Phil for Humanity
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A Few Humble Suggestions to Get Out of this Recession


Let's face the harsh truth. The United States of America is probably in a recessionů maybe even a depression.

To get out of this recession, we must first understand why the United States is in a recession. So in no particular order, here are the 8 main reasons why the United States' economy is faltering:
  1. War: The United States is spending an estimated 2 billion dollars a day on the Iraqi war.
  2. Manufacturing: Most of the factories and manufacturing jobs have already left the country and more jobs are following.
  3. Off-shoring/Outsourcing: Even high paying jobs, such as engineering, medical, architecture, insurance, and technical support, are moving overseas at an alarming rate. This rate is much higher than the creation rate of new high paying jobs.
  4. Housing Credit: Most of the home loan banks are in financial trouble and are less willing to issue new mortgages and loans until their financial situation improves drastically.
  5. Personal Debt: A lot of people in the United States have purchased more than they can afford. Their credit cards are maxed out, and they are only able to pay the minimum each month. Furthermore, a huge number of people are no longer able to pay their mortgage either and could lose their homes.
  6. Consumer Confidence: Even those people who can afford to purchase goods are less willing because consumer confidence in the economy is low. People also have low confidence in their jobs, so they are spending less.
  7. Energy: Each year, trillions of dollars are sent to other nations, sometimes even to our enemies, for our oil requirements.
  8. National Debt: The United States owes other countries a lot of money to support the war and our standard of living. With a huge trade deficit, our already enormous national debt is increasing also at an alarming rate.
Luckily, the government of the United States has realized that the economy is in serious trouble and is pushing for two economic stimulus packages.

First, the Federal Reserve is lowering interest rates quickly. The theory is that with interest rates lower, companies will be more willing to borrow money to grow their businesses and thus stimulating the economy. Even the Federal Reserve agrees this has limited effects on the economy, since companies have low confidence and are less willing to borrow money or grow their businesses. On the other hand, this may actually help alleviate some mortgage holders by lowering their adjustable rate mortgages, thus maybe helping both the housing credit and personal debt issues. As you can plainly see, lowering interest rates will not directly resolve any of the root problems with the economy. At most, this plan will only temporarily stimulate the economy, since it does not have a long term solution to fix any of the problems mentioned above.

The second stimulus package is that President Bush is trying to push a $600 tax rebate ($1200 for couples). The theory is that if taxpayers have more cash in their pockets, then the consumer confidence would increase. Unfortunately, these types of stimulus packages have had little effect on the economy in the past. I predict that most taxpayers would use their tax rebates to help pay off their personal debts, loans, and mortgages. Other taxpayers will try to save this money as an emergency fund for the recession. And the consumers that do spend this money will not contribute enough to significantly increase the consumer confidence level of the entire nation. As a result, I predict that this stimulus package will have limited impact, since it does not attempt to resolve the root causes of any of the economy's problems. To best solve the economic problems of the United States, each of the above 8 reasons needs to be addressed. This does not mean that each problem needs to be fixed; but rather, the best action plan is to try to fix as much as possible.

So, here are my humble suggestions to pull the United States of America out of this recession.

But first, a brief history lesson is necessary. The Great Depression of the 1930s basically ended because of World War 2. To support the war, a huge number of manufacturing industries increased production and were created. As a result, tens of thousands of manufacturing jobs were created. This eventually stimulated the economy successfully and even improved consumer confidence too. This also fixed the personal and housing debt issues of the time. Therefore, it can be concluded that creating more jobs was instrumental in pulling the nation out of a depression. And it will be necessary again.

Unfortunately, it no longer makes sense to create traditional manufacturing or high tech jobs in the United States any more, because these jobs would quickly relocate to other nations where labor is cheaper. And since only jobs that stay in the country have long lasting effects, it is best to create jobs that can not be outsourced or off-shored.

My first suggestion is construction on a massive scale. Imagine replacing every single power plant in the country with a brand new renewable power plant and building additional renewable power plants to offset all of our energy needs that we import into the country. First, this would create a huge number of high paying construction jobs in the country for a very long time. Second, this would solve the problem of all the money leaving the country when we purchase oil from other countries. Third, this would make the United States self sufficient in terms of energy, thus more secure financially and militarily. Forth, it is now believed to be cost effective to implement renewable energy sources in the long term, since some alternative fuels are now cheaper than oil. Fifth, this would be environmentally friendly; since solar, hydro, and wind power plants would create significantly less pollution. Even new nuclear power plants could be created, if long term storage of radioactive waste can be decided upon. Sixth, once constructed, this would increase the number of permanent high paying maintenance jobs to support these power plants. Finally, maybe we could eventually even export energy to narrow the trade deficit and maybe even decrease the national debt.


My second suggestion for stimulating the economy is to increase research and development (R&D). In the next 10 years, the four technological fields that are predicted to have major breakthroughs are biotech, robotics, nanotech, and alternative fuels (my personal favorite is fusion power). Hopefully each of these technologies will eventually spin off a multitude of industries that will benefit all of mankind and not just by creating thousands of jobs. Therefore, I recommend accelerating these advancements by significantly increasing grants and funding to local researchers and scientists in these fields. I am fully aware that most of the jobs created from these future industries will mostly be in other nations, but the huge potential economic benefits would still be enormous locally. Again, this should help the decrease the national debt and trade deficit with a large number of successful startup businesses in the United States.

My third suggestion is actually an idea from a friend of mine. Currently, several parts of the United States are suffering from droughts for several years. Climate changes, increases in population, and bad luck have drastically and dangerously lowered our fresh water supplies with no sign of relief in the near future. Therefore, we need to construct several water desalination plants to offset this problem. Again, this construction and maintenance will create more high paying local jobs too.

If you have been keeping track, the only problem with the economy that my suggestions have not addressed is the Iraqi war. The simplest solution is to immediately end the war or at least end it as soon as possible. First, there are no clear long term goals for the war. It is widely believed that once the Iraqi government and military is self sufficient, the American military would leave. At that time, whatever terrorists or freedom fighters that remain in Iraq will be taken care of by the Iraqi people. For a multitude of reasons, the Iraqi government and military have not been successful in taking over their country. I believe they would be much more successful if they did not have the U.S. military as a crutch that they can support on. As a result, I believe that ending the war immediately will help both Iraq and the economy of the United States.

In conclusion, I believe getting the United States of America out of this recession is extremely important. Whatever solutions our government takes to resolve our economic problems, these problems need to be addressed immediately. I can only hope that my suggestions will help spur changes in the positive direction. Please remember that the entire world needs the United States to pull itself out of recession to pull the world out of their recession too.

by Phil B.

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