Saturday, December 18, 2010

Income In-Equality: The Reason for the Recession?

Now.. I'm not a socialist, so I don't normally align myself with schemes aimed at governmental re-distribution of wealth. What I DO SUBSCRIBE TO is the belief that economic OPPORTUNITY must be made available to the greatest number of people as possible in order to preserve price competition. And that means the greatest economic driver in any economy must be a strong small business sector and middle class which sustains the demand curve in any economy.

For that reason, this article struck me as germane. It asserts that the "rich" have effectively siphoned off economic wealth from the middle class to the point where there is no more purchasing power. And they also, logically, assert that the rich are able to manipulate government officials to pay heed to their needs, and not the needs of "Main Street".


Extreme Inequality helped cause the Great Depression and the current economic crisis

I think we all can recognize that these Wall St. bailouts have essentially done very little for "Main Street USA". We have a unemployment rate FAR HIGHER than what is being recorded (only actual people drawing unemployment are counted in the statistics). Big banks received TARP money, and are now able to borrow from the Fed at nearly 0%, and then loan it back out to the taxpayer financed US Treasury at over 3%. THAT was the reason we had a Trillion dollar stimulus. It created a place to "park" all of that borrowed Fed liquidity, not to make low-interest loans available to the humble masses, most of whom are already up to the necks in debt.

Now I can recognize the need for Governmental intervention into the economy for the purpose of fostering employment. But those projects must be aimed at obtaining an ROI for the US taxpayer. Whether it be re-training people to work in new technologies that enhance productivity and create wealth, or long-neglected infrastructure that will sustain enhanced economic growth, the majority of it must be directed towards projects that create value (short, or long term) for the US Taxpayer.

What are our options? Obviously energy independence that matches or is less than the economic cost of foreign energy.

Renewed efforts towards space exploration and exploiting the resources available there?

Material Sciences.. Carbon Nanotubes.. etc..

Bio-Science.. and health care innovations (17% of the US GDP is health care related and that's TOO MUCH..)

Aqua-culture?

All of these make sense to me.. But what doesn't make sense is just putting people on unemployment for years and claiming they are "creating jobs" by such extensions. You want to create jobs.. then put people to work and obtain an ROI for the taxpayers.

Scrutinizer

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