Archive | April, 2013

Pants, Belts and the Economy

2 Apr

A parable of Pants, Belts and the Economy

My brother–I’ll call him Bill for the story–was alone on the farm after chores one night and leading a Clyde stallion from one barn to another when the fool horse decided to settle who was boss–an annual discussion with this horse.  The horse reared and struck at Bill, narrowly missing his head.

Bill grabbed the lead rope with both hands to bring the horse under control, but he forgot he’d lost weight and wasn’t wearing a belt.   His pants fell to his ankles.   Bill and the horse fought back and forth, in itty-bitty steps, over the two hundred foot space between the barns before the stallion settled down.

Bill won the fight before reaching for his pants.   He’d be dead if he’d reached for his pants first.  That night’s ‘discussion’ reminds me of the economy now: a weak recovery and large debt, competing problems with differing solutions.  Our economic pants are around our ankles and the economy could be clobbered on the head if we don’t choose the right problem to tackle first.

That’s why I hear the ‘whoosh’ of a large hoof whizzing past my head when a politician downplays unemployment, decries the national debt, and offers to save my grandchildren’s future by cutting funds for education to pay for tax cuts for the wealthy.  Maybe I’m just naturally suspicious.

The metaphor of family finances is often used to justify cutting government spending during bad times.  The claim is made that a family can’t spend money it doesn’t have, which is pure balderdash.  The vast majority of homes are bought on credit—a mortgage.  And if the adults in a family lose their jobs, they don’t stop feeding or clothing their children.  They go into debt.

The US has trillions of dollars in infrastructure that needs repair and renovation.  With interest rates at all-time lows, lets borrow the money, do the work, get the economy rolling again, and raise taxes later to pay for the deficits.  We did it after the depression and WW II.  Why should we believe it won’t work again?