This is a really frustrating article to read:Corporate profits are soaring. Companies are sitting on billions of dollars of cash. And still, they've yet to amp up hiring or make major investments -- the missing ingredients for a strong economic recovery.
Many Democrats say the economy needs more stimulus. Business lobbyists and their Republican allies say it needs less regulation and lower taxes.
But here in the heartland of America, senior executives say neither side's assessment fits.
They blame their profound caution on their view that U.S. consumers are destined to disappoint for many years. As a result, they say, the economy is unlikely to see the kind of almost unbroken prosperity of the quarter-century that preceded the financial crisis. In other words, the fundamental issue facing the economy is lack of consumer demand, driven in part because consumers either don't have money or are using it to pay down debt.
This is a textbook case for Keynesian economics. Hilariously, though, the Post makes the claim that this isn't really about stimulus.
This isn't rocket science, though. I've gotten more cautious in my spending. I'm working to pay down my debt. So are millions of others. But if we want to figure out what it would take for me to drive fewer dollars into savings or paying off debt, ask me or the millions of other people out there who are engaging in this altered behavior.
More money in the economy would do it. Almost certainly. And there are ways for either the Fed or the Congress to inject more money into the economy. In fact, they could do it by borrowing the money that consumers like myself are putting back into savings.
If our economy comes back in an altered state, that's good. If we have more money going to CSAs, organic farmers, and gardening supply companies and tool libraries and less going to underwrite crap food chains, that's awesome. If we have more money going into savings and less into purchases of unnecessary crap, that's awesome. Economic transitions are, of course, painful. But we don't need to insist that this one be more painful than necessary. |
