Unintended Consequences of Sudden Economic Change

My wife was driving on the freeway and decided to switch to the fast lane to get around traffic.  As she did so she thought she saw something on the road and suddenly swerved to avoid it.  Her car swerved out of control so she steered the opposite direction but this made things worst.  Her car flipped upside down totally crushing the roof on the passenger side and partly collapsing the driver’s side.  The fire department had to extract her from the totally demolished car.  By some miracle she escaped with only minor scrapes and bruises but had there been a passenger that passenger would have certainly been killed.  Fortunately no other vehicles were involved.

When one makes a sudden and unexpected change to something major in life it can have disastrous unintended consequences.  Applying a defibrillator in panic to a patient with chest pains can send the patient into cardiac arrest and kill the patient if it was only heart burn.  It is wisest to spend a little time if at all possible assessing whether the patient is really having a heart attack before applying radical treatment.  Applying triage to a patient just because there is a lot of blood on his cloths may likely do more harm than good if that blood isn’t his.  If there is no real and present danger then it is far wiser to investigate more and plan things out with fewer risks of unintended consequences.  The course of action should be to reverse the conditions in a controlled and calculated manner to do the least harm rather than take unnecessary risky and radical actions if there is no present danger.

This wisdom also applies to our economy and national debt.  Everyone agrees that the national debt is far too high and needs to be controlled.  But House Republicans want to put the panic brakes on it now as well as cut the source of revenues from taxes.  No one is predicting that current deficit trends will be catastrophic to our economy this year or next year or even ten years from now.  They are saying that it will be catastrophic to our children some years down the road.  This double whammy now is like suddenly swerving to avoid an obstacle a mile down the road.  There is time to more carefully change lanes to prevent the car from going out of control in a sudden maneuver ending in an unnecessary accident.  There will be far more unintended consequences if we steer the economy suddenly to avoid an economic collapse more than ten year down the road.  The important thing is to start correcting the downward trend and have a plan that will steadily bring us back into control even if it takes a few more years.  Having the ability to borrow money is good as long as you do not spend more than you can afford, but to stop borrowing altogether before you have a well thought-out plan on how you will pay the rent and buy food for today is not a good recourse.  We should bring our expenses into control in a planned out fashion to more gently reverse our borrowing down to a sustainable level.

Consequences of dramatically reducing the budget arbitrary as well as reducing tax income without a well thought-out plan of reducing unintended consequences could send the country and world back into a deep recession or worst a depression.  The debt increased significantly after the economic collapse of 2008 largely because of efforts by the administration to stem the economic bleeding with loans to failing institutions and stimulus programs to create jobs.  Now that the recovery is almost complete most of the loans have been paid back and the stimulus programs are on the wane.  The government has reduced its borrowing and is systematically reducing ongoing expenses.  I feel this non-triage approach to solving the national debt appropriate as long as it continues relative to overall expenditures.  I feel we need to focus our expenditures domestically and reduce our military foreign aid and related military assets to levels we can sustain without compromise to key domestic programs.  The United States government can better serve its citizens by staying out of the affairs of other nations and focus upon the needs of the vast majority of its own people.

Education, healthcare, poverty, and infrastructure need far more attention and smart funding with much more over-site.  We cannot keep doing thing the way we have historically.  We need to be as creative in government as industry is creative in producing new products.  It appears that healthcare is getting an overhaul which I believe in the long run will have better overall benefits than what exists today.  But Education is still a problem.  We are ranked somewhere in the middle relative to other nations when we should be at the very top.  This will have an overall detrimental effect upon our capability to remain at or near the top of the economic ladder in the future.  We need to radically change the way we implement education with performance instead of seniority being rewarded.  Poverty is still a problem with wealth so highly concentrated with a few.  House Republicans are focusing their efforts to reduce entitlement programs that help the poor.  Eventually we will give more money to the needy of other nations than we do to our own poor.  Our infrastructure is becoming more and more outdated and susceptible to failure.  Bridges are collapsing resulting in the loss of life.  Infrastructure to protect us from natural disasters such as storms are inadequate..  Roads are often in disrepair with pot holes and other dangerous conditions in addition to increased traffic congestion.  Water and sewage delivery systems are falling apart because they were build over a century ago.  Old natural gas pipeline are in similar shape with explosions occasionally killing people and destroying property.  Power distribution systems are outdated and very susceptible to blackouts. and sabotage  Public transportation is almost non-existent in most municipalities and what exists is very old by world standards.  The list goes on.

We need to have a plan for fixing these problems or we will spend more time and money and suffer more loss of life if we simply wait for each infrastructure item to fail.  This is not a way to maintain a nation of prosperity.  Maintenance of existing infrastructure is as important as building new infrastructure.  Like anything not maintained it becomes more dangerous and increasingly susceptible to unexpected and catastrophic failures.

Of course with our current inept government, doing anything that makes a bit of sense won’t happen.  So we are left with a nation that is suddenly swerving from one disaster to the next while the developing nations pass us by as happened to the British empire a century ago and the Spanish empire before that and so on.  China is on the verge of passing us by very soon economically with other developing countries not far behind.

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