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Why don’t politicians listen to Main Street?

Michael Condon
Internet@plumasnews.com

We have major economic problems to address. Our politicians are rolling up their sleeves and digging in their heels at the same time. But the dialog is healthy and that is good.

We all agree on the problems. Our national debt is spiraling out of control. The recession might be technically over, but the technical definition of a recession only matters to economists. Wall Street has not yet rebounded to its pre-recession levels, but it’s well on its way.

Good for Wall Street. Main Street is another matter. Small businesses still struggle and employment remains a huge problem.

So what will it take to bring the economic recovery to Main Street? We need to understand the problem before we will know what the solution is. To help understand the problem, ask local business owners.

Ask your local car dealer if doubling the number of cars for sale on the lot will help. I am pretty sure he will say no. He needs more buyers, not more inventory.

Ask your local Realtor if she needs more homes for sale to improve her business. What she will tell you is that she needs more homebuyers.

Ask any sort of business owner and the response is the same. What is needed is more people buying the goods and services that are already available for sale.

Put another way, we have adequate supply. What we need is increased demand. Consumer spending is what will pull us out of this recession.

And what of the problem of our national debt?

Any business owner on Main Street can tell you that to stay in business you need to make sure your revenues are higher than your expenditures. They will tell you that borrowing is OK if it’s within your means and enables the business to make sound investments that help grow and maintain the business. They will likely tell you how they pay close attention to both spending and revenue to keep them in balance.

Many of our politicians tell us that while our debt is spiraling out of control, we do not have a revenue problem. We just have a spending problem.

Try to find a business owner on Main Street who is having trouble making ends meet and yet insists he doesn’t have a revenue problem, just a spending problem. If that business owner ignores revenue and just cuts spending, he won’t be in business long.

If your business, or your country, is going deeper in debt it is because revenues and expenditures are out of balance. To bring them back into balance you need to focus on both. To ignore one or the other is pure folly.

So what have our politicians done to address these problems? In recent months, and judging by proposals on the table now, their solution seems to be to cut taxes for the wealthy and save money by cutting discretionary spending and especially entitlement programs. Or to put it more bluntly, the wealthy receive more benefits in the form of lower taxes and the middle class and poor receive fewer benefits in the form of decreased services.

The fairness of this approach seems to be driving the debate. Fairness is a legitimate question. But we can put the fairness issue totally aside and this approach still doesn’t make for reasonable economic policy.

Why not? It is really not that complicated.

What happens to wealthier Americans when their income goes up? They don’t spend a lot more on consumer goods because they already have plenty of money to buy what they need. They tend to invest. As smart investors, they put their money where it will give them the best return, whether it is here on Main Street or, as is likely the case these days, overseas.

Giving more wealth to upper income folks may make sense if our underlying economic problem is the need for more investments. But that is not our problem right now.

Who would build more cars or more houses if there were no one to buy them? We don’t need more investment, or more supply, right now. We need more buyers. We need to increase consumer demand because only increased consumer demand can pull us out of this recession.

Cutting health care, social programs and education, as is being proposed, means lower- and middle-income consumers will have less money to spend at precisely the same time our economy is so dependent on their spending.

Cutting spending on infrastructure projects means cutting jobs just when we need more jobs. Those projects make our economy more competitive, which leads to even more jobs and more consumer spending. Those infrastructure projects do not solve the debt problem in the short term, but by adding jobs and increasing consumer spending, they do reduce debt in the long term. That is exactly what we need right now.

Why don’t our politicians listen to Main Street?

 

Editor’s note: Although ostensibly retired, Michael Condon is Feather Publishing’s webmaster, safety officer, backup photo editor and fishing columnist.

 

 

 


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