About Me

My photo
New York City, New York, United States
41 year old African-American Male. I like to think of myself as a jack of all trades and a master of none...I rely on reasoned common sense, rationality and what my gut tells me is right/wrong (combined with the well reasoned opinions of others!). I don't consider myself an expert on anything in particular, but I have lots of opinions.

Saturday, March 12, 2011

Energy Policy and Job Creation

House Speaker John Boehner has said that higher gas prices are hurting those consumers (presumably low and moderate income consumers) who will be most likely to lead the US out of the current economic environment (ie, the sluggish recovery).  Problem:  Relying principally on out of control consumer spending is part of the reasons households are in their current shape---overextended credit card balances and mortgages for homes with inflated or decreasing values combined with stagnant or decreasing incomes and rising consumer prices...This just doesn't (and won't) add up...Unlike the government that can issue more debt (its another question as to whether and to what extent that's prudent policy), most households can't just assume more debt without digging themselves into a deeper hole.  At what point will  reality kick in for these leaders?
We (the American consumer) were encouraged to sepdn following 9/11 (which most of us dutifully obliged), and we have been doing it at increasing levels for the last 20 yrs (if not longer...).  If the financial collapse of '08, that was tied to the housing bubble should have taught us anything (despite our tendency toward amnesia), its that overblown consume debt is not the answer---it puts the individual at risk when the credit is called due and it puts the entire economic system at risk when consumers can't pay their debts (I find it hard to believe that banks have truly and fully reset themselves financially following the foreclosure crisis that hasn't been fully resolved...Its been only through the grace of creative accounting, no interest and low interest loan from taxpayers and "proprietary trading"-or, what I like to call, market manipulation, that financial institutions have been able to report ground breaking profits).  But, all of this tricks are all illusory...Just like Speaker Boehner's claims that higher gas prices will keep consumers from spending, which in turn will prohibit the recovery. 
True, consumers are feeling the impact of rising gas prices, but this isn't the reason for the prolonged  recovery.  The American economy produces very little that anyone is interested in buying...Corporate Executives (our fellow American citizens) outsource production to lower cost markets  (China, Brazil, India, Mexico) where they have found cheap labor markets to exploit, thereby increasing their profit margins, and therefore, their exponential pay packages.  This vicious cycle is part of what is keeping the American economic recovery in neutral.

We need fresh ideas on both the oil production front (ie, as the President has said repeatedly, a country that consumes 25% of the world's oil production while owning only 2% of the world's oil reserves is not going to dig its way to energy independence...again, the math and the logic doesn't add up).  Similarly, we need fesh ideas on the job creation front...the high paying manufacturing jobs of yesterday are not coming back to America (after find inexpensive labor elsewhere, I seriously doubt that companies will have a change of heart).  Simply has lower gas prices (despite Speaker Boehner's claims) will not create more jobs. 

I agree with the Op-Ed in The NY Times and I hope that the President stands up for this very important issue.  Similarly, I also hope that the President stands behind his words from his State of the Union speech where he said (to paraphrase) that we need to out innovate the rest of the world---from what I have seen, I am not so sure that we are headed in that direction.

No comments:

Post a Comment