I’ve been examining how the economy has been going for a while now. And it looks like even though the economy hasn’t “double dipped” quite yet, people are saying there is a 20% chance that it could still happen. Double Dipping is when the economy is in a recession and then there is a period of growth or stabilization for a short while, and then the economy dips into a recession again. This term is interesting and catchy, but it primarily focuses on Gross Domestic Product (GDP) statistics. Although GDP is an important statistic for determining wealth, we need to remember that GDP doesn’t really factor in the distribution of wealth in a country. So even though it may seem like the USA is seeing stabilization in GDP, that doesn’t mean that the average person is feeling that growth or stability. What people are actually seeing on the street level is a continuing recession. The interesting thing is that even though many people are having bad economic times right now, there are some companies and individuals that are making barrel loads of profit. What are these companies and individuals doing with most of their money? They are for the most part sitting on it. It may be confusing why people would sit on their money in tough economic times. Wouldn’t companies want to spend in order to jump start the economy? Wouldn’t people want to purchase properties on a massive scale? What I think is really going on is that since entities that have massive amounts of money are basically hoarding, the economic downturn will continue and eventually prices will drop to such a point that those who have money to spare will be able to purchase land, the means of production such as factories, natural resources, water rights, energy, and important companies and utilities at clearance, bottom-of-the-barrel prices. We are already starting to see massive consolidation of ownership in utilities and media providers. So basically the companies and individuals that have money and investments can really mop up and buy the whole enchilada for just pennies if they hold on and are patient. Another dip in the economy would actually benefit those who have huge amounts of money and investments. This may seem counter-intuitive because these very individuals and companies would be loosing money, but the real issue is that if prices drop, their purchasing power would increase and so even though they would be losing money, they will be able to buy much more with it.
Consolidation of wealth and an increased income gap may seem worrisome to many of us, but there is a good chance we will see unexpected benefits because of this. One thing that may seem negative and even scary at first, is the idea of huge amounts of government cutbacks of important programs and services. But if the government can’t afford its many programs, it will have to pick and choose what programs and services they want to support and fund. One such program is Medicaid. There is a good chance that states will have to cut back how much they spend of Medicaid. This can really negatively effect a lot of people, especially people of low income. But if governments begin to cut back on many programs, they will eventually anger people and there will be increased government scrutiny. You see, when things are going well, people tend to let governments initiate programs and hire people that cost a great deal of money. And this can create inefficiency. But in order for there to be reforms there has to be real problems in the budget. Governments don’t usually try and trim down and become more efficient on their own, they like being fat and employ a lot of people. So what is going to happen is that State governments aren’t going to be able to afford all of their programs. And they are going to have to cut funding for things like education, Medicaid, among other things. These cut-backs will eventually get the attention of the people they most closely effect. It may take a long time for people to catch on, but after a decade or so the citizens who need government programs will become more interested in the political decisions of their region and will either become more involved or else will be exploited or ignored.
I think what is going to happen is a trend of government program cannibalization. Funds from programs that people need but aren’t totally vital to the functioning of a government will be limited or cut all-together. The end result is that we may have leaner, more efficient government spending after years and years of economic downturn. This being said, I don’t foresee the Unemployment Extension decisions being debated in congress to happen. This is going to hurt a lot of people who are relying on unemployment insurance to pay the bills. But the reality is that the American People need to become more efficient. And the future holds that we need to learn to adapt to living our daily lives with less money. If the Federal Government decides to extend the unemployment insurance issue I will be really surprised. The reason why I say this is because there aren’t as many high paying jobs available anymore. And the ones that are out there you need to fight for them. If there aren’t as many jobs then what is increasing the time that people will be able to get unemployment insurance do? I think it will just delay the inevitable. I feel for the many people out there who are going to be effected by this, but I think there are going to be a lot more people competing for jobs like retail sales and food service.
I was at Starbucks the other day and I looked at a poster that promoted working at Starbucks. And I remember seeing the poster a couple months ago and it had a young woman as the iconic employee. But when I saw the poster recently it had a man who was in his late 50’s early 60’s and he was bald and the caption read something like, “(name of dude) has been a barista for 3 years.” Really? People working at Starbucks in their 60’s? Does this worry anyone else except me?
