Creationism

The country is looking for a creator, you know. No, not The Creator. He’s doing quite well these days. I guess most everyone is praying for a solution to the stagnant economy and bleak unemployment figures. Rather, the creator I speak of is the entity that creates jobs for the masses seeking gainful employment.

It is said by many that government cannot create jobs. Tell that to the myriad of workers receiving a paycheck from various and sundry local, state, and federal coffers.  But we’re also possessed with paring down the size of government and, in so doing, only add to the unemployment rolls in a time where we are also trying to pare them down. Confusing, isn’t it?

Government can, however, create an atmosphere more conducive to job openings within the private sector. Lower taxes on business, less red tape and the like, or tax credits for expansion are just a few being bandied about. (Business likes to throw in less oversight, but that’s what created much of the mess the world finds itself in today, so I’d say we may need a pinch more money and personnel on the oversight side of things.)

Unfortunately, we’re witnessing an unparalleled Congressional logjam where any potentially successful program is unpopular because it might reflect favorably on a President the House majority is trying to oust. Without the cooperation of Congress, government has little to offer, job creation wise.

Banks could loan sought-after funding to entrepreneurs, small businesses, and homeowners. But they don’t (or won’t). They claim that credit requirements are tighter than ever, but they’re sitting on historic piles of cash (largely provided by us via TARP) and choose to “loan” their bucks to Uncle Sam for a guaranteed, albeit lower, return on their investment. And guess who pays the return? Yup: you and I.

The corporate world is also awash with large sums to use for investment and expansion. I believe that they’d rather play high stakes poker with the politicos and see how many perks, exemptions, and loopholes their lobbyists can create in the name of promised future growth. And others, still, like to think that their reluctance will be blamed on a Democratic administration that will then be defeated in November 2012. Either way, it doesn’t amount to many jobs, does it?

And there you have it: government can’t do much and the unholy alliance of banks and big business won’t. Each blames the other for being the major impediment to a brighter and bigger tomorrow when, in reality, it is a circle in great need of a knife to cut the continuing cycle of inactivity.

This is where I normally exhort the reader to get involved and change the direction of things, but I’m at a loss in thinking of anything we can presently accomplish. We can send emails to our representatives, but I don’t believe that they’ll change their allegiance to whichever altar they currently worship. And we don’t have the money to take our business elsewhere.

So we hunker down and count our currency, hoping that the great job creator will rise out of the ashes and save our day. I guess that’s why The Creator is finding new customers daily as more and more turn to prayer. Will the tide turn? I think so, eventually. I certainly hope so, anyway. But our society is used to instant gratification and waiting even an extra thirty minutes for a meal is unbearable. Should it come as any great surprise that we’re equally, if not more, impatient when talking about turnarounds that could take several years?

In the meantime, keep an eye on your elected representatives so you know if they chose politics over progress come next November. And be ready to reward businesses that took chances on investment when you once again have a dollar or two extra to spend. Not the best prescription for a happy day, I know, but with a little patience and fortitude we can all live to see the other side of the coin. 

Recovery or Reinvention?

It's hard to watch or read any news report without some mention of the ongoing economic "recovery". Jobs, housing, production, productivity, and similar statistics inundate us in trying to explain the continued malaise while searching for some sign of improvement. Nothing surprising there, I'd say, but I can't help wondering whether the term "recovery" is appropriate. I won't waste your time (nor mine) re-plowing the ground in describing how we got to where we are. We all know that song, so let's spend a few minutes looking at how this extrication differs.

In past recessions, workers were laid off as production was reduced. Then, as the economy rebounded, workers were recalled and production returned to previous levels. In other words, the economy recovered. This time is different for a myriad of connected reasons. I'm not an economist so many of the subtleties escape me, but bear with me as we take a look at some of the major pieces of our dilemma.

Housing: It all started with offering unqualified buyers the opportunity of owning their own home. "Don't worry. The value goes up so fast that you can sell when your payment becomes too high and still walk away with money in your pocket." As the economy slowed, buyers became scarcer, adjustable mortgage payments went up, and the foreclosures began. It didn't stop there, though, because construction fueled much of the economy so, as it slowed, other jobs were eliminated. Today, more stable, qualified, buyers are slipping into the world of foreclosure, short-sale, or bankruptcy.

Many distressed properties are yet to be placed on the market by the banks to prevent even deeper cuts in selling prices so we can expect this glut of under-valued homes to continue for a good time. Many caught up in this whirlwind may never buy a home again. Some won't be able to even consider it for years until their credit reports improve, but that may still not be long enough for the demand to outpace supply. 

Banks: Banks are not in business to loan us money. They're in business to make money. Presumably, the TARP funds were meant to be used as a primer for our economic engine. That wasn't part of the contract, though, and the banks hoarded their funds to cover future losses connected with the toxic assets incurred during the mortgage binge. In the meantime, they could be used to inflate the bottom line and provide even larger bonuses to the executives.

No, banks are not our friend, nor will they ever be. Do not expect the loan requirements to suddenly vanish. Money will continue to be loaned under highly restrictive terms resulting in a prolonged period of stagnation.

Jobs: While many of us are still working, wages have stagnated. Discretionary cash is scarcer and most are now limiting purchases, big and small. The ability to draw from a home equity line of credit is all but gone as home values have lowered and the equity terms have been altered commensurately. As we reined in our spending, the economy shrank further, resulting in more job losses. And, as more lost their job, foreclosures and their related vehicles soared. Unemployed and underwater: a lethal combination, financially speaking. In looking for new work, many considered relocation, but how does one relocate when one cannot sell their home? And, should they be able to sell, it will fetch a price so low that no gain can be realized to finance the relocation.

And, when better times arrive, many of those lost jobs will not return. Some were replaced by technology...others by the increased productivity of co-workers afraid of finding themselves on the street, too.

Uncle Sam: Historically, government stepped in and provided jobs and benefits to those caught up in the clutches of a recession or, worse yet, a depression. But our generous Uncle has no money, either, and seems unwilling to “borrow” from a future where better days lie. So no short-term assistance, no long-term investment seeking the next best thing since sliced bread. Just a promise of better days to come.

The economy that we all grew up within was based on consumerism. I'm not so sure that the immediate future will include masses of folks scrambling to buy the latest and greatest doodad. We’re in for a major realignment of our economic model as folks consume less regardless of their personal bank balance. I'd say that we're entering a period of reflection, reorganization, and reinvestment in our own quality of life. Smaller homes, greater savings, new careers. In other words, a reinventing of how we define ourselves, our economy, and what is important to each.

Such a transformation takes time under the best of circumstances, but the continued mantra of "economic recovery" seeks only to delay any real progress as it attempts to reassure us that things will soon return to normal. Only when we accept the fact that established definitions of jobs and housing and standards of living are passé will we begin the process of economic reinvention. And the sooner we get started, the better. 

Job Security

The continuing high rate of unemployment is proving to be a thorn in most everyone’s side. From the top to the bottom, we look to see signs of a rejuvenated job market. The President and his administration are drawing particularly heavy flack for this situation and I’m at a loss to explain it. In one poll, citizens rail against an intrusive federal government, but in the next, they want Washington to do more in getting a paycheck back in their hands. Typical “both ways” mentality that I’ve addressed in the past.

Some jobs are gone for good due to the global economy or perhaps finding a better way to accomplish the same thing. There’s not much we can do about that except wait for other, new industries to rise from the ashes of their predecessors. But what about the continuing concerns that have laid off a higher percentage of labor than the Great Depression while amassing corporate profits that eclipse those of the same dismal period? Let me talk to you as an employer might talk to his employees:

I run a business and you are needed to fulfill my goal of financial success. I know, there’s that thing about making the world a better place. How about if we compromise and I’ll make the world a better place...for me. If you get ahead, too, so be it. I’m constantly looking for ways to lower my costs while maximizing my profits. You, sorry to say, are a cost and it is in my best interest in minimizing your numbers. True, there will be a point of diminishing returns, but I’ve not yet reached it nor do I expect to, what with a buying public willing to sacrifice quality in order to save a buck.

The recession in which we are currently mired has proven to be a boon for me. It gave me a reason to cut back on you employees. This reduction created such a fear in those remaining that productivity soared to never imagined heights. Sure I want to be liked, but to be feared seems to be a better work incentive. And I like you at times, but I’d fire off a “Dear Colleague” letter if I could figure out a way to do what I have to do with less of you. Hell, they’re outsourcing lawyers and accountants to India. What makes you think that you’re so special? With fewer employees doing more work I cannot see why I’d bring in more worker bees unless I was to increase the size of my operation. That’s OK, too, so long as the productivity remains high and my profit increases.

Now, there is a possibility of the tax cuts enacted by my good old friend, W., not being renewed. This is bad for my bottom line so it behooves me to paint a bleak picture if they fade away. I’ll say that, without those continued tax breaks, I’ll decide against adding jobs to my payroll and the rate of unemployment will remain at an unacceptable level. (We both know that I’m not going to add jobs anyway unless it helps me.) What’ve I got to lose, anyway? If the cuts are renewed, good for me and bad for you. And, if they are not renewed, I’ll pass along the costs to my customers to make up for my personal loss. Then I’ll ask you to work harder due to increased costs. Still good for me and still bad for you.

I can tie my argument to the deficit, too. If they let me keep my tax cuts, I’ll “promise” to re-invest in my community which will then pay more taxes to lower the deficit. I won’t mention, however, the fact that my definition of community probably differs significantly from theirs (or yours). They might fall for it, too, in spite of the fact that the only way they can guarantee some money coming in to the federal coffers is to take it from our income through taxation. That fear thing again might just do the trick and maintain my current cash flow.

Face it: your fear of losing your job is the lynchpin in my strategy. Once you start to realize that I need you as much as you need me, I’m pretty much screwed. That’s why I’m also against the movement that might make it easier for your to unionize. An organized workforce replaces fear with confidence and I see no reason why I should embrace such tomfoolery.

Enough, already. It’s past time for you to get back to work and for me to figure out how to whittle a few more positions out of the payroll. You’d better bear down...you might be next!

Who's Next?

“Take two aspirin, go to bed, and call me in the morning.” Isn’t that the age-old advice given to folks by their friendly M.D.? Well, it once was, anyway. There’s a problem with its applicability in today’s world, though: a significant segment of our society has no doctor to call (due to no healthcare) nor a bed to crawl into (due to homelessness). There are many causes for these problems and we’ll explore a few, with your indulgence, in the following paragraphs.

Healthcare issues are generally addressed through one’s employer. It should come as no surprise that the current economic malaise has created a whole new group of unemployed worker bees as the unemployment rate flirts with 10%. It’s a safe bet that a good number of those folks had some sort of medical coverage, but are now without. Cobra and the like? Pretty expensive solutions, considering you’re out of work. And what about your pre-existing condition(s)? They’ll no longer be covered in any new plan you may find yourself affiliated with.

So now you’re out of work with no healthcare. The economy continues to swoon and, should you be fortunate enough to “own” your home, you find yourself upside-down, financially. Foreclosure is a definite possibility. And you renters are not much better off because your cash flow is substantially curtailed, too, and the prospect of homelessness becomes all too real.

OK, so now you’re out of work with no place to call home and no way to handle health issues that may now spring up due to less-than-desirable living conditions. A job (even if one can be found) becomes more difficult to land because many positions require an address on the application and you no longer can provide one. You have little or no money to prepare for an interview (clean clothes, well rested, showered and shaven) and find yourself in this ever tightening spiral that offers little or no hope of relief.

Now what? And therein lies the true challenge. We are now engaged in yet another debate on national healthcare. Should we find a way to provide such a benefit, companies of all kinds suddenly find it cheaper to bring on additional employees as benefit costs go down. Jobs create income that leads to the acquisition of suitable living quarters and pretty soon that spiral is unwinding a bit and the light at the end of the tunnel no longer resembles an oncoming train.

Simple, huh? Nope, no way, not on your life. Because now we become a socialist country with big government and that, my friends, must be avoided at all costs. Or so some would have you believe. Do I favor socialism or big government? No, nor do I believe the terms are interchangeable. And a bigger role of government in looking after the well being of its citizenry is warranted because, quite frankly, nothing else has worked. Will there be graft and waste and fraud? Of course. Name one organization or program that doesn’t suffer similarly at the hands of scalawags and connivers trying to get something for nothing. That is no reason to refrain from reaching out to the overriding majority who, but for the grace of something-or-other, go us. And will it be expensive? A relative term, because we’re all paying now in the form of higher insurance premiums (should we be fortunate enough to have coverage), higher consumer costs to cover those higher premiums for coverage supplied by employers, and the subsidization of “emergency room healthcare” provided to those who have no other choice than to wait until they are in dire straits and then proceed to the nearest ER. I’d like to think that, at the end of the day, we’d be spending a bit less, but have no doubt that we’d be getting a bigger bang for our buck.

Right about now, someone will rise with indignation and shout, “Let ‘em go out and take care of themselves like I’ve done all my life.” Let me tell you something, my friend: you are not so good or so smart or so omnipotent that you have succeeded on your own. You have had help and opportunity from countless sources and to disown their contribution is the height of elitism and snobbery regardless of what rung of the economic ladder you may occupy. No one...NO ONE...has made it on their own and to turn a blind eye on those that, for one reason or other, require some assistance from others enjoying a greater degree of success is a shameful act. We are the greatest country in the world and no man, woman, nor child should face a day without the availability of shelter and medical attention. That is not Republican, nor Democratic, nor socialist, nor liberal, nor conservative. It is humanitarian and we should all rush to crowd into that tent.