We cannot spend our way out of the resession

It is a common refrain.  We cannot spend our way out of the recession.  More particularly, the government cannot spend our way out of the recession.  It should be the commercial world that leads the charge and helps pull us our of this recession.  The problem is that there are not a lot of corporations who are capable of this level of effort.  And then this morning we find one company, part of a much larger, more powerful industry, actually doing everything it can to work against helping us get out of the recession.

I present Exhibit A, the Bank of America, who announced that they are going to charge a fee of $5/month, per debit card, for transactions.  These charges are going to be directly against you, the consumer (WTOP).  Now, your first reaction might be that a fee of $60/year is not that big a deal.  But let’s look at this in more detail.

First, BoA argues that they need these funds because  “the cards increasingly replace cash and as banks look for ways to offset the loss of revenue from a new rule that will limit how much they can collect from merchants.”  Come again?  The cards replace cash?!  Well, should you not be looking at this as a good thing.  You do not have to count it either to the consumer or coming back from the retail establishment, you do not have to store it, and you do not have to insure it.  Not having to deal with cash, but with ones and zeros should be seen as a good thing.  Further, limits on the amount of fees you can collect from merchants is actually a good thing.  It will bring more merchants into the system because they can accurately calculate the cost of the service.  So I am not quite sure I am grasping the BoA’s rational.

Second, there is nothing to prevent them from increasing these fees without warning or appeal.  And if you think that will not happen, let me introduce you to the nickel and dime operations of airlines, who have made fees an art form.

But more importantly, here is the banking industry, making huge profits through not paying interest on savings, while charging outrageous interest rates on what few loans they are making, is illustrative of the pure greed mentality that is gripping the United States today.  People will continue to pay down debt so as not to be caught paying these fees, and will therefore continue to not spend money.  And until these industries stop acting like spoiled children and start acting to the benefit of the economy, we will continue to be mired in the recession we are in.  Whether or not the economists agree that it is technically a recession is not even an issue.

There is nothing wrong with the Economy

While politicians in Washington are wringing their hands, lamenting the loss of jobs, the lack of hiring, and the generally anaemic economy, and just the whiff of a job fair draws thousands of job seekers, there are companies, in fact, several companies, that cannot find an employee to fill their open job postings.  In fact there are so few people to fill the job requirements that those companies are looking outside the borders of the United States for qualified individuals.

If you think I am making this up, you are not paying attention.

There is nothing wrong with the economy.  It is working quite well.  What is wrong is a two-fold failure of education and basic principles.  The failure of basic principles is pretty straight forward.  Most of the jobs that are available are those that are not located near where the work force is because those companies have set up in places that are economically beneficial for them, but lack the basic necessities, like a trained labour force, necessary to make them run.  This is the case with Siemens for example, who has plenty of work for labourer who have a modicum of intelligence.  As covered on 60 Minutes recently, Siemens cannot hire enough people who are capable of passing their tests.  What sort of tests.  Basic hand-eye coordination and entry level math necessary to operate their systems.  Wrench turners of the 21st Century essentially.  But it is not enough just to be able to turn a wrench.  You have to know a little math to turn the wrench.  Basic stuff, not applied calculus.  Yet Siemens cannot find employees that can do it.  And if you have been in a retail store lately, you will not be surprised by this statement.

Which brings me to the second problem, education.  The United States no longer educates the best and the brightest.  In fact, it is getting worse.  School districts cannot even send home paperwork that passes the logic test, begging the question of just what are they teaching our children.  But it is more than education at the elementary level.  It is also at the University level.  Current graduates do not seem to have the basic understandings needed to even compete in the business world, much less be successful.  They are unable to form complete sentences, their communication skills are lacking any depth of thought, and their attention to detail is lacking.  And it is a wonder why they are losing out to candidates whose first language is not even English?!

The economy is working just fine.  Oh there are areas where companies can improve things.   Increase vacations to keep people from burning out and actually costing more for health care is a good one.  Recognize that they are people and not just cogs in the machine and therefore replaceable.  Encourage useful training and interactions with peers for the sake of improving the business.  Forget about the quarter-over-quarter return model and actually focus on building a quality product, knowing that the business cycles will go up and they will go down, but a quality product is always in demand.

But in large part the changes that need to be made are more systemic.  And in that regard, the Nation is well and truly broken.

…Or the Terrorists Win

On the cover of McPaper this morning, the headline screamed …Or the Terrorists Win.  Now I am not 100% sure what exactly the article was about, I only caught the flashy title.  But on seeing this, I only had one thought…

The terrorists have already won.

Let me say that again.  The terrorists have already won.  Plain and simple.  In the blink of an eye, Americans have given up rights and privileges in the name of security, driven themselves almost to bankruptcy in the name of security, and cower under the blankets, all on the off chance they too become victims of terrorism.

This is not the first time I have covered this, but certainly, on the eve of the tenth anniversary of the September 11 attacks, it is a good time to look at what those attacks have wrought.  Contrary to popular thought, September 11, 2001 was not the first act of terrorism on American soil.  Contrary to popular thought, it was not the first act of terrorism in the world.  Only the latest (at the time) and certainly not the last.  But instead of looking to how other countries have coped (or not) with terrorism, the United States, because that is the way they roll, went their own route.  They bombed uninvolved countries, threw money at cities for security and introduced legislation stripping away the rights guaranteed under the Constitution, turning it from the law of the land into little more than a set of guidelines you might want to follow if they are not too inconvenient.

Welcome to 2011.  The foreign press have been doing a number of articles about how the United States has changed and what sort of progress has been made since 2001.  What is funny is that it is the foreign press doing these investigations because it is not something the domestic press would ever do.  To question the progress made is seen as unpatriotic as asking why the government wants us to take off our shoes when we go through security at the airport even though drug smugglers seem to have no issues using airplanes to move their product, even in these high security days.  One of the most amazing facts, besides the almost completely ineffective airport security, is the amount of money thrown at cities and counties and states for the purchase of things that will help deter, defer or prepare for a terrorist attack.  Most of the money has been wasted, for lack of a better term.  Equipment sits unused in warehouses because the people are not trained on how to use it, foodstuff are rotting, forgotten on shelves, rather than rotated properly, and the average population is no more ready for a terrorist attack in 2011 than they were in 2001 as illustrated by something as simple as a heavy rain, the result of the remnants of a hurricane.  If we are not prepared for what Mother Nature throws at us, how can we say we are prepared for a terrorist action?

And then there are the deaths.  Sure, it makes news when a large number of people die.  Just look at the news that is made when there is a car crash.  Oh, wait.  That is not news.  And that is the point.  More people die in traffic accidents in the United States every month than have died in terrorist actions in the world over the last generation.  Heck, more people die of heart disease and smoking in a year than have died in all the terrorist actions ever.  And yet we are more worried about preventing a terrorist action than we are about wrapping our cars around a telephone pole, smoking, or gun related deaths.  One wonders just how skewed the priorities are.

The United States has spent billions of dollars fighting terrorism, including the wars in Afghanistan and Iraq.  Meanwhile the infrastructure is crumbling, the Government is on the verge of bankruptcy, and the population is getting older, which will further strain already stressed services.  You cannot kill an …ism.  You cannot defeat terrorism.  You can only be vigilant.  But vigilance must be balanced by rational risk assessments.  Hopefully, as we cross the 10 year mark, some rational risk assessment will be imposed, but I am not hopeful…not by a long shot.