I just shake my head when it comes to government. It always seems that the people in charge don’t seem to have the least bit of common sense — or, maybe it’s me that doesn’t understand economics.
First off, the bail outs. I just don’t understand how giving billions of dollars to banks helps anyone but the bankers. They’re not passing that money on to people who need it. Like all these proposals to bail out car manufacturers — how does giving money outright to GM help anyone? If no one is buying the cars, what will they use the money for?
I think what the government should be doing is buying things. Go to GM with a few billion dollars and buy cars. Tell them the government will buy 20,000 Volt plug-ins, and here’s the money up front. Finish designing them then build them, and deliver them to the government no later than September 2009. So GM will need to keep people on the job, and they’ll also be tooled up to compete in the post-oil economy. And the rest of us will win because after building 20,000 cars, GM will be able to sell them at a lower price to the general public, making greener technology affordable to Joe Schmo, hopefully reaching a critical mass where our oil consumption plummets.
I don’t know what to about the banks; but it seems to me that the easiest, most direct thing is to use that money to pay off bad mortgages once and for all. I know $700 billion won’t cover them all, but if people like me — who diligently pay their mortgage every month but find themselves squeezed and under water — got a small windfall to cover the portion of their mortgage that’s under water, well… it would probably be enough save our home by lowering our payments just a bit.
And government? We need to change the way government budgets. Every year, if departments don’t spend all the money they’ve been alloted, they won’t be allowed to ask for more the next year. This means that in years that the economy is booming, government spends everything it gets. But in poor years, government has to cut services just when they’re needed the most. Like the rest of us, government lives paycheck-to-paycheck, not saving for a rainy day. It seems to me that government should spend less during the good times while still collecting the tax revenues when people can afford it; then use those savings to step up safety net programs and cut taxes when people are worse off.
Logic, of course, has no place in politics.
