I'm told I've been mighty accurate in my estimations of the economy over the last five years I've served on tax and economic outlook committees in the Idaho legislature. These days we are doing a lot of urgent predicting. Predicting a volatile economy though is not the sort of thing that lends itself to strict formulas. In my humble opinion, the world is too complex for formula economics. That, I think, is why a lot of economists sound sort of odd right now, like they are describing a different world than the one we all live in. I think many are having trouble fitting all the factors into one calculator.
I might put it this way: we have created a hollow economy, one built on fiction, on money none of us have, money that is promised against debt large enough to consume more wages than we may ever earn in a life time. And that is just the personal debt. Medical expenses, balloon mortgages, loans for new more fuel efficient cars, home equity loans, and everything from groceries to nick knacks stacking up on credit cards. The average person owes more than $10,000 in personal debt. That's the average. That means most Americans own nothing, or that someone else owns most or all of what we live in, eat off of or sleep on. It is a disturbing thought. Who owns it and can they take it back?
As a nation we have waged two wars on trillions borrowed from other nations. Dollars that a President and previous Congress pretended we had to spend.
We have allowed American companies to manufacture everything elsewhere or to sell us nothing but goods entirely made by other countries. Our dollars flow out to buy little plastic plug-in fans that make rooms smell like lilacs, accent tables and CD holders made for pennies by children using whole forests of foreign trees. We pay dollars and companies owned by shareholders on several continents earn the rest. Our wages flow out of our communities for insurance premiums and every daily necessity, staying only in tiny portions for the hamburger flipper, the bus driver, the nurse, the teacher, the shop keeper. Local stores are shuttered and dark and their owners who once slaved for a decent wage, work now for people they don't know and will never meet, in a chain store selling goods from far, far away.
Our factories still stand there, and people who know how to run them are still alive because much of this has happened in the past eight years. We could fix this. Not by outlawing or taxing foreign imports but by recreating a sense of pride in what we make and a sense that our very survival depends on our buying what our communities produce.
Even our food now finds us from far, far away. We may grow carrots and produce milk or beans or flour, but it leaves the state so we can buy someone else's, paying then the cost of packaging, shipping, cooling and storing it all when we really don't need to.
We have grown soft and dependent because it was profitable for Texas to watch oil prices scrape the stratosphere now and then. Alternative energy research has been underfunded by Washington or bought wholesale by Mobil and Shell. We were allowed to become dependent on oil made by other countries which long have known exactly how to gouge us just long enough to start and then quell revolutions in fuel efficiency and electric vehicles. We all know oil prices will again be at $4 a gallon, but, by design, we don't know when.
And then there is how we let banks play dice with debt. With bad debt. How we let a loan become a Las Vegas game worth 50 times anything material that was ever attached to it. We let insurance companies and investment firms pretend that one dollar was worth $50 and created fifty trillion in fake value or "derivatives" that inflated everything like a giant stay-puff marsh-mellow.
You know how a marsh-mellow turns into a weightless crisp black shell when it hits a flame?
Well, our economy is a crisp black shell and we are all sitting on the surface of it. This is just my opinion, but I think we'd better start filling it with something, making something to fill it with. We can, as a nation. Not that long ago we did. And whatever we make will form a lattice-like scaffold inside the burnt shell and the dollars we spend to buy the things we make will be like the bricks that turn that lattice scaffold into a solid place.
We can't wait for government help to come because there isn't quite enough real money in the world economy to bring back the whole sticky stay-puff that was our economy.
Things will get worse before they get better. And the stimulus will keep state governments from raising taxes and may help us prepare to be a bit more independent. But more important than that is that we have the ability, each of us, to choose to buy what we make. And those of us who are still doing OK can maybe think about what we can make that we or someone else made in our communities, one time, not so long ago.
And then we'd better start making that thing like our lives depended on it.