Political rhetoric won’t cure troubled economy - East Valley Tribune: Columnists

Political rhetoric won’t cure troubled economy

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Posted: Friday, November 19, 2010 3:45 am

When politicians talk about the economy, let the public beware.

On a percentage basis, very few politicians have studied the “dismal science.” And among the consuming public, fewer yet have made economics a study. We are all pretty much amateurs, knowing far less than we think we do.

Today’s conservative politicians still sing the praises of Reaganomics with its tax-cutting theory of floating all boats on a rising tide of stimulated private sector jobs. And they reverently quote Reagan when he said that big “government is the problem.” Yet even the Great Communicator himself did not follow the theories of less government intervention and lower taxes.

Turning his back on his own Council of Economic Advisors and lending an ear to his fellow Californian and close advisor, Ed Meese, Reagan deregulated savings and loan interest rates. That led to a rush of new construction, primarily in the commercial sector, but still left deposits flowing into those institutions FDIC-insured.

Hard-pressed to find places to invest the cash to generate 13 percent returns on government-guaranteed deposits, these institutions caused such scandals in Arizona as the Keating Five and Fife Symington’s fraud accusations. Nationwide the entire S&L industry vanished almost overnight. While the FDIC did refund depositors their money without interest, billions of dollars were lost when these surplus commercial properties were sold at heavy losses. Yet those who purchased these surplus properties and held on to them for a few years did sell them for what the S&L’s had stated on their books as a fair market value, pocketing very handsome returns indeed!

Today, liberals touting Keynesian Economics as the answer produced the American Reconstruction and Recovery Act, pointing out that our infrastructure is crumbling around our feet. After all, didn’t we have a bridge crossing the Mighty Mississippi fall down with more crash than did London Bridge? All we need to do is stimulate our economy and it will take off once again.

Who is right? Will tax cuts stimulate private sector jobs and float all boats on a rising economy? Or instead, will the rain trickling down from those tax cuts raise tides overseas? We live in a new age, one as drastically different from the industrial age as it was from the predecessor agrarian age. No longer does improved manufacturing technology make it possible to support a domestic laboring middle class. Labor now lives overseas and works in economies where daily bread is the only concern.

We need to understand that to cause our tides to rise again, we must do all things much better than we have ever done them before. Neither cutting taxes nor spending money will shock our dead economic heartbeat back to life. Step 1 is to cut out all of the political rhetoric. Step 2 is to look at and listen to what other nations abroad have done and are doing to achieve their success.

Health care deserves a fresh look. We may not have gone far enough! Where many countries have embarked on infrastructure revitalization projects putting ours to shame, we need to get ourselves back on track. Where we turned our backs on alternative, renewable and/or green energy research and development while others have charged ahead, we may need to play catch-up, if it’s not already too late.

One thing is certain: We need to tell our politicians to shut up and then put up. And we need to roll up our own sleeves and pitch in.

Dale Whiting is a Chandler resident

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