The lessons of a down economy

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By Rob Witwer

The other day, a friend told me he believes there’s a good chance our kids’ generation will face the same kind of Depression-era challenges our grandparents did. I don’t know whether that’s true. I sure hope not.

If we had our way, of course, our kids would never face economic hardship. Difficult times lead to deferred dreams, missed opportunities, strained relationships and, in some cases, poverty. There’s nothing good about job losses and a stagnant market.  

But if it must come to pass, there are also lessons to be learned about the values of thrift, sound planning and delayed gratification. The Great Depression was a time of severe privation and pain, but the people who survived it won a war and created the most robust period of sustained economic growth in our nation’s history.

Unfortunately, the federal government’s response to the current economic crisis runs counter to the lessons our kids should be learning.

“Spend more,” we’re told — even though rampant consumerism led us here.

“Don’t put your money in a mattress,” we’re told — even though our savings rate has hovered around zero percent for years, leaving Americans with few reserves for a rainy day.

“Going into debt to spend on ‘stimulus’ is no big deal,” we’re told — even though by doing this we’re just pushing the day of reckoning further into the future (and making it worse in the process).

The lesson coming from Washington is simple: The best solution is the one that patches things up in time for the next election, even if it creates a larger problem down the road.

That’s not the lesson I want my kids to learn. I’d rather they learn not to fear hardship but to take it for the opportunity it presents. And I’d hope they can see beyond the short term and understand that decisions made now are only wise if they still make sense decades later.

Take the loss of liquidity in the markets. It has forced businesses large and small to revisit their purposes and re-focus on core competencies. The bear market is imposing austerity and discipline on organizations throughout our economy, and that adjustment will make them stronger. This would happen with or without a “stimulus.”

When an economic bubble pops, there will be a correction. That correction will be painful. But by artificially softening that correction with debt-financed spending, Congress has chosen to defer the pain until a later date. Over the long haul, more jobs will be lost, more value destroyed, more economic hardship imposed on the people. What kind of lesson is that?

Rob Witwer, who grew up in Evergreen and currently lives in Genesee, is a former member of the state House of Representatives.