The Fiscal Cliff, leadership, and snow
I have discovered that many people don’t understand what the fiscal cliff is, even though they have heard we are going over it and it is a bad thing for our economy. By the time you read this column, we will have either avoided the cliff or we will have gone over it. But there is value in understanding a little bit about it regardless of how it turns out. So here it is, the watered down version in a nutshell:
The Fiscal Cliff is a phrase coined by Ben Bernanke, the Chairman of the Federal Reserve, the central bank of the United States, to describe what will happen on Jan. 1 if the United States Congress and President Obama cannot come to an agreement to avoid it. On that date there will be significant, across-the-board tax increases and spending cuts. In fact, the deficit, the amount of money the federal government spends that is more than it takes in, will be cut in half.
That sounds like good news and it is. Unfortunately, our economy is far more complex than many of us realize. Spending drives our economy forward, and if we the people aren’t spending enough to drive it and the government isn’t spending enough to drive it, then it begins to retract, which is what a recession is. If our taxes go up, then our spending will go down, because we will have less money to spend. The government will be spending far less as well, and thus, we will in fact -- according to all professional economists -- slip into another recession, which will reduce consumer spending even further. It’s a vicious cycle.
What many folks prefer is to slowly reduce government spending and increase government revenues by increasing taxes on the rich to decrease the deficit. However, not everyone agrees with that approach, and thus politicians don’t all agree. Some disagree philosophically and others are afraid of losing theirs jobs even though they may agree with the approach. It seems to me that sometimes our leaders have to risk their jobs to do what they know is best for us, even if we disagree with them and will vote them out of office. That’s what leadership is. Which brings me to the second part of my column this week:
What do we want from our leaders?
When I write the word “leaders,” I mean those who represent us in our government, from legislators to executives on all levels, local, state and federal. Do we expect them to get into office and simply vote the way we would if we were in their shoes? Do we expect them to simply vote the way we tell them to, or do we expect them to use their judgment about what is in our best interest? If they are going to vote exactly how we tell them to on each and every issue, why do we even need them? We could simply sign in on the government website and vote on every issue. But we have a republic, which is a representative democracy, not a direct democracy like the ancient Greeks had in Athens. When you have a small country or city state like ancient Athens, it is far simpler for the citizens to vote directly on every issue. The founders of our nation knew that would be impossible for us, because even then, more than 200 years ago, our new nation was far too large and complex for every citizen to become informed enough about every issue to make good decisions. In a representative democracy, we elect people to devote their time to become informed so they can make better decisions than we can, because we are busy in our own jobs and businesses whether we do medical transcription, plumbing, sell clothing or appliances, practice law or medicine, write or take photographs for a living, et cetera.
Frankly, as many of you know, it is hard enough for us to figure out who to vote for to make those decisions, to make some determination as to who is smart enough, who has sufficiently well-developed analytical thinking skills, who is honest enough and committed enough to our well being.
I will tell you that I have voted for people with whom I have often disagreed, just because they possessed those characteristics. Think about it: How much time do you spend reading about macroeconomics? Do you really know enough to tell your representative how he or she should be voting on it? I spend a considerable amount of time learning about it, and I know that I don’t know enough to make all those decisions. I need someone, many someones, to spend far more time than I can learning about economics so they can put us back on the right economic track. I’m very fiscally conservative. That’s my economic philosophy, but just like in this business that I run, I do not permit my ideology, my philosophy to prevent me from making a practical decision that the evidence shows would likely produce a far better result.
I virtually always get into the holiday spirit each year. The holidays are a magical time for me. People seem more courteous and happy in general. My nine year old is more excited by the day and I feel nostalgic for my own childhood excitement for the season. However, something seemed to be missing this year, and I figured out what it was. I stepped outside my back door from our daylight basement just far enough to see the sky past my overhead deck. I was surrounded by snow, about a foot of it. The woods around my house looked beautiful. The sky was dark and wintry. It was cold, and I got a chill, because I was only wearing sweat pants and a tee shirt. But I got the feeling back, that old Christmas feeling, even though it was a few days past Christmas. I needed to see snow, a lot of it. I needed to smell it and feel it. I needed it in my bones and in my soul. I grew up here in the northeast, and there was always snow this time of year. I’m so glad it is back. It really put a smile on my face. It really made me feel great.
I know: I hate the shoveling too. But for me, at least it’s worth it to have this feeling. I’m not saying I won’t feel differently a month or two from now. I may be sick and tired of shoveling by then. But for now, I’m just enjoying it. I’m bathing in it, soaking my spirit in it -- and it feels great!
Bruce M. Hardina
Coastal Journal Editor & Publisher