A friend urged me to view a You Tube of teenagers trying to make a phone call with a rotary phone. They had a hard time, and even used the handset by holding it away from their face. How many adults today know what a skate key is? My husband was telling everyone at Easter dinner the finer points of turning the crank on a motorized vehicle without breaking your thumb.
During the summer, how many people today sit on the front lawn watching the neighborhood kids play hide and seek while the parents talk? When you invest, do you look for stocks which will pay you dividends to finance your old age? Can you remember taking the trash to an ashpit for burning when it got full? How many people today can do all of the important maintenance on a car or even change the oil and sparkplugs? (the what)?
My first paragraph refers to how to do things. The second refers to changes in social norms and economic activities. We now pay others to do what we could do for ourselves years ago. This is by way of illustrating that times change but we may still be living with the experiences and information we gathered in the past. Not only does this interfere with generational communication, but it also hampers our ability to solve the problems of today.
One example of this can be seen here in Twin Falls as well as across the country. It is taking longer to complete construction projects. It is hard to find contractors who will remodel or do short jobs. They have steady work on long-term projects. You probably are looking at the unemployment rate, currently at what is considered full employment. You may be thinking that the reason for the favorable rate and being unable to find construction workers are linked and are because of favorable economic policies coming from the Federal government. You would be only partially correct.
One of the most important reasons for our full employment is due to Mother Nature and the strength of the insurance sector. Between hurricanes and devastating fires, there has been ample need to rebuild property which was insured. The federal government’s disaster aid has come in for a great deal of criticism, but private insurance knows how to handle claims and fund temporary housing for the displaced. All of this has stimulated the economy as much or even more than any government stimulus package. Unless the administration has control of the weather patterns, they can take no credit.
Another example of an incorrect assignment of cause and effect can be seen in the increase in market indicators which make people with investment savings happy. Are your 401Ks making you happy? They should seem pretty healthy because stock prices are still rising, and most people think of their wealth in terms of the aggregate total of the market price of their stocks. Again, a partial truth and a way that the administration’s tax legislation skewed the stock market toward what I think of as a false (in part) positive. Company’s have been using their cash, especially the cash they have been encouraged to bring back from overseas, to buy back their stock. They have spent billions doing this. However, they have not been giving the money to their stockholders in the form of dividends nor have they made investments in ventures which will employ more people at higher wages.
There are a couple of points I want to make here, and I hope you will think of others and comment on them. The most important point is that many of our economic indicators are out dated and not reliable indicators of economic activity. Even our central bank is trying to figure out some of the new realities in national and international banking.
The second point is that we must be aware of spin, or the tendency to point out the best news even if there is an equal amount of bad news associated with something. I’m a natural optimist, but I also know that there are public policy challenges to be met. Let’s think about what is, not what was.