The Econosphere

Shhh....Larry's Sleeping

Did you ever feel sort of numb?  I don’t mean physically numb, but rather mentally, emotionally and/or psychologically numb.  Did you ever feel that sort of way?  I kinda do.

Part of it is that the world seems to be moving in slow motion right now.  I do believe that we are on the edge of a much more convincing economic recovery than we have experienced thus far, but it is a little late, and we are all mostly underwhelmed.  We are just sort of waiting and preparing for it.  It feels like all of the U.S. is at a bus stop.  We anticipate that the bus will come, and deep down we’re really not all that worried.  But, the bus is a little late and we’re just kind of standing at the bus stop, staring at each other, and otherwise occasionally looking down the road to see if the bus is coming yet.

We are waiting.  People are waiting for an absolute bottom in the housing market, the return of jobs, for commercial properties to start trading again, for the next major consumer trend to begin, etc…  Not that there isn’t a ton of prep to be done and strategies to be formed in the meantime, but all that work behind the scenes doesn’t make for a very exciting news day, nor does it necessarily make the phones ring.  It kind of feels like late-June and the beginning of a meandering summer, but it’s only late-March!

The malaise has even robbed me of the desire to remark on the one place in the economy where there has been some action of late: Washington.  How could there have been a massive healthcare bill passed, and yet I can’t seem to find the enthusiasm to remark on it? I think that it may not just be the slow current economy; the new programs themselves are designed to invoke malaise.  They phase in so slowly that it will be a slow drip of change.  Moreover, let’s face it; none of it has much to do with me, that is, until it’s time to pay the higher taxes.  It wasn’t written to make my life better.  It was written to make someone else’s life better.  So, while I am happy for them, there isn’t much under the tree for me to open. 

What can we say?  Well, it is a very large new program designed to transfer some wealth from one cohort to another, and also a program that is designed to take some of the burdens of life off of every individual’s shoulders and onto the government’s shoulders.  Health care is now supposed to be one less thing to worry about….kind of like retirement savings and Social Security.  The new bill actually communicates the message to “go ahead and be a little numb,” we’ll take care of things if you get really sick.  So I guess that’s nice.  But I do wonder.  Is it good for all of us to feel numb?

To examine that question, let’s look at Social Security.  It is said that Social Security is the most popular Federal program ever, and I am apt to believe that.  I think it is popular because it has retained its “you take out what you put in” aura—even if it is quite imperfect in that regard.  People don’t see it as welfare or a redistribution program, so people generally do not begrudge paying into it.  If I were to have to guess about the program’s future, I would guess that it is slated to eventually lose that aura entirely as the burden of the payroll tax becomes more progressive and benefits are eventually scaled back for the wealthy, but for the time being, people seem to like it, and maybe people will like the new healthcare laws, as well (though the healthcare’s redistributive qualities are much more apparent right from the onset).

But I do wonder what would it be like if there was no Social Security?  For my household, I would prefer that Social Security didn’t exist.  I would like to believe that I could do a better job investing those funds than does the government.  Thus, I’d just as soon keep that cash with me.  As for others who, perhaps, would rather not have the burden of personally saving fully for their retirement, Social Security is probably a great program.  Certainly, Social Security has likely prevented extreme poverty among many thousands of elderly who might have saved too little or invested poorly—the likes of which is what prompted the creation of the program to begin with.  So all things held equal, I guess we can see the program’s merit.

But things are never held equal!  And I can’t help but think how the world might look if people were able to control more of the wealth that they create.  How would the world look if we all had our payroll taxes back?  Would there be more money available for college tuition?  Yes there would.  Would there be more investment capital?  You betcha.  Would banks be better capitalized and better able to lend freely?  Yes.  And once all that excess capital, free to find its highest use, finds all these now highly educated people, would the world be better off and more productive?  Yes, it probably would be.  The new wealth created could make the likelihood of poverty among the elderly far less likely.  We could be robbing ourselves of a more productive, more dynamic economy by outsourcing our saving and investing to the government.

Still, with the government taking care of retirement and healthcare decisions, and maybe with new policies to protect consumers and homeowners, and who knows what else is in the pipeline, pretty soon we won’t have to worry about nearly as much as we used to.  Sure, the economy may remain slow like it is currently, but we might be reasonably comfortable standing at that bus stop, waiting for the bus, or waiting for the mailman with our benefits check, and we’ll have time to stare blankly at each other and, well, be sort of quiet and subdued and mentally, emotionally and/or psychologically numb.  It sounds kind of nice, sort of like being sedated.  In fact, I already feel a little sleepy, and unengaged, and generally….zzzzzzzzzzzzzzz…..wake me when my check arrives…..zzzzzzzzzzzzzzz….