Charles McGrue

I remember as a child the last thing I would think about is what the state of the economy was. As long as I could go out and play after doing my homework, I had really no cares. As I reached my teenage years, and upwards to college, I still didn’t pay much attention to what was going on; but looking at today’s environment, I can look back and recognize that I have been in at least two downturns in economic growth. The first one was in the later eighties, early nineties. The second was the tech bubble in late nineties, early 2000’s. Today, it’s the financial crisis that has yet to resolve itself – and the various guests on the multitude of news channels seem to be fueling the fires of uncertainty.

Currently, there is a pretty serious global financial crisis that is causing countries to wind up in a position where they can’t pay their debts. Just like an individual who can’t pay their creditors, countries are winding up in the same position. The effect is also similar, where it causes concern for those involved; however, they are happening at a much grander scale. For example, the average income in the United States is somewhere in the $40,000’s per year; which has pretty much been stagnant for the past few years – a simple Google search can provide you with this information. Likewise, and this is from my own experience, gas prices have gone up an average of $2 (or more) during that same time period. Not only has gas prices gone up, but all necessities have gone up. Therefore, that $40,000 average just doesn’t get what it used to.  However, I really don’t think that an average of $40,000 per year is a valid average in today’s environment.

Currently, at least in the United States, the unemployment rate exceeds 9%; but that doesn’t include those who have stopped looking for a job and other areas that would impact a person’s income. For example, if you are underemployed, you may not be unemployed, but you’re not making what you were making before.  Typically you will see this when someone’s hours get cut back at work, or they take a lesser paying job because unemployment doesn’t cover the cost needed; and they really need more money than what employment provides. Personally, I applaud anyone who will do something like this. Instead of sitting around and collecting money from the government, they are staying active in the work force.  But I digress, so let’s look at other countries.

When you start looking at other countries, you have to take into account their politics as well. In the United States, we have two primary parties who spend a lot of time arguing over what direction we should go, while blaming the other for the reasons that are stopping us from progression. However, when you really break down what the impacts are, it makes more sense to take a more independent approach. As of the time of this writing, Greece and Spain are having some serious debt issues. For Greece, this has caused a lot of rioting as the government is taking steps to try and manage the debt through tax increases. Personally, I don’t mind paying taxes, but like anyone else, I would prefer that the taxes I pay are used wisely. Frankly, I don’t really care to have my taxes pay for a research project in another country to observe the mating season of horse flies. However, if you are going to raise someone’s taxes in order to help resolve your debt issue, you need to have a plan.

For too often I hear the phrase, “Plan your work and work your plan.” I first heard this while working at a project manager in a telecommunications company. I think this is the issue that we are dealing with when it comes to our governments. As an elected or appointed representative, it is imperative that they enact due diligence to represent their constituents using commonsense and a sound policy that will ensure the financial survival of their respective nations. What appears to be happening is that various countries are being called forth to help out the other countries who can’t seem to manage their finances. It is one thing for an individual to improperly manage their finances, but when governments do at the expense of the people in their countries, then that’s not okay. But I can’t just blame the government; as that wouldn’t necessarily be completely correct. What about the decision makers who chose to lay off workers in order to keep their own financial status at a premium?

I’ve heard that taxing someone who has established themselves among the elite is penalizing them. To that my first question would be how did they get there? No one, except someone who is an heir, just gets millions or billions of dollars just for being born. Yes, working hard and putting in the effort will help to achieve a nice income, but it’s also about who you know. There are plenty of million, if not billionaires, who have increased their net worth to unimaginable amounts in comparison to where they started. However, when part of that wealth is created because of downsizing and being part of the cause instead of the solution that is when the average person gets upset. This is not a write-up to say that we are being treated unfairly by the wealthy, but something to take into consideration.

If we are looking at improving the economy, whether it is national of global, a good way to do it would be to not start doing layoffs, but to do a an across the board income cut on those who make obscene amounts of money. Of course this would be up to them to do to themselves, but if the middle class and the lower class are the ones who keep the economy running, wouldn’t it make sense to keep them employed? Even those who sit at the top of the totem pole should be able to understand that concept. As long as the economy is moving, people are more comfortable with being able to make the right decisions in order to support themselves and their families. Unfortunately, this mindset seems to be overshadowed by the chase to become or remain as one of the elite. At what point do you really have too much money? I’m sure some would say that you can never have enough, but if you took at top 10 billionaires and stripped away one billion dollars from each of them, you would be able to employ 50,000 people at the average income of $40,000 for five years. I guess you can say that this is getting into the area of increasing taxes on the rich, but if Warren Buffet has no problem paying more taxes, then why should a lot of the other billionaires?

I was watching a cable news show and they stated that the tax would be put on a small percentage of the population to cover a large part of tax revenue, and decided that the president’s plan was unfair. Well, my first thought was that you really have to love statistics. You can take statistics to show the data that you want to show, how you want to show to influence your audience. I will agree that you are asking a small percentage to pay a lot more in taxes, but if you are making over one million dollars a year, and only paying 10% in taxes, which is $100,000, you’re still going to pay more than the average person. Keep in mind, the average income is around $40,000 per year. The intent is to put everyone on the same playing field, so everyone is taxes about the same. Unless you are living beyond your means as a multi-millionaire, which is something I can’t see happening for many, paying a fair percentage of your income in taxes should be justified. Why should someone who pays the average have to pay upwards to 32% while someone who far exceeds the average doesn’t pay anything close?

When it comes down to it, everyone has their own opinion. Personally, I think we can all agree that governments need to manage money better; especially when the average citizen is forced to manage their own finances better whether they like it or not. And, if we’re lucky, the more fortunate will take it upon themselves to share the wealth with the people who got them in the positions they are in. Most importantly, we should all hope that our governments don’t continue making decisions that continue to put our world economy in a bad state. And hopefully, our leaders will make a little more effort finding middle ground to that will benefit all the people effected by their decisions.

I’m not an economist by any means, and the fact that I have an MBA doesn’t mean I’m a guru, but there is one thing that I learned back when I was a young lad doing odd jobs around the house – it takes money to get what you want, let alone what you need. However, when there is no income, you can’t get either.

As I go around from home to wherever I go that day, I see people with signs or pushing carts. The sign will say anything from “Just need a little help”, “Trying to feed the family”, “God Bless You”, or even something more humorous, “I just want a beer”. Regardless of what the sign says, or how much is in the cart, the message is the same – We need to get Americans back to work. But you have to wonder, how do we do that? Actually, you really don’t have to wonder about how we do that, as it is pretty simple. Businesses need to hire more people.

It is really as simple as that. There is no need to really make any changes in economic policy or tax policy. If businesses just started hiring people, people would start spending. When people start spending, businesses make more money, and can hire more workers. It works the same way when businesses aren’t making money. They fire workers as a means to cut costs. When they start doing this, people spend less money. So if they are opposites, why would businesses want to add to a downward spiral when they could help to improve the economy? Well, if you aren’t involved in the stock market, you might not be paying as much attention.

A company will typically reduce its work force with the intent to reduce its operations expensese. Regardless of how well you have performed, or how long you have been with the company, when it is time to cut costs, layoffs and work force reduction, or “right-sizing” as it is sometimes called, is the quickest way to do it. When a company reduces costs, they help to improve potential profitability, and therefore, they can see a benefit in the stock price. This bump up in the stock price is what the investors are looking for, and part of the reason a company will reduce its work force.

There are many other reasons a company might make changes in its work force, but if businesses started hiring instead of laying off employees, people would feel more comfortable with spending money, and businesses would be able to flourish. So my question to those executive making the decisions to lay off workers is, “Have you considered making dent in your own incomes first before getting rid of the people who make the economy run?” Just a question.