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There are two groups in the economic structure of our society who especially need to be able to plan, to rely on a certain amount of stability in the economy.
One is small business. We've heard this a lot. And in the past couple of years I have personally seen what the chaos, the extreme ups-and-downs in our society have done to the small businesses of my friends and family. It's devastating. For example, one of my friends had a solid business, employed numerous employees. But when this depression hit, her consumer base was devastated and sales declined. She had to give up a lot of her investments and is fighting just to keep her home. As long as she could, she kept paying her employees, but she finally had to give up. The damage caused by the instability in her market didn't just harm her life; it nearly destroyed the lives of some of the people who relied on her for their income.
The other group that particularly needs stability is students, young people. Students invest significant time and, today, outrageous amounts of money in training and education. And when you have to train and retrain and pay tuition upon tuition never to find stability in your career because demand for the skills you developed in your last foray at the university are no longer sought, you become bitter and jaded -- to say nothing of poor and exhausted.
Is change necessary to progress? Yes. But so is stability. Above all, stability in one's working life, in one's career is essential to developing expertise, confidence and even creativity in the workplace.
One of the secrets of the German economy is the tradition of trade guilds. The guild concept, the concept that your work, your career to some extent defines your path in life can be very limiting but it also can provide the kind of moral and social glue that a society and an economy need. Americans change jobs too often.
(Employers don't seem to realize that new is not better. Sometimes that old, tired, boring employee is actually doing a better job than that new, enthusiastic know-nothing hired last week. American employers too often look for glitz and excitement in employees rather than competence and reliability. And then they wonder why employees don't show up for work on time. Duh???)
If you think the mortgage crisis was bad, just wait for the student loan catastrophe. Kids are mortgaging their lives to pay tuitions of as much as $47,000 and maybe more per year for their university educations. I honestly don't know whether that includes living expenses. It's unrealistic unless you can be pretty sure you will keep the job you trained for or got your degree for long enough to live and pay back the loan.
I am a good example. I invested a lot of money in education in my 50s. When a friend of mine also in her 50s came to me and asked whether she should invest in getting training in a certain area, I frankly told her, compare the cost of your education to what you can most likely earn once you have it in the working years that remain in your life. She decided not to go back. I enjoyed the field I entered. I should have entered it much earlier in my life but couldn't. But student loans really diminish the financial value of your degree. Especially when the job market is so unstable, so unpredictable.
So, stability in the economy, not fantastic growth rates followed by deep recessions, should be the goal. That is why the Laffer curve and supply side economics are not funny. Laffer betrayed his values in this interview: the goal for him is to have as fast growth rate as possible, not a reliable growth rate that encourages ordinary people to save and invest.
Being forced to start a new business or go back to school and retrain over and over in your life is very hard on the family values as well as the bank account. As a nation, we cannot afford to continue our manic-depressive, bi-polar economic policies. They harm small businesses. They harm young people trying to choose a career path. They hurt families. We need to view stability as something positive. We should not worship fast growth but steady progress. Say no to get-rich-quick-schemes whether offered by our government or by charlatans on the radio.
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