Tuesday, August 24, 2010

Economy running out of stimulus options? Try embracing a slower economy

Worry about the national debt has made it harder to advocate increased federal spending to stimulate the economy, but without government lead does private enterprise tend to flounder?

There's no big initiative, or projects (that I can think of) coming out of the private sector. Little to capture people's imaginations and provide focus or purpose to economic activity. No overarching "larger than life" journey into the future?

Sometimes it takes a war to give the economy focus. War is a deadly strategy, however.

A new frontier is another thing, instead of war, to provide focus. Expanding into space, for instance.

Are we ready to start colonizing space now that we are running out of frontier here on Earth? The economy does need to keep expanding, or does it?

Is expanding beyond Earth practical? Maybe, in the more distant future, but there's still a big disconnect between space colonization and our current situation. We struggling to find the first rung to that ladder.

New technology is another thing that can provide a frontier. For instance, a "technology" frontier seemed to benefit us during the Internet boom of the 1990s.

Is there anything like that on the horizon now?

Obama talks about building the green economy. A new frontier in green technology. That transition could provide a focus for the economy, but will it work? What is a green economy? Will the laws of physics allow us to get there or is most of it just a pipe dream?

How about just slowing down the economy? Seems like we're already accomplishing that; like it or not. Less consumption would be one route to a greener economy.

One way to reduce unemployment is to share the work with more people. Job sharing. Some folks might benefit from shorter work weeks while others could benefit from picking up those extra hours. Work a little less, but spread the wealth more evenly.

It seems like there's a lot of fluff in our economy. Fluff that creates jobs but is questionable as to it's desirability.

I think of new strip malls being built, but will they be leased after construction? Will the products and services be needed or will they just be more "rate race" and damage to the environment?

Would it be better if we could learn how to thrive in a slower economy?

I'm not against new technology and progress, but slowing down can be a virtue also.

Can we have both? Can we have new technology, but also a less harried life?

Less consumption of the environment is one benefit from a slower economy. Also more time. Personal time for individuals to enjoy friends and family. More time to figure out how to use some of the products we've already got. Less stress, less hurry and a higher quality of life. This could be seen as a step forward for civilization.

Yes, it seems important to feel that civilization is always stepping forward. Even if our economy slows down, we still need to benefit from a feeling that the future is brighter.

In the future, longer vacations; for instance. That can be seen as progress.

In slowing down, here is an important question.

Can people survive if more folks are working part time?

It would be good to have more time for things like vacation, but can one still pay the rent? Good question to ask since many folks have to pay well over one third of household income for housing. I hear one third is the percentage of household income recommended for housing.

What if income drops, but rent remains the same?

Housing could start eating up half or even two thirds of household income. It's already there for many folks.

People don't take kindly to cutting expenses if all the cuts must come from the discretionary spending side of household budget. Fixed expenses will need to take cuts also.

If we learn to live in a slower economy, we'll need to figure out how to reduce a lot of fixed expenses in household budgets. Health care expenses, mortgages, rents and various overheads we've inflated in our current economy.

Looks like property values will need to continue dropping since it's hard to maintain the current system when people's incomes drop. That could be a good thing in disguise.

We can create a better economy, but we have to keep thinking in new paradigms.

Yes, new technology, maybe even expanding into space, but also slowing down.

Can we have all these solutions at once? Are they contradictory?

I think it can be done. We can slow down a bit, but still have much of the innovations that keep modern life moving ahead. To do this, we may have to learn how to reduce some of our fixed living expenses, however.

I feel lucky that a lot of my fixed expenses are low. That's been a secret to keeping my life better than just survival even though my income is modest. Nice landlord, no car, for instance.

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