My take on the crisis

Steven | Random Thoughts | Thursday, 11 June 2009 - 23:40

So there’s this thing called crisis. Like a filthy disease it’s creeping into our lives, immobilizes us, and spread to our loved ones. Oh yes, talking about viral, here is viral redefined.

To be honest, till a month ago or something, the crisis was something that didn’t affect me at all, not in theory nor in thinking. I figured out it was something that would pass, at least pass me and the people I work for/with/ .. And sure, I still have my job, and luckily Nascom isn’t doing bad at all (keep fingers crossed), but I did hit on quite some people I respect and consider to be good at what they’re doing. In fact the whole advertising industry in Belgium has taken a hit, largely international controlled, but still. And it’s not only the advertising industry, I do know that ..

What’s happening in the ad industry however, is a sign what’s happening in the society as a whole, and is supporting the thesis I’m bringing here.

My main idea is that macro economics is a bubble anyway. Yes, just like you had the .com bubble. It’s something surreal, based on trust .. or better: on habit. But if you think about it it doesn’t make sense. We’re forced into systems we can’t choose and can’t control. And we can step out of society, that’s why they keep on working. And in essence, there’s not too much wrong with it. I’m sure any of these systems can be improved, but apart from that: as long as the bubble stays, the economy stays, and welfare stays. So in a way, the goal of modern economics is to inflate the bubble to a level it’s as big as possible, but doesn’t burst.
Yes this is what’s called the consumption society, and again, nothing wrong with that as well. If you disagree: sell your car, tv, house, grow your own crops, .. you can do that, even in a consumption system. The system is build on welfare, on buying stuff. Stuff you should be able to go without. That’s, what, 90% of the stuff we own?
Personal, I’m a big believer of a system like this. I believe in work ethics. Working hard should lead to prosperity, prosperity should lead to consumption (even of things we don’t need). And it’s this consumption pattern that has brought people/the society/the world to where we are today.

The strength of the system is at the same time it’s weakness. The same bubble that can make it grow berserk, can make it collapse. And that’s what’s happening now ..
For some reason (well, we could identify a few, mismanagement at banks to name one) the bubble bursts, and everything that’s build on top of it collapses with it.

In a way the mission is simple: re-inflate the bubble. Try to make it more solid this time. Build in warning systems to prevent future bursts.

Because, where we are now, the bubble is still collapsing, and that’s were the danger is. Consumption again. People without jobs don’t consume (that much), less consumption is less demand, less demand is less jobs, is less consumption, is ..
We need to stop this chain effect!

How can we stop it? By raising consumption I reckon. And if we need to increase consumption, we need to make sure people have an income. A job basically. So, in my mind, this should be the first priority of any government. And no, at least in Belgium, this is not the number one priority. Why is that, because work is so insanely expansive here! Do you know in Belgium, as soon as you’re starting to earn some money, you cede about 50% of your paycheck? Add to that the not tiny amount the employer has to pay for every employee as well, and you know hiring a single person costs a lot of money. I don’t own my own company (just yet ;) ), but I know from numerous starters here, once your hiring people, making a profit is actually getting quite hard. And this is insane in my mind! If we want to his economy to survive, this needs to be changed. Hiring people should actually be something that’s encouraged. Mentally, but as well financially!

And yes, I’m well aware what we buy with our donation to the government. We have a pretty decent society, health system, and so on and I couldn’t miss it. However, I hear too many stories of people actually needing the help of the society, not getting it. And paying this much money for it (collectively) that’s just a big fail, sorry guys. On the other hand, I hear too many people taking advantage of the system. That’s the second fail.
Add to that that I keep on hearing that the scandinavian countries actually do a better job than here in Belgium, and it doesn’t need people to share that much of their paycheck. You then know we have to do better.
To complete the story, I really think the organization of the government isn’t good. I see so many lost potential, lazy (or burned out) people getting stuck in a job they can’t get fired from. That’s the way it goes here. And I don’t want to offend the people doing a good job. Really guys, keep on fighting! But I guess for those people it’s even more frustrating to see a colleague getting away with doing, well, little. And it’s not that they’re underpaid or anything.

Creating jobs is something else than saving jobs. I guess most governments out there understand that jobs are important to save the economy. So what you see is that’s they’re pumping loads of money in industries that are kept alive artificial. Look at the car industry for example. On what possible way does it make sense to keep an industry alive like this? All what you’re doing is shifting money. In the end it’s all a balancing act. The money put in the car industry saves jobs, but can’t be used for something else. Create jobs to say one thing. Wouldn’t it make more sense to spend the money on innovative industries? Come up with new stuff, to make a difference? If it’s so much cheaper to produce cars in Asia, why would you want to compete?
I understand we need workers as well, not everybody is interested in doing desk work (or meant for it). And that’s a good thing. But I believe there’s enough “work” to be done without investing in industries that in fact are dead. Try building a house .. how long does it take to find the proper people. And be honest, how many of these workers are local people. I’m not saying they can’t be foreign, but the thing is there’s just too much demand. And when demand rises, these spots are filled one way or another.
Again the Belgian situation: how can you logical explain why we have to subsidize the building of cars, while at the same time we have to import labor from let’s say poland. If we would move the car plants there, and use the local workers to build houses .. wouldn’t that make much more sense.
And yes, I know I’m cutting corners, but some of this questions make sense, right?
There is enough to subsidize that actually encourages useful local jobs and in addition to that improve the life of the taxpayers at the same time. If it wasn’t so expensive to hire a proper painter, I probably wouldn’t have paint our house myself. Same goes for the flooring, the garden, ..

In a way I believe in an energy balance. If it takes much more effort to do something that can be done easier, it’s probably not the best way anyway. I believe we need to apply this principe to economics as well.

I’m not holding a plea for protectionism or anything, far from. But I do believe in a free market that is supported by the government. But this support should focus on adding services to the citizens. Like healthcare, pension, money when you loose your job, .. remember the freewheeler principle? Things everybody want, but nobody want to pay for. These are things the government should take care of.

So to conclude, this is what I think is the way out of the crisis
1. make sure people have jobs, by making labor cheap, and putting energy into industries that are leading and less dependent on cheap workers
2. Invent ways to increase consumption.

Both points are connected to each other. It’s a vicious circle we need to restore.

I from my side am helping the economy as much as I can by consuming and buying things I don’t actually need. You should to! ;)

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