Okay, I'm about to make a drastic departure from my first two Yearly Kos diaries, and blog about something that I knew really very little about to start: the economy.
I went to the panel on The Economy for the express purpose of learning, in fact, because aside from a rudimentary understanding of supply and demand, and a poli sci course I took years ago on globalization, I actually know nothing about it. What I learned about the state of our economy terrified me.
I had been busy paying to all the obvious (and enormous) problems with the terror that Bush and Co. have wrought: global warming, unnecessary war, incompetent diplomacy in the imploding Middle East, etc. And all this time, I had been ignoring the silent killer, the `high blood pressure' of Bush's policies, if you will. The economy.
My guess is this diary'll be easy enough to follow, because I'm no maven, as I've said. Just one Kossack writing about the things that impacted me at this amazing conference.
So, I admit that I got there late - that's because, there was a different panel at the same time (energy, I think) and I went there first. (This would not be the first or last time at this conference that I wished I could be everywhere at once.)
I came in, just as Professor Linda Beale, I believe, was informing us that deficits do affect the economy and hurt the middle class, specifically. And also pointed out that BushCo. (as usual) made the total cost of the tax cuts seem cheaper by pretending that they were really intended to be temporary.
My notes for the remainder of the panel run together as far as who said what, but Stirling Newberry and London Yank both gave chilling presentations.
My new, post-YK understanding of how our economy is operating goes sort of like this:
Deficit spending is unstable; we've done it before but it's out of control under Bush. This is especially bad because the only reason it's worked in the past, without our creditors taking action, is that there has been a credible idea that in the next industry boom, the U.S. will race ahead, uncatchable by any other country and be dominant in whatever field that is. Essentially, our economy is only functional as long as "You know we're good for it" works with the people we owe money to.
And that may have worked back when we were big stars, but, well, you may have noticed the rise in competitiveness from countries like China and India, Bahrain, the list goes on. Coupled with the facts that our domestic economy is based in large part on the housing market (i.e. a non-exportable industry), we run a huge trade deficit (we import WAY more than we export), our own lessening of competitiveness in the anti-science, anti-innovation era of Bushonomics, and our huge dependence on foreign oil, and maybe it starts to make sense why "You know we're good for it" isn't going to work much longer.
(Stirling Newberry, btw, points out that a 15% drop in housing costs means the death of our economy; the bottom essentially falls out of the only thing propping our economy up and then the creditors will come to call.)
(I should also point out that I was struck at Yearly Kos in general by the vast importance of our "dependence on foreign oil" problem --- it came up in the economy panel, the energy panel, in talks about the environment, obviously, and in foreign policy. It's huge.)
Here are some key points, about what we can expect:
1. Deficits make other countries buy our assets (land, property and other capital) because they know that the dollars won't be worth as much when our economy collapses, and soon, we're foreign-owned.
2. Simultaneously, however, the rest of the world is getting edgy about our economic stability and wants to start bringing investment money home, which will cause a dollar crisis.
3. Creditor nations (China, EU) are in fact already collaborating to address our fiscal irresponsibility, and it doesn't bode well for our prominence in the world economy. This is especially concerning because China and Europe both have more confidence and are more assertive than in decades past, and they're gaining allies. Many countries (and wealthy Americans) have already essentially abandoned investment in the American market in favor of international portfolios.
This whole discussion made me feel like we as a country are like a kid who's way too far from shore, can't swim that well, with a cut on our leg, and the sharks are circling. Everything's just fine if you don't think about what's about to happen.
But lest it all be doom and gloom, the panelists were clear about how to make things better - things we need to do to fix this situation. And, as usual, I was COMPLETELY unconvinced that the Bush administration will do any of these things, except maybe the first one. But then again, I don't think Halliburton counts.
Prescription to avoid economic disaster
1. Invest in more businesses (we need an export-based economy rather than an internally based one)
2. Achieve energy independence
3. Become more multilateral in our economic dealings
4. Become fiscally conservative (ex. Work to increase savings rate, which will cause a recession, but we're at the point where that's needed. Reform health care and education so that we get more for the money we're spending - our systems are grossly inefficient by world standards)
5. Adopt global best practices for management of deficits, gov't. spending, etc.
It was noted that this is not going to happen without a drastic change in the `political outlook.' The speaker suggested that the government needs to appeal to the "thrifty, rugged individualist" in the American people. If we can get people to latch onto that ideal from the American Dream, we can make the necessary changes before our creditors pull the plug.
Personally, I'm not at all hopeful that Bush can do it. My prescription is that we need to work damn hard for the next 99 days to get some political power back. And keep our fingers crossed that the American Enterprise doesn't go belly-up in the meantime.
Your comments, as always, are welcome. Especially if I've misquoted anyone or gotten it all wrong. :-) (Here's one time when I'd be thrilled to have that be the case.)
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The other diaries in this series can be found here:
Part I - My question for Howard Dean, my take on the Black Caucus
Part II - Science Friday, on this scientist's impressions about how to take back the debate about science.
This series is happening so long after the conference because I got married in July, and there wasn't time till now. There will be two more segments. One on The State of the Party, and one on the media's complete not-getting of what Yearly Kos was all about.
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