Modeled Behavior points out something I’ve talked about recently. That companies are holding trillions of dollars in profits close to their chest and losing trillions more in opportunities because they’re scared and won’t put people back to work…even those there’s plenty of work to be done because the demand is there.
First, the capacity utilization…
Now, the unemployment rate…
This is a failure of our basic institutions of production. The job of the market is to bring together willing buyers with willing sellers in order to produce value. This is not happening and as a result literally trillions of dollars in value are not being produced.
Let me say that again because I think it fails to sink in – literally trillions of dollars in value are not being produced. Not misallocated. Not spent on programs you don’t approve of or distributed in tax cuts you don’t like. Trillions of dollars in value are not produced at all. Gone from the world entirely. Never to be had, by anyone, anywhere, at any time. Pure unadulterated loss.
Time and time again I see people speak about recessions as if they are a bad harvest – an unfortunate event wherein we have to figure out how to go with less. Some say we should all sacrifice – some say the sacrifice should be based on X or Y. Some say each family should take their lumps as they come.
However, they are all getting the basic idea wrong. This is not a bad harvest. The problem isn’t that there is less to go around. The problem is that we are creating less, building less, making less.
We have people who would be working but are instead watching Judge Judy. We have machines that could be spinning but are literally rusting for lack of use. This is a coordination disaster.
And the government can do absolutely nothing to make this happen. Obama can’t force companies to hire people. His new tax credits for small businesses may be able to nudge. But that’s all it can do…nudge.
More as it develops…
This entry was posted on Wednesday, September 8th, 2010 and is filed under Barack, Economy, Obama. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.