Economy

During my adult life the economy has gone thru booms and busts and these are known as cyclical business cycles. The standard way to get out of a cyclical recession is to have the government spend more money, called monetary policy and lower taxes, called fiscal policy. This is what we have tried for the past few years and so the question is why hasn’t it worked? The answer is that the problem is not cyclical but it is structural. But what is meant by structural. If I lose my job at the auto factory because there is a slow –down in the economy that is a cyclical change but if people start using mass transit and biking and walking and the demand for cars drops and then I get laid off that is structural. If I lose my job at the car plant because of automation, that is structural. If I lose my job as a tool and die maker because of a computerized robot does my job better at lower cost, that is structural. If I lose my job at the GE plant making light bulbs because they outlawed incandescent in favor of new technology and the new bulbs are made in China that is structural. If I am unemployed because the country needs computer people and I don’t understand computers, that is structural.

Now President Obama has assumed that when he took office we were in the midst of a typical cyclical recession but he was wrong. The typical cures for cyclical downturns is to have the government deficit spend and lower taxes which is what was down but it didn’t work because we have a structural problem. It is like prescribing antibiotics for a viral infection. You can’t get there from here.

The solution to our current economic problem is to remove government restrictions on business, starting with getting rid of all the Czars we have, getting rid of Obama care, stop printing money and stop spending money. The sooner the government gets out of the way, the sooner businesses will feel comfortable about expanding and creating jobs.

Once we have job creation all of the other problems will start to go away. The president must understand that we cannot spend our way out of a structural downturn. In simple terms what we need is smaller less intrusive government.