Mark Zaccaria: You Can’t Finance Growth with Deficit Spending
We all should be vitally interested in the goings-on in Washington, DC, regarding the Stimulus Package that’s making its way through Congress. The news reports may make it seem complicated and far away, but it won’t be long before the effects of what our lawmakers do to us on this matter come right home to roost.
America became what it is today by productivity. In days gone by that word meant manufacturing, virtually the only process by which wealth is created. The productive capacity of the United States of America was the deciding factor in both World Wars of the Twentieth Century, and our ability to build the things that businesses and consumers around the world wanted created the highest living standard in history. I would also argue that the inability of our adversaries to keep up with our productivity was the very thing that won the Cold War.
Today we are seeing what happens when our ability to keep creating wealth slips away from us. Make no mistake. We still manufacture plenty here in America, just not as much as we once did. But we have been consuming more than we’ve been creating for some time and the result is plain for everyone to see. So it falls to government to act as agent for American society and do something to fix our ailing financial system.
That means now is the time that every politician who has ever uttered the phrase “Doing the People’s Business” gets to prove that he or she knows what that means. To government, Doing Something means spending money. To politicians, spending money carries with it the implicit chance to curry favor with voters in the process. Without that there might be no re-election.
So what will curry favor with the voters while also having a positive impact on our economic woes?
The Congress of the United States seems to think that would be a spending frenzy on public works and special interest projects. Collectively, our Senators and Representatives appear to have decided this will please voting constituencies in the short term, even if it takes years for the economic impact to trickle down to you and me. What we are seeing in the Gazillion Dollar Spending Bills making their way through Congress is a litany of measures that fail to address the housing crisis, contain wasteful spending at a time when tax revenues are bound to be down, and create only temporary or purely public sector jobs.
How about creating an Industry instead of just a spending program? What if private capital instead of public tax dollars created the infrastructure that millions of us could work within to once again make the things that businesses and consumers around the world really want? For that to happen, government action has to attract that private investment, not repel it. Harder still, our political leaders have to have the courage of their convictions to give the voters credit for understanding that it is only economic activity that will create growth, not pork and not special interest pandering.
Giving taxpayers’ hard earned dollars to inefficient corporations won’t help us. Spending in deficit to pump up the balance sheets of banks won’t help us either, if those banks just sit on the cash instead of putting it to work in the economy. What these approaches will do, at least according to one study, is give every American Taxpayer a brand new $10,000 invoice on top of all our existing indebtedness.
There are real product opportunities in green technologies and alternative fuels, just to name two industries that will be built on innovation. Electronics and nanotechnology are two more. Recent gains in efficiency for high voltage electrical transmission promise to let us use much more of the juice we generate, if we will only put them in place. There are plenty of market segments where a real stimulus might trigger a new growth industry.
What’s lacking is political courage inside the Washington Beltway.
But you and I can help with that. We can let our elected representatives know we understand that stimulating the economy is different than helping insiders feed at the public trough. We can let them know that we hired them to go down there and do the right thing for Us, even if we don’t have lobbyists reminding them of it all the time. Drop a Dime. Send an E-Mail. Write a letter. It could save you Ten Grand! The more we tell them that they have more to loose by doing Business as Usual than they do by innovating for new times, the more likely they are to get it.
Here in Rhode Island, our own Congressional Delegation is composed of professional legislators. None of our team in Congress has any practical experience in the private sector. So they can’t be expected to understand intuitively what the right thing to do actually is. We need to tell them. We need to let them know that when they hold back on spending for government managed projects they are doing what we want. We need to tell them that incentives for economic development will cost much less and go much farther towards helping everyone than entitlements put in the hands of consumers will.
Let them know you’re watching. Let them know that you approve of doing the right thing in this crisis. Hopefully it will give them the political courage to actually do it.
Mark Zaccaria is a small businessman in North Kingstown. He is a former member of the North Kingstown Town Council and was the Republican Candidate for the state’s District 2 seat in Congress in 2008.