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Factors pushing the U.S. economy
Megan McArdle
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Kai Ryssdal: The one thing that's certain about what's going on in this economy is that there's a whole lot of stuff happening that's not very certain. That's the second half of the broadcast today -- how businesses both big and small are dealing with that.
Right now, a perspective on how we got here from commentator and business writer Megan McArdle.
Megan McArdle: During the 2008 primaries, I was puzzled by all the people throwing themselves so furiously into campaigning. Why would anyone want the presidency? It seemed clear to me that a number of trends were about to converge into a very unhappy time for America.
I'm not claiming I predicted the financial crisis. I didn't. But I did see a popping housing bubble, and a nation that had stopped saving because after all, their houses were so valuable. I saw that we'd likely have a recession because, well, you usually do after eight years of growth. And I saw that there was no agreement -- among experts, voters, or politicians -- on how to fix any of these problems.
Three years later, it is even worse than I expected. The financial crisis has made it hard for overindebted households to repair their balance sheets. That's depressed demand for longer than usual, and sent unemployment skyrocketing. Many people have been out of work for years now, many may never work again. This is a tragedy for them, and an economic loss to their nation. Meanwhile, the federal deficit balloons as tax collections collapse and welfare spending rises. Much of the added government spending is a good idea, but it will still be a drag on growth when the economy finally starts to recover.
The financial crisis has also destroyed whatever political consensus we had -- both about fixing our short term economic woes, and about our creeping fiscal disaster. The political dynamic has turned towards actively making things worse. Out of concern for the deficits, we've somehow managed to put our nation's credit rating at risk, and yet we've utterly failed to outline a credible plan for either the country or the debt. All this just adds to uncertainty about the future. And uncertainty about the future makes it hard to invest in a new business, a new product, or a new idea.
Three years ago, I saw the wounds that economic trends were going to inflict; what I didn't see was the ones we'd inflict on ourselves.
Ryssdal: Megan McArdle is a business writer at The Atlantic magazine. Next week, Robert Reich. Your thoughts, whenever's good for you. Send them to us.
There actually is a consensus. It is sort of hidden somehow, but it is there. The bailouts of the big banks were massively unpopular.
If people understood what a Credit Default Swap really was, and how Synthetic CDOs were made of them, and how their tax dollars went to pay for them... there would be even more of a consensus.
If people understood more about how corrupt and ineffectual the SEC is (Marketplace, I look forward to your take on the Taibi article in Rolling Stone about the SEC destroying MUIs) there would be consensus.
Amongst those who understand it, and are not massively conflicted (cough, Roger Lowenstein, cough) there is consensus. Massive frauds were perpetrated, and if there is no financial law enforcement, then we will continue to have financial chaos.
"Out of concern for the deficits, we've somehow managed to put our nation's credit rating at risk, and yet we've utterly failed to outline a credible plan for either the country or the debt."
Does the last month of brinksmanship really look like "concern"?
We all know what's happening. The Republicans know that if unemployment stays above 9%, Obama will probably be a one-term president. So they are blowing up the economy. You can argue about whether this is for good or for ill, but it's certainly rational for any political party seeking to gain control of the executive branch.
I was struck by your comments about people never working again, and those who rely on public assistance in record numbers slowing future economic growth. I am a self employed sole proprietor over 50 years of age, a virtual assistant. I work fulltime from home. What started as a little freelancing has now turned into a fulltime job, sustaining me through unemployment and the prospect that I will never work again in the traditional sense, because i am old and expendable and the society just wants people like me to die off.
So, since I am supporting myself, but not creating jobs for anyone else, I am a non person. And yet every day I communicate with other VAs and webmasters and tech support people all in the same position. And we are the personnel engine that revs up entreprenuers who also cannot afford to hire conventional employees.
We're not in any statistic. We're not labor. We're not management. We are hardly counted as business if we are sole proprietors. We are doubly taxed. But without our efforts, the public dole would be even larger.
I think that the self employed, sole proprietors, and forced entrepreneurs deserve tax breaks and economic incentives so that we too can afford health insurance for ourselves and our families, so that we can afford to make the purchases or hire people that can cause our businesses to expand. Maybe these can be tax credits, maybe a lessening of the social security tax. But something. We should be counted. Right now we hold up a major piece of the entrepreneureal sky, and yet we are unacknowledged in any economic figures.
I think that staying off public assistance by my own efforts with no help from anyone deserves a little credit on my taxes. I am a job creator too, just like those folks at the top who just can never have their taxes increased. I created one job. And I have saved the government money by staying off public assistance.
And I am still alive, working, and no one really cares.
