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Fletcher: The politics of economic recovery

February 14, 2012
Stephen Fletcher , The Alpena News

The now deceased Speaker of the House, Tip O'Neill, said "all politics is local' and so, too, are all economics.

We can read in about any newspaper that the unemployment rate in the U.S. is down to the middle 8 percent rate.

In this newspaper we can find that the rate for Northeast Michigan is back up to 12.6 percent, or about 150 percent of the national average. The problem accounting for this differential in the rates is that our region's major industries are directly connected to the nation's housing industry.

We make cement, concrete block machines, and hardboard for an industry sector that is all but dead. We are fortunate to have low-cost producers of cement and of hardboard as those mills still are operating at a time in when most of their counterparts have drastically cut both production and labor force.

As the debate rages about the 2 percent decrease in the employees' contribution to Social Security, President Barack Obama proposes another budget with a trillion dollar deficit. The budget will get a lot of press for the Congress but since the Senate hasn't passed any budget in three plus years, I'm saying that we shouldn't pay too much attention to Sen. Debbie Stabenow's chamber. These senators just don't look like serious players when you look at their actions, as opposed to listening to their words.

The solution to joblessness is to increase the time to collect unemployment to 99 weeks rather than to cut the shortfalls. Also, to have tax policy changed to allow for job creation. The Keynesian stimulus thing just doesn't work.

The Community Reconstruction Act, which led to excessive overbuilding and a housing bubble, was approved by Congress. Despite that fact, the banks are the ones who get blamed for the trouble the law creates. How about repeal a bad bill as a start to recovery? We know the subsidies to ethanol aren't productive, but do we really want the oil companies to charge more to get the price of petroleum based fuel over the price of corn based fuel. Perhaps it is also time to rethink this policy.

There are civil wars and sectarian violence occurring in Afghanistan, Iraq, Syria, Libya, Egypt, Yemen, Sudan and many other places, yet our national defense is being cut.

Our average family income has dropped from $54,000 per family to $51,000 per family in four years and the number of poor has increased. The new budget from the White House is reported in the press as being no different than the one proposed in September. There must be some grownups in Washington.

Russia is moving its sphere of influence into Syria and very soon into Egypt. Egypt, which has been a stalwart ally in the past, is detaining the son of a Cabinet Secretary for possible activities while working for an agency created by the Congress. We close our embassy in Syria and the Russians announce a state visit to the same country. Six Central and South American countries do not have U.S. ambassadors to help promote American interests that include exports and jobs.

More rules and regulations have been put in place in each year of the current administration than in the entire four years of the prior president.

Milton Friedman, who is really one of the grand old men of economics, said in 1962: "Freedom in economic arrangements is itself a component of freedom broadly understood, so economic freedom is an end in itself."

To which I would add: "Economic freedom is also an indispensable means toward the achievement of political freedom."

Stephen Fletcher was graduated decades ago from Cornell University with an A.B. in Economics and from Michigan State University with an M.B.A. He has lived and worked in the decades from graduation until now in the Alpena area. He thinks economics is fun and interesting.



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