Just Make a New Plan, Stan

As the Fourth of July holiday recedes, and the election season shifts into high gear, The Plans are emerging from the McCain and Obama camps. Don't worry, America, the candidates tell us, we have...a Plan.

In keeping with political neutrality, I'm not going to go through the candidates' plans and pick them apart, nor say which candidate or party I recommend. That's not what this is about. My thesis is far simpler than saying McCain's plan won't work because of this, or Obama's plan will fail because of that, or liberal this or conservative that. To me, that's like arguing over the placement of deck chairs or the musical accompaniments on the Titanic. It's worse than futile, because it distracts us from the real dangers we face: time spent arguing over these trivialities is time one could be spending finding a lifeboat or at least a piece of furniture that will float.

Instead, I'll just cut right to the chase, and say that neither Obama's nor McCain's plan are going to fix what's wrong with the American economy. Why is this? "How can you so cavalierly dismiss the plans," you ask? I can and I do, because the candidates are not addressing the underlying issues afflicting the American economy. Since the Seventies, if not before, we've based our economic policy on the following set of assumptions:

1. We can consume more than we produce, and continue doing so indefinitely. This is probably the root of most of the other issues. For decades now, Americans have bought more from the world than the world buys from us. We've spent more than we've made, especially in the public sector.

2. Free trade is always beneficial, no matter how uneven the playing field. It's that last half that's the trouble. Free trade with our industrialized peers is fine. Free trade with nations that use slave labor--that's another story. Competition is good, but any competition has to have rules that apply to both sides. There's a difference between competition that's fair and which makes you work harder and improve (like when our auto industry was forced to reform by Japanese competition), and a football contest where your opponents get to wear chain mail and carry maces (like "competing" with Chinese slave labor whose products are artificially cheapened by a devalued currency). The reality is that free, fair trade is beneficial.

3. Cheap oil is a national birthright, and no matter how much we use, we'll always find more...and more...and more. This is a classic human failing, confusing abundant with unlimited. Abundant is not unlimited. We found that out the hard way with the passenger pigeon, which once existed in flocks of billions of birds, some such gatherings being hundreds of miles long. As of 1914, the passenger pigeon was extinct. How could that happen? People assumed that, because the passenger pigeon was abundant, it was unlimited, and they could hunt as many as they wanted as often as they wished. They likely thought Earth would magically produce more. It didn't.

4. The market always knows best. Don't get me wrong: I believe in free enterprise and private property as the foundation of a solid economy. The 20th century showed conclusively that private enterprise, not the State, is the most efficient engine a society can rely on to produce economic growth. But the market is a playing field, and ball games need some rules and referees. Note that I said "some." You don't see ball games with more umpires and referees on the field than players, and likewise over-regulation is a bane to economic progress. But there's no question that excessive deregulation of the financial sector aided and abetted the mortgage crisis. Loans were made that should not have been made. Low-grade shady paper was repackaged and passed off to investors as prime-grade securities. Banks were allowed to lie to shareholders by reducing payments on mortgages to try and keep borrowers from defaulting--yet could still report full payments on their books. The whistle should have been blown three or four years ago.

If you examine the candidates' plans, none of them comprehensively address these issues.

The standard lip service is paid to #1...there's not a candidate who has run for President since the Seventies who doesn't promise to balance the budget. We're now $10 trillion in the hole and counting.

#2, which has decimated our manufacturing base and contributed the most to the decline in the standard of living of American workers, is barely even mentioned.

#3 is getting some attention, but the predominant thought pattern remains that either the oil companies are bilking the public and manufacturing the shortage, or that environmentalists are the only thing standing in the way of America exploiting the big gobs of crude oil off its coasts and becoming the next Saudi Arabia. Token measures are advocated to support R&D into alternative energies.

We are in an unfolding crisis, and token measures aren't going to cut it. When World War II was raging and two hostile regimes threatened us, Roosevelt didn't say he was going to look into the idea of harnessing nuclear energy for military purposes, and bump up R&D over the next five to ten years. No, he got the best minds in the country together, gave them a budget with teeth, placed all the resources of the United States at their disposal, and told them to find the answer--and yesterday! The candidates today pledge nickels and dimes when what we need is a new Manhattan Project.

#4 is getting some attention, in that some of the worst deficiencies that permitted the mortgage crisis to unfold are finally being looked at...kind of like fixing up the barn and upgrading the quality of the hinges on the door after the horse is long gone. It's a start, but only that.

So, what can we as citizens do about all this? This blog doesn't make partisan political recommendations, but I will say that, when leaders refuse to lead, it's up to citizens to take the initiative. The change that's coming in this country is going to be bottom-up, not top-down. We can each take some steps to address those four issues on a personal, microeconomic level.

#1: Get your own finances in shape. Cut spending. Consider lifestyle changes. Let's face it: much of what we Americans spend money on are wants, not needs. While some of us are facing an inability to pay for basics (rent, food, electricity) despite good financial stewardship, many of us are in financial binds that are, at least to an extent, our own doing. We pay $25,000 for an $18,000 car when really we could have gone to a used car lot and paid $8,000 for a $7,000 car that would have done what a car is supposed to do: get us from point A to point B. We eat out and pay $20.00 for a meal we could have made at home for $8.50 (this is one of my personal weaknesses).

#2. We can't personally affect trade policy...or can we? If we buy less, then we import less. If we buy a couch for $75 at a secondhand store versus $750 at a furniture store, we save $675 and reduce our trade deficit by several hundred dollars. If we buy our children quality toys that make them think rather than showering them with cheap plastic crap, we reduce imports.

#3. We can vote with our wallets for alternative energy. We can drive less, and bike, walk, and take the bus more. Check your local utility: many allow you to specify that your energy is to come from wind, solar, and hydropower and pay only 3-5% more. And lowering consumption (see #2) reduces fossil fuel use.

#4. We don't have much power to affect this issue directly, but we can choose as individuals to lead ethical and prudent lives. We can take a look at what people propose to us and decide if it sounds too good to be true, it probably is.

The candidates don't have viable plans to fix what ails the country, so I suggest to everyone out there that you come up with your own personal and family plans to downshift and localize your lives.