big mutual fund, it's bound to go up if I give it enough time. Just think of the money I could make.
From my understanding of the stock market, now is the time to invest and history shows that I'll be glad I did in the future. But, what if the stock market doesn't increase in value? What if things continue to decline? What if financial institutions as we know them cease to exist? Surely the financial system that we have now has evolved from an ancient financial system that at some point came to an end. Who is to say that this evolution isn't about to speed up?
This is the point that I wanted to make and also the point from the blog I referred you to at the beginning; I don't think anything is a sure thing. While I think that things will likely return to 'normal' at some point, I have this little thought at the back of my head saying that it is quite possible that HUGE changes are in store. What would I need if the financial institution as we know it dissolves into nothing? I would need just a few things. Top on that list would be a home and some land where my family could live. Next on that list would be more knowledge than I currently have on how to grow enough food for my family for a year. I'd probably also need some equipment to do that much farming.
Maybe instead of investing in the stock market I should invest in a house on a couple of acres of fertile land with sufficient rainfall. Boy would my family think I was a freak if I sold everything I have in order to buy a farm in preparation for a financial disaster. (Don't worry family, I won't be buying a farm anytime soon).
What is the sign that it's time to buy the farm? How bad does the financial system have to be? I feel like I'm trying to predict the future, and I'm not good at it.
Don't take the wrong message from this post. I don't think that everything is going to fail, and if it does, I think it will put up a long grueling fight before it's ultimate collapse. The point that I want to make is that we shouldn't assume that everything is going to return to 'normal' (does anyone else think it's odd that we refer to prosperity as normal). If peak oil is real and banks are in as bad of shape as some people say they are and there are other major issues in the economy, things could get ugly. I certainly don't hope for that, nor would I predict that, but I think it's a bad idea to neglect to recognize it as a possibility.
Then if you really want to get the meaning of this post, go back to the site I have referred to several times and read about things of value and things that have no value. It's thought provoking.
I hate it when I post on the economy, I'm far from an economist. Next time I'll try to post more about the conference I attended. I'll give you a little glimpse into what it was about. It was about obesity and everything they said could be generalized to be either about eating less or exercising more to prevent obesity.
Tuesday, March 18, 2008
Public opinion
I am currently in a public management class that has been quite eye opening. The question arose the other day (I may have been the person to bring it up), if 'Mom and Pop shops' and walkable communities are seen as more attractive, why don't we have policies that encourage small shops and walkable communities? In fact, cities generally give big incentives to the box stores (like free land or paying for infrastructure needs of the business) in order to come in when it is knows that they will likely destroy local businesses.
The answer was simple and true. The reason is because that is what you want. Well maybe not you personally, but I think many of us are guilty. We voted for the big box stores and against the little guy. Right, I know they didn't hold a formal vote, but that is still the way the masses vote. They vote with their dollar.
Hypothetically you want to buy a new computer. Also pretend that you know as little about computers as I do, but you hate it when yours crashes and you want to be sure you get something good. Here are your options. You can go to a big box store like Costco or Wal-mart and get absolutely no customer service, but a pretty good deal (or at least you can hope). You can go to Best Buy or another of the big box electronics places and get marginally better service and pay a little more. Or you can go to the local guy on the corner who knows everything about computers and he will sit down with you for 30 minutes or more in order to talk you through exactly what you need and the best computer to meet your needs, but you will pay a premium for the computer. Oh and there are the online deals that are a really good deal, but you're never quite sure what you'll get or if it will work.
Which would you choose? Or would you go talk to the guy on the corner, have him tell you which is the best computer for your needs and then order it online or get it from the box store at a really good price? I know small business owners who experience that regularly and it's destroying their business. Do people realize that you are taking money out of that guys pocket as you talk to him and 'waste' his time and then send your money to a big box store or other entity that offers no customer service?
Lets look at this in the context of the original problem. The 'Mom and Pop shop' now has to charge higher prices in order to put food on the table and the city gets less tax revenue from them. Eventually the 'Mom and Pop shop' goes out of business so the city can put in something that will make more money and the computer expert can get a job elsewhere so he can support his family. The city will get more money this way and the store owner will likely be able to find a reasonable job that pays pretty well.
Where does it leave us, the consumers? We end up with a limited number of people who can actually guide us on our computer buying decisions and no option but to go online or to a big box store where nobody knows what they are talking about. But I thought we wanted walkable communities and local stores with local owners. We did, but we were more worried about ourselves than our community so we outsource their jobs. Who does the outsourcing, the US or us, the consumer?
My wife and I have been talking about buying a new digital camera and here are my requirements. It has to meet my wife's demands (even though I don't know what those are). And I want to pay full price from a local guy to help keep him in business and help feed his family. Am I going to pay too much? I suppose it depends on how you look at it. My community is worth it to me.
The answer was simple and true. The reason is because that is what you want. Well maybe not you personally, but I think many of us are guilty. We voted for the big box stores and against the little guy. Right, I know they didn't hold a formal vote, but that is still the way the masses vote. They vote with their dollar.
Hypothetically you want to buy a new computer. Also pretend that you know as little about computers as I do, but you hate it when yours crashes and you want to be sure you get something good. Here are your options. You can go to a big box store like Costco or Wal-mart and get absolutely no customer service, but a pretty good deal (or at least you can hope). You can go to Best Buy or another of the big box electronics places and get marginally better service and pay a little more. Or you can go to the local guy on the corner who knows everything about computers and he will sit down with you for 30 minutes or more in order to talk you through exactly what you need and the best computer to meet your needs, but you will pay a premium for the computer. Oh and there are the online deals that are a really good deal, but you're never quite sure what you'll get or if it will work.
Which would you choose? Or would you go talk to the guy on the corner, have him tell you which is the best computer for your needs and then order it online or get it from the box store at a really good price? I know small business owners who experience that regularly and it's destroying their business. Do people realize that you are taking money out of that guys pocket as you talk to him and 'waste' his time and then send your money to a big box store or other entity that offers no customer service?
Lets look at this in the context of the original problem. The 'Mom and Pop shop' now has to charge higher prices in order to put food on the table and the city gets less tax revenue from them. Eventually the 'Mom and Pop shop' goes out of business so the city can put in something that will make more money and the computer expert can get a job elsewhere so he can support his family. The city will get more money this way and the store owner will likely be able to find a reasonable job that pays pretty well.
Where does it leave us, the consumers? We end up with a limited number of people who can actually guide us on our computer buying decisions and no option but to go online or to a big box store where nobody knows what they are talking about. But I thought we wanted walkable communities and local stores with local owners. We did, but we were more worried about ourselves than our community so we outsource their jobs. Who does the outsourcing, the US or us, the consumer?
My wife and I have been talking about buying a new digital camera and here are my requirements. It has to meet my wife's demands (even though I don't know what those are). And I want to pay full price from a local guy to help keep him in business and help feed his family. Am I going to pay too much? I suppose it depends on how you look at it. My community is worth it to me.
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