We in this country are on the verge of a recession. I see two realities in this prediction – one is an academic understanding of economics – the other is the real human disaster of poverty and despair. I’ll speak first to economics – it is important to understand some basic principles.
A recession is generally regarded as two consecutive quarters of negative Gross Domestic Product. That means that we as a nation produce less each quarter. The formula is as follows:
Using this formula we can see that increasing consumption, or investment, or government spending can decrease the risk of recession. But there are wise methods of taking such action. Increased Government Spending has consequences – like either higher government debt or higher taxes – the money has to come from somewhere.
The Republicans generally believe that tax breaks should go to the wealthy – thus increasing investments and stimulating growth. According to our formula – that is sound reasoning.
The Democrats believe that if people have more money they will consume more – a growth stimulus. So the Democrats believe in higher wages and tax breaks for the less fortunate. Perhaps you can see why I vote Democratic – my sentiments generally lie with the less fortunate.
But these are academic discussions – all with merit – all with real consequences. My concern is at the human level of suffering and comfort, of education and health care, of cohesive family, of the very human qualities of hunger, poverty, homelessness, and despair.
So my position on stimulating the economy would fall with tax breaks and even tax rebates to the lower economic strata. If we rebate $150 then they can buy some groceries for a few days. If we rebate $1000 they can buy some groceries and replace their broken refrigerator – now we are talking economic stimulus and feeding the hungry at the same time. I believe we should give hope as well as money.
This is serious business. I am offended by the politicians who debate the economy with no mention or understanding of personal human consequences.