We are living in a pivotal moment in time. A "pivoment in time", maybe. The move by Wisconsin governor Scott Walker to take away collective bargaining rights is a major attack on public workers, there is unrest in the middle east which will drive fuel prices even higher, there is a major increase in the cost of food worldwide, healthcare costs are rising, wages are stagnant, federal debt and deficit are skyrocketing, and House Republicans have moved to ease environmental laws. Our society is nearing a breaking point. If something isn't done soon, the dollar will crash, public unions will be destroyed, gas will be $7/gallon, and global warming will suffocate our ecosystem.
Okay, now let's take a deep breath and put things in perspective.
First, journalists like to couch events as being pivotal. I don't think it's fully intended to be a fear tactic, but it's similar to the ads on TV saying 'prices will never be this low again'. It's meant to draw people in.
The protests in Madison, WI are actually pretty relevant. Walker's law would undo several decades of standing law that allows many public unions the power to bargain for wages, medical insurance costs, and pension benefits. If Walker and the Wisconsin legislature prevail, pay will go down, and the cost of medical insurance and pensions will go up, much like what's been happening for years. Now the other effects of this will likely be that the education system in Wisconsin suffers. Having gone to school with and known many Cheeseheads, I can't say that I've ran into many that I find to have had a poor education. I believe the Wisconsin unions would make concessions; Walker's move seems purely political, made to break the unions. Except this way he's doing it through policy. The last time I saw a union broken was by Northwest Airlines. Northwest Airlines regularly needed bailouts from the state of Minnesota, and still managed to lose tons of money during economic booms. When bought by Delta, they were saved, probably because Delta had better leadership.
The unrest in the middle east might be a sign that democracy is on the march. The hard part for me is that it always seems like there's some level of unrest in the middle east. Regardless if there's a democratically-elected government, there will still be religious and cultural differences that will cause more "unrest".
Any type of unrest in the middle east will cause fuel prices to go up, like they have been for years. Back in 2000 when gas prices were nearing $2/gallon, our country didn't pause to understand or even care why they were going up, and ask what may happen in the long-term. Our government didn't stop and think that maybe a new policy would be needed towards gas consumption. Maybe at the time, if we had imposed a higher gas tax, or raised CAFE standards, we'd have a different attitude towards how much gas we use, and what a factor personal vehicles are in our lives. Not one single thing could have been done to fix the issues associated with gas prices, but over the long term hopefully mitigating the factors over which we had control, that big sign at the corner filling station might not worry us.
The budget deficit and debt have been climbing for years. When we were running 'record deficits' of $300 billion+ between 2000 and 2008, I was always curious why the government didn't do something to balance the budget or at least minimize the deficit. Yep, had we started that, and had Washington taken steps then to take our budget seriously, the banking and real estate crises may have not had such a strong impact on our economy, and in turn government revenue. While fighting two wars, dealing with US jobs going to other countries, and competing for resources and markets worldwide, had a tax hike taken place, or some deal to reduce Social Security benefits long-term, we might not be looking at trillion dollar deficits.
To address the budget issue, the government created the National Commission on Fiscal Responsibility and Reform, http://www.fiscalcommission.gov/. This group got together and came up with a list of policy changes to reduce the deficit and debt. Like most government commissions, they are mostly ignored by Congress. Most recently, news came out that the House Republicans passed a continuing budget resolution for the current federal budget cycle to reduce $60 billion in spending. It seems like a nice Band-Aid on the budget, but it does nothing to address the budget long-term.
If you've actually read this blog to this point, you'll notice how many times I've suggested that nothing could be fixed immediately, only by making incremental adjustments could we make any difference in several years.
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