The economy and your business; what can we say for sure about the future?

There is much discussion and a whole lot of self-serving hype in politics these days over the nation’s economic future.  As a small businessman what can I assure you that the future holds?

ur predicament has been going on for decades, and it’s not going to be resolved overnight.  Since 1980 – yes, 32 years – there has not been a single quarter in which growth of total debt in this country hasn’t exceeded GDP growth.  Our economy has been pumped up for 32 years by 88 trillion dollars MORE debt  than GDP growth.  My budget, my business’s budget, my state’s budget, and certainly not the federal budget can be sustained indefinitely on ever increasing debt.  Sooner or later the reality of mathematics and economics collapses the unsustainable.

he very definition of GDP = C+I+G+NetEx (Consumption, Investment, Government, net exports-imports) tells us in simple addition that one way or another, there is no painless solution to resolving our debt problems.  If my liberal friends have their way, and we balance the budget by increased taxes (approximately $1.5 trillion dollars/ year) GDP will shrink by approximately 10% as Consumption and Investment are reduced by taxes.  If my conservative friends have their way, and Government spending is cut to balance the budget (again, $1.5 trillion dollars/year) GDP will shrink by approximately 10% as “G” is reduced.  Many  economists say that by the time those 10% reductions work their way through the economy, it will actually result in a GDP contraction of at least 15%.  4% contraction is the definition of a depression.  Take you choice; either way, tax or cut, there’s major pain ahead to solve this problem.

he “fiscal cliff” so often talked about is but a foretaste of what needs to be done.  As stupid, ill-planned, cowardly, and ham-fisted as the self-induced “fiscal cliff” is, it would solve only about  ½ of next year’s deficit.   It would also probably driving us into a recession but lead us to increased growth in 6- 9 months.   We’re now in a situation where the “solution” will slow economic growth, temporarily exacerbate the problem (more people unemployed, fewer people paying taxes, less disposable income, less investment for the future) all with little consideration for those among us who are the least resilient in facing economic problems.  As an economic nation, we need a root canal to get healthy; we have to go through chemo-therapy to survive as an economic power; the question is, “how do we ease the pain for the least among us”.

As a concerned American, with family and friends I have concluded:

• It’s not going to be pretty, but the sooner we start the resolution of our debt, the better
• We must insist as Americans – not Liberals or Conservatives – that we discuss thoughtfully among all segments of society, what government services we want, and pay for them in real time; more borrowing guarantees complete economic collapse and political upheaval.
• Those of us who have businesses, incomes, education, must do more.  Small business has historically been the driver of employment and it’s up to us to make sure our economic engine doesn’t die.  We, the employers of Americans need to take care of our employees, run thrifty, responsible, caring organizations – and employ more motivated hardworking men and women.
• We need a government that is in the 21^st century.  We cannot allow the antiquated, inefficient, wasteful and corrupt government structures of the 19^th and 20^th centuries to continue.  Major top to bottom governmental reform must be enacted with waste, fraud, and abuse vigorously prosecuted.
• Similarly, any organization – corporate, NGO, non-profit – who parasitically lives off the government largess, and presumes bailouts inevitably will continue must be eliminated.  The adage of too big to fail must be transformed to too big exist.  Tax payers must never again assume the risks of independent organizations.
• We need a REAL energy policy that allows us to grow, energy independent, and bridge us to truly clean energy sources.   37 failed loans to green energy companies isn’t an energy policy.  We need major research, and a 50 year plan to sustainable energy independence.
• We need to cut the costs of medical care.  I’m talking about a total reform of the system, and how health care is distributed.  Restrictive, monopolistic, non-competitive, top down central planning is doomed to continue our out of control, exponential growth in costs.  We need direct accountability, by service, and vastly increased competition driven by outcomes and cost.

hy do we do what we do?  Restyle Redistributed office furniture is one small way in which organizations maximize the value of their capital.  Our clients understand that being a bit more profitable, a bit more competitive, and creating a few more jobs – that’s how they and the country move ahead.  That’s what we do. We’re thrilled to contribute to our clients’ success and overall competitiveness.