“Ask five economists and you’ll get five different answers — six if one went to Harvard.” ~ Economist Edgar R. Fielder
We don’t have to look to Wall Street or Detroit for evidence of the difficult economy. Local examples abound. Morgan Hill’s Circuit City store, which opened just a few months ago, now sports “Store Closing” signs, as does the Mervyns store a few blocks down the street. The Garlic Festival Association was unable to sell any of the 24 condos it built in downtown Gilroy. The city of Gilroy is likely to layoff 44 employees, one-sixth of its staff, in the near future. I wouldn’t be surprised to hear soon about layoffs at the city of Morgan Hill.
Recently, a Dispatch article reported that Gavilan Community College plans to trim nearly $1 million from its budget without resorting to layoffs or reducing the number of classes offered. One way Gavilan is hoping to accomplish this difficult feat is a sharp reduction in the number of course catalogs it mails to residents in the community college’s district. This will save $20,000 in printing and postage costs without affecting jobs or course offerings.
Kudos to Gavilan officials, right?
Yes, if you’re an employee or student at Gavilan College.
Not so much if you’re the owner or an employee of the company with the printing contract or an employee of the United States Postal Service — both of which just lost revenue because of this decision.
This isn’t a criticism of Gavilan College officials — far from it. They’re expecting less funding from the state of California and must cut expenses. They’ve set priorities — protect jobs and classes first — and are executing a plan that achieves those goals.
But the reduced printing and postage decision provides a clear example of the ripple effects of cutbacks, whether those cutbacks slash jobs or spending on supplies or services.
Spread those kinds of expenditure reductions across every municipality, governmental agency, business and household in the United States and you’ve got a recipe for a very difficult economic period.
Congress recently passed a $700 billion bailout for Wall Street because the cost of the bailout was said to be less than the cost of doing nothing. Were they right? Who knows.
Now the Big Three automakers are making similar arguments. If these companies fail, we’re told, the cost of the ripple effects of lost jobs throughout the economy will be more than the $50 billion they’re seeking. Besides, others suggest, we can include requirements in the bailout that the Big Three produce environmentally friendly vehicles that will help to address the global warming crisis that’s been eclipsed by the economic meltdown. Others say it’s better to let the struggling automakers fail and instead use the money to bail out the workers who lose their jobs. Who’s right? Who knows.
Should we embark on a program of New Deal-style infrastructure improvements to boost employment? Should those program focus on reducing the effects of global warming? Should we reduce our involvement in Iraq not only because the Iraqis want us to leave but also because we cannot afford to stay?
Americans might not have lots of jobs, credit, home equity or retirement funds right now, but this much is clear: We have an abundance of questions with too few answers. Because this crisis is hitting at the height of the Bush Administration’s lame-duck period, I think we’re all going to have to take a deep breath and hang on until the Obama Administration takes over and can set a clear direction.
We might not all agree with every one of President-elect Barack Obama’s decisions on how to address the economic crisis, but it’s clear to me that what we need most of all is intelligent, thoughtful, decisive leadership to restore confidence, calm fears and enact an economic recovery plan. And that can’t happen until Jan. 20, 2009.
In the meantime, remember that your spending decisions ripple throughout the economy. Do your best to spend as a large a portion of your holiday budget as you can at South County businesses.
“If all the economists were laid end to end, they would not reach a conclusion.” ~ Playwright George Bernard Shaw