Measuring the Economy
by Greg Henderson
We measure things with some of the oddest sort of ideas and statistics. Something big happens, say a big event like a war or a pandemic, or the government handing out money to keep the economy strong – or to maybe keep the citizens from revolting. But how big is the debt of our government that is drawing interest – and don’t forget the large piece we call unfunded debt, like buying a car on credit with no income to make the payments? Thirty trillion dollars – Yeah, $30 trillion dollars – has been bandied about. In politics really big numbers are better than medium sized numbers, because the constituents can’t understand how much a trillion actually is. So, they will ignore it.
Now I have read that we know the economy must be doing well because of two things: Full Garbage Cans and people quitting jobs without having another one in hand. Strange things happen when we’re suddenly secure in money, for a little while, anyway. Trained economists at high levels have thought long and hard about these two statistics. Not enough people in high places where decisions are made have been doing enough long and hard thinking. Where we once were concerned about leaving debt to our children, it is now our grand children and great grandchildren who will be receiving the bill for our short-sighted actions.
If there is an extra amount of garbage going to the landfills then people must be buying a lot of stuff. Anyone who buys a lot of stuff must have a lot of money to buy it. Right? Money sitting in a bank doesn’t help an economy much, but if that money “turns over” a few times the favorite term Multiplier Effect revs up. If I spend my money at your store, then you spend that money on paying your help, and your help takes her family out to eat at the local diner, and the owner of the diner buys a new stove, that money I spend at your store has been used four times – or, has a Multiplier Effect of four (or something to that effect). One dollar has turned into four. And that’s an economic good thing according to the experts. Its also a place where the popular idea of “Buy Local” originated.
Unfortunately, all this talk about our strong economy, multiplier effects, low interest rates and price appreciation (inflation?) convinces those of us in our neighborhoods that everything is just fine, or will be soon. And our city leaders, politicians, and candidates to be politicians, keep telling us they have “A Plan” that will keep us safe and secure for the rest of our lives; so just don’t worry.
Covid has become quite annoying. So is climate change. So is the inevitable tsunami that is going to hit our western coast. And whatever it is that Russia is doing on the border of Ukraine that has a lot of people in a tizzy. Too much salt in our diets, obesity, ice cream and not enough exercise already keep us awake at nights.
How do you measure your success? What is a good economy? Its good to know that we have politicians with “A Plan”.
Greg Henderson is the retired founder of the Southern Oregon Business Journal. A University of Oregon graduate and a six year U.S. Air Force veteran, he spent nearly 30 years in banking and finance. His articles have appeared in dozens of publications concentrating on some 20 industry sectors. Contact him at firstname.lastname@example.org