Looking back, it should be clear at this point, that – when it comes to our economy – most politicians had no idea what they were looking at, or talking about.
And many still don’t.
For clarity, this is not merely a "slowdown," and it is not just a "downturn."
This is serious trouble.
Even the term, "recession," is disingenuous in the respect that it suggests that this is something that we’ve seen before, or dealt with in the past.
Unless you are 80 or older, you haven’t seen anything like what is headed our way.
Currently, we are sinking into the morass of an economic depression. The "D" should replace the "R" when – in addition to recession – significant sectors of the economy begin to collapse, such as investment banking, automobile manufacturing and housing.
Certainly, many amongst us do not feel the reality of the "D," because we are still heavily medicated on the drug of Credit – as well as helpfully aided by public assistance.
The paradox, of course, is that Credit – or the misuse of it – is what got us into this trouble, and now we need more of it to get us back out. And clearly, more Credit – not used responsibly – could drive us all the way into the abyss.
So what are we to do?
At this point, we take the shot.
The drug is called "stimulus." And it will be administered in a massive dose – a major injection of capital (on credit) at historically unprecedented levels that is geared to generate enough horsepower to pull us out of the muck.
The shot, if done effectively, will begin with highway construction and follow with infrastructure work involving bridges, schools, hospitals, rail, dams and wind farms.
It is important to begin with highway construction because this is the fastest, most effective channel to putting people back to work quickly, with the most immediate Return On Investment. It also has the highest ripple-out effect to other businesses – as it induces vehicle and equipment sales, parts purchasing – it spurs clothing sales and office supply sales, it generates hotel and food service spending – not to mention that it reinstates health care and retirement fund payments – instead of dumping it all into a welfare bin.
When confronting our Governor (Tim Pawlenty) on this subject – at the Bemidji Regional Airport this past fall – he stated that a federal infrastructure bill was not an option because the federal government was broke.
The Governor’s party still maintains that the way to handle this problem is to cut taxes, cut spending (except for overseas military crusades) and to de-regulate.
Imagine this as a proposed solution in 1932 – as the remedy to the Great Depression.
And it’s not that business people don’t appreciate these things – some of it is very nice – but this approach is a little like discussing room service on a sinking ship.
Additionally, the Governor’s camp claims that it is not possible to spend our way out of this problem – but really, who are they kidding? It’s called "investment." Few businesses – or nations of economic significance – are built without it.
The other political party, the one that is actually going to take a crack at this thing, has got a few problems of its own. Currently, they are loading the syringe with about 790 billion in stimulus, which will probably be followed by a second dose – in the form of another bill a few years from now.
This is because the current bill is laden with clumsy features such as ineffectual tax cuts and several non-infrastructural spending programs, many of which lack stimulating impact.
What the government must do (which it only partially will) is this: Starting at the federal level, we must spend but it has to be on ourselves – on infrastructure, on endeavors of domestic improvement, on programs that have a measurable Return On Investment. We must cut government programs that do not have a quantifiable ROI – cut waste and mismanagement, cut unfunded mandates – and most certainly we need to shut down all paranoiac overseas military adventures that have drained our national treasury. For those amongst us who struggle with this last one -- for those who live in fear of foreign invasion – the suggestion is this: bar the door and load thy shotgun. Cover your own foxhole. Don’t ask the government to do it for you.
Put the borrowed dollar where it will count – at the highest octane level possible.
We cannot continue to induce ourselves on postured Credit like some sort of junkie who has lost his way to the point where the drug has become the reality.
We have to find discipline. We have to get frugal, responsible and accountable. We have to do so when it comes to our personal lives, our corporate health, and our state and national fiscal condition.
Let’s be ready to do our part
So starting now . . . if the United States Government is prepared to put these stimulus funds out there and prime our economic pump (even if clumsily) in a manner in which there is a definitive Return On Investment, then we should be ready to do our part – which is to work harder, work more responsibly – perhaps for less, and with less government services.
In addition, we may have to implement an old practice from the 1930’s – which is to look out for one another, and to take care of each other.
We have finally entered an era where it is not, "what’s in it for me," but rather, "appreciate what we have today" – each and every one of us – especially considering that it is on borrowed money – and strive for a better day tomorrow.
(Mark Thorson is Past President of the Minnesota Asphalt Pavement Association (MAPA) and President of Mark Sand & Gravel Co of Fergus Falls, MN)