Many observers see no significant sign of economic recovery and fear for the worse. This uncertainty can be a major cause for keeping our economy in deep recession for several years or possibly generating a ‘double dip’ that brings on a worldwide depression.
Over lunch, a physician friend described how the practice to which he belongs had intended to expand in number and move to larger quarters, but now any such plans have been placed on hold, in part because they are uncertain about what changes, if any, will occur with the national health care practices. The health care industry is 17.3% of our economy, so it has huge impact.
Our sister company is hesitant to take on a multimillion dollar upgrade of a hotel with a change of ‘flag’, an opportunity it would have seized two years ago. The opportunity to make future profits has to be weighed against remaining liquid should the economy not improve or get worse.
For the first year and a half of this sharp downturn, most established and prosperous entities could conduct business pretty much as usual, cutting back a bit but otherwise not altering their general outlook for the future. Today many of the same have found their profitability eroded, their assets greatly reduced in market value, and are giving serious thoughts to jettison future investments, to reducing normal expenditures, and to further lay off workforce.
Young couples, even with a good income, are hesitant to take the step to purchasing a home. They fear that their employment might be at risk if things get worse. Their prospects for a prosperous future are not as good as were their parents.
All this suggests that we need tangible signs of recovery, not claims of a reduction of unemployment from 10% to 9.7% when in actuality the number of people without jobs actually climbed; or a jump in Gross National Income largely predicated on government stimuli and a buildup of inventories in hope of future needs (which is borrowing from the future), rather than increase in non-subsidized capital expenditures and consumption.
Another cause of uncertainty is the unwillingness of members of the out party to negotiate seriously with the administration, thus paralyzing the ability of the federal government to act. When political parties in the American system vote as a block, there is definitely something wrong with the legislative process.
How do we deal with uncertainty? The doctor friend wants the government to concentrate on reducing deficit, stop meddling with health care except to adopt some useful cost cutting efforts such as allowing competition across state lines and reforming malpractice tort laws, and stay out of the way of business.
On our part, we would like to see a new stimulus bill, this time one that concentrates on (1) improving our nation’s infrastructure rather than trying to set a political agenda for the future, (2) subsidizing state budgets since most are not allowed to run deficits, and (3) health care reform that concentrates on cutting costs at least as much as expansion of coverage.
Given the harsh times, we consider ourselves moderates.
“Another cause of uncertainty is the unwillingness of members of the out party to negotiate seriously with the administration, thus paralyzing the ability of the federal government to act. When political parties in the American system vote as a block, there is definitely something wrong with the legislative process.”
And when exactly were the members of the current ‘out’ party seriously invited to the table other than to provide a rubber stamp for the decisions and back room deals being made by the Obama/Pelosi/Reid gang? Republicans HAVE advanced specific proposals, only to be repeatedly rebuffed.
No new stimulus. Instead, leave our hard-earned money in our hands instead of taking it from our grandchildren (I’m referring to the overwhelming tide of generational theft being perpetrated by the leftist/elitist thugs running the Democrat party). Government ‘stimulus’ guarantees that vast quantities of the monies involved will be lost to the overhead costs of the bureaucracy involved, and what’s left will be used only to advance the socialist agenda of the Obama administration.
From where I sit, I much agree with your commentary.
There clearly remains a persistent uneasiness amongst business owners and entrepreneurs that manifests itself in a hesitancy to act or to invest. In some cases it is, as a you state, a desire to remain liquid.
In other cases real uncertainty about the future value of any investment made today in light of apparent certainty of near term tax increases on wages, income and capital gains.
Most health care professionals that I have spoken with seem sincerely interested in industry reforms that deliver a lower cost structure (as you discuss) to a greater number of people. I haven’t yet encountered one such discussion where there was any confidence in the ability of the federal government to deliver that result.
I also agree that the partisan political climate in Washington, while healthy for the cable networks and bloggers, is highly detrimental to effective governance.
All that said, I think the primary focus of the Federal government has to be how to spend less money, not more. For instance, restructuring all Federal procurement practices and bid procedures to make them function more efficiently would greatly enhance the value of the dollars spent by our government.