In today’s economic landscape, securing a good job has become increasingly challenging. The era when anyone could stroll into an office, don a tie, and enjoy a comfortable salary while browsing the web is long gone. Today’s job market demands more than just a pleasant demeanor; it requires valuable skills that can generate profits for employers. Most importantly, hard work is now a prerequisite for success.
Many university degrees, particularly those in less practical fields, are failing to prepare graduates for the realities of the job market. Recent students armed with degrees in unconventional subjects are discovering that their knowledge is often not applicable in the workforce, leaving them unqualified even for basic roles.
Recently, the Senate rejected President Obama’s jobs bill, which aimed to add $447 billion to the national debt to create jobs that were not in demand. This decision marks a rare moment of wisdom in a government often criticized for fiscal irresponsibility.
By choosing not to spend money they lack on unnecessary job creation, the government has potentially given the economy a chance to recover more authentically. History has shown us that excessive spending does not necessarily equate to job creation.
Understanding the Issue
In May 1939, after enduring a decade-long depression, FDR’s Treasury Secretary, Henry Morgenthau, addressed Congressional Democrats about the inefficacy of stimulus spending. He stated, “We have tried spending money. We are spending more than we have ever spent before and it does not work … after eight years of this Administration we have just as much unemployment as when we started … And an enormous debt to boot!”
Fast forward to today, and we find ourselves grappling with the same lessons. Humans often have a tendency to repeat mistakes, overlooking the wisdom gleaned from past experiences. It seems we have forgotten critical lessons about economic management, and the country may have fared better had the 111th Congress refrained from passing the $787 billion American Recovery and Reinvestment Act of 2009. While the recession would have been deeper, a lack of stimulus might have helped the economy find a bottom and create a solid foundation for rebuilding. Instead, nearly three years later, we are still mired in challenges.
20th-century philosopher George Santayana emphasized the importance of memory in progress, stating, “Those who cannot remember the past are condemned to repeat it.” It appears we still have much to relearn.
A Call for Consequences
The Occupy Wall Street protests have drawn our attention, initially with skepticism and later with a desire to understand their motivations. Many protestors feel they were dealt an unfair hand, burdened with significant student loans while good job opportunities evaporated. They voice their anger over government bailouts for Wall Street, shouting, “Bail Out the People—Not the Banks!”
But a crucial question remains: why should the public receive a bailout? And if so, who would foot the bill? These inquiries reveal an unsettling truth—the climate of entitlement can lead to absurd conclusions. While the protestors have valid complaints about government prioritization of banks over individuals, they also need to realize that expecting government intervention won’t resolve economic issues.
To foster genuine economic recovery, we propose a radical approach: no bailouts. Not for banks, and not for individuals. Allowing failures can lead to growth and accountability. Continuously throwing funds at failing entities will only perpetuate problems.
Rejecting the cycle of bailouts does not eliminate the business cycle; it acknowledges it. Historical evidence indicates that significant government spending does not lead to sustainable economic productivity. This notion has been tested during the Great Depression and in Japan for the last two decades, with limited success.
Ultimately, actions have consequences. Incurring debt and spending beyond one’s means can lead to insolvency. It’s vital that individuals and institutions understand that they cannot rely on government support. They must face the music—let them fail or succeed on their own merits.
Sincerely,
MN Gordon
for Economic Prism