Column
By: Mike Buffington
Economic recovery will be a long road
It looks like it will be a long road back to economic recovery. The nation’s economy is probably worse off now than it has been in many years. The dot-com bust of the late 1990s and early 2000s was but a blip. The downturns in 1991 and the early 1980s were big, but not this big.
The nation’s economy has always run in cycles. Some years have been good, others bad. A number of recessions and a couple of depressions have hit the nation over its 200+ years. So it isn’t unusual to have some economic ups-and-downs.
But what makes the current economic downturn so problematic is the slew of problems that are feeding it. It’s as if the nation has been caught in a “perfect storm” of economic woes.
Consider:
• The nation is involved in a lengthy, protracted war that is hammering the federal budget. Billions of tax dollars are being spent to support the nation’s war efforts in Iraq and Afghanistan. While some narrow industries might be profiting from the war, most are not. All lengthy wars drain economies. Even worse, there’s no end in sight of American involvement in Iraq or Afghanistan.
• The rise of China as a growing industrial power is draining raw materials and resources away from the U.S. Prices for steel, concrete, lumber and other basic materials that support our core industries are rapidly rising due to the growing demand in China.
• The efficiencies most businesses got out of new technology have begun to plateau. The advent of personal computers and the Internet initially allowed for new production efficiencies in most businesses. But those technologies are maturing and their immediate impact is softening. American became more efficient over the last 20 years not because we worked harder, but rather because we had those new tools that allowed us to be efficient. That curve is no longer rising at the same rate.
• The housing bubble has popped. Locally, that has cost a lot of blue-collar jobs as builders no longer need that labor. It’s also hit the banking industry; not only are banks not making as many housing-related loans, they’re also trying to absorb foreclosures due to bad loans. In addition, other businesses in many markets made decisions based on growth projections that have now faded.
• Oil is riding at an all time high, in part due to the demand from China, but also due to the instability of the Middle East. Oil is a basic commodity that affects everyone and every business. When oil prices inflate, we all feel the pain.
• The full impact of NAFTA is just now being felt across the economy. Open trade was supposed to help everyone, but for many U.S. factory workers, that hasn’t been the case. The exporting of jobs to other nations did help level the costs of some goods, such as textiles, but the trade off has been a massive displacement of core jobs.
• The U.S. government immigration and work visa system is broken. While various reactionary groups are focused on the problem of illegal immigration, the truth is that much of that illegal movement of blue-collar and agricultural labor is due to a messed up U.S. immigration service. The same thing is true at the other end of the spectrum with intellectual labor. The U.S. immigration system is preventing intellectual labor from other nations from staying and working in the U.S. even as our high-tech industries are begging for additional “thinking labor.” All of this puts additional stress on the U.S. economy as businesses scramble to hire workers at all ends of the economic spectrum.
• The cost of government, especially local and state government, is rising faster than the economy. The boom cycle over the last few years pushed governments into taking on large infrastructure projects and into expanding their own labor force. Higher property values largely funded this fattening of government. But now property values are declining, new growth has slowed and government revenues are tanking. The result is fat governments with less income. But governments don’t have the same pressures as private businesses and are slow to react. Governments seldom have layoffs; instead, they raise taxes, which puts even more pressure on the economy. (Side Note: Why doesn’t our county government do property assessments today, when values are down, just as they did when values were peaking?)
All of these things contribute to the current economic downturn. While pundits, economists and various special interest groups all blame each other, the truth is we’re all to blame. We allowed our government, business and economic leaders to make some spectacularly bad decisions.
It’s a long road back and it will take some time to overcome this long list of problems. That process may take even longer because of the weak leadership we see in the nation today.
Mike Buffington is editor of The Jackson Herald. He can be reached at mike@mainstreetnews.com.
Editorial
Maysville on the road to being a ‘traffic trap’ town
It’s obvious what’s about to happen in Maysville. The town lowered its tax rate and then budgeted a 50 percent hike in police fine income.
The result, of course, is the creation of another small town traffic trap in Jackson County.
It’s all about the money. Small town leaders don’t like having to make difficult financial decisions, so they put their armed forces on the road to extort additional funds from passing motorists as a way to finance their city budgets.
It’s wrong. Small town police agencies should not become revenue patrols. That isn’t why we have police departments. City police departments should exist for public safety and nothing more.
When small town police departments start trolling the streets looking for any small excuse to stop and fine motorists, then the system is broken. That isn’t public safety, it’s legalized highway robbery.
Maysville had, until now, refused to join the parade of money-grubbing police agencies that have become so prevalent in the area.
Looks like that is about to change.
