A downturn, or a chance to regroup?
I don’t want to accept that we’re in an “economic downturn” just because everybody says that we are.
OK, sure, I get it. The banks aren’t loaning money because they got burned by the subprime-lending fiasco. And now the auto industry is supposedly on the kabosh. And factories are laying off left and right, just down the street from my office, literally, almost, in my backyard.
What I can’t figure out is … where did all the value go? If it’s defaults on too many subprime loans that is the root of this, and everything I’m reading and hearing says that it is, the houses are still standing, right? They still have some value, then. Correct? Ah, yes, they are overvalued, or to be more precise, were overvalued. Common sense told us that back during the bubble, though, didn’t it?
But did we listen? Of course we didn’t listen. And note that I’m saying we, not they. A lot of us are blaming they – the unscrupulous lenders who were able to turn the loosey-goosey environment of the early part of this decade to their wealth-creation advantage when they had to know that bubbles as pretty as they might appear for a time inevitably burst. But we were right there with them, the vast majority of us indirectly, definitely, but still. It wasn’t just the big bad lenders who were out there buying Hummers to drive the kids to school and plasma TVs to watch “Wheel of Fortune” and “Jeopardy!”
We’ve all been living high on the hog. The last slice of bacon is gone from this one. Time to get to work on fattening up the next.
Might I suggest, humbly, that we diversify beyond real estate and day-trading next time around? I know, I know – easy bucks there. Understood. And then in a couple of years, the next speculative bubble bursts, and we’re back to square zero. I’m for thinking long term – investments, for example, in R&D for the green revolution that is a-coming, whether we want a seat on the bandwagon or not. We have the infrastructure in place, physical and human, to lead the greening of the 21st century economy, but the world isn’t going to wait for us to decide that we’re going to do it. There’s a mint to be made here, as there was in the ’50s and ’60s with the automation revolution that changed the way the world worked back then. Might as well be us leading this one, as with the last.
And while we’re at it, I’m going to put a plug in for universal health care. I can hear my Republican friends ratcheting up their tired lines about socialized medicine, and really, I wish they’d move on. The election is over, and I’m thinking not like a politico but like a lot of my friends in business here. The one thing that puts us at an inherent disadvantage with our competitors outside our borders is that we are the only major industrialized nation on the planet that does not offer universal health care to its citizens. Thus the burden here is still on business and industry to provide health care as a benefit to employees, meaning we need to factor in the cost of the benefits as a cost of doing business. That’s one side of the equation. The other is that we simply pay too much under our current system with the added layers of profit-motive-focused bureaucracy that do nothing to provide health care but clearly add to the bottom-line cost.
I was talking with a friend who is a builder the other night about how slow things are for everybody right now, and it came to mind to me that this isn’t exactly all bad. As my friend was relating to me, until the bubble burst in the past year or so, he’d never had to think about how he was running his business because things were going so well that it was all he could do to keep up. I’m not saying it’s a good thing that we’re all struggling a bit right now, but at least we have a chance to sit back, catch our collective breaths and consider what it is we need to be doing to get ourselves ready for when things get going in earnest again.
Because they will get going in earnest again. Which is why I don’t want to accept that we’re in an “economic downturn” just because everybody says that we are. It won’t take the banks long to figure out, for example, that they can’t make money by tying up their assets in a vault and paying people to stand watch guarding it. And once that money gets back out there in circulation, Katie bar the door.
So get your head up. More bacon is forthcoming.
– Column by Chris Graham