For years, The Durango Herald has been publishing Associated Press reports expressing alarm about the federal budget deficit – no matter that the No. 1 cause of the deficit are the Bush-era tax breaks and two long wars.
The conventional wisdom is that a national economy is just like a household budget. Therefore, it implies we must tighten our belts in tough times, like the long recession, for our nation to return to prosperity. But, the conventional wisdom is wrong: A national economy is not like a household economy.
Why? Because my spending, say, to repair my roof, becomes the income of the roofer, who in turn pays workers and suppliers, who in turn spend their payments – you get the idea. Economists have been pointing this out since the debate over the 2009 Recovery Act, but you wouldn’t know it from reading those Herald AP reports.
But then, the paper ran an AP report headlined “Survey: US Income gap is holding back economy” (Herald, Dec. 17), in which three dozen economists were interviewed.
This isn’t about bleeding heart liberals bemoaning the plight of the unemployed. It’s about the enlightened self-interest expressed by one economist, who said, “What you want is a broader spending base. You want more people spending money.” Those advocating austerity (cut unemployment, cut food stamps) may think they are helping the economy by being tough, but they are being dumb and shooting us all in the foot. As a result, companies and the wealthy continue to hoard cash because potential customers lack money to spend.
But, all that’s not what I wanted to write about. What I’ve described above affects every man, woman and child in La Plata County. Locally and nationally, we’ve had record foreclosures and record numbers on food stamps during this recession. We’ve had intense conflict over our policy choices: Austerity or stimulus? And during this whole time, why have we heard so little about this from the Fort Lewis School of Business Administration? Doesn’t anyone there have something to contribute to this discussion?