Punchinello’s Chronicles

August 8, 2009

The Ever-Shrinking Operational Budget

Filed under: Survival 101 — Punchinello @ 3:27 pm
Tags: , , ,

The spin on economic news these days is all about how we’re doing less badly than expected. Expected by whom? Even with that, the problem isn’t about doing more or less badly. The real problem is that we’ve learned to view economic news from the perspective of costs. How much money are we losing in our expenses? What can we save in our expenses? Can we cut costs or buy things cheaper?

There are two basic ways to handle any kind of economy, whether it’s your own family income or the national budget. Either you make more money or you spend less money. Those are the most basic, fundamental principles of economics. For half a century, it seems as if we’ve all been turned into cost-cutting fans. Nobody’s paying much attention to the other side of the equation: making more money.

American productivity has been shrinking for a long time, in terms of how much the resulting money can buy. We’ve had numbers showing that our productivity is going up, but what about the money we’re getting for that increased production? Our lifestyle, in general, has been going down. Where we used to have a nice life with one wage-earner per family, now we’re running as fast as we can just to stay even, and that’s with two wage-earners. Sometimes three, with one person holding two jobs.

Even the health insurance debate is ridiculous when you consider that nothing whatsoever is going to happen without someone having money to pay for any kind of health care. If we all lose our jobs, nobody has any money, then no amount of cost controls or cutting is going to mean squat. No amount of regulation, control or culling the herd is going to work if there isn’t any money.

What happened to the idea that people earn money and pay for their medical services as they go? Oh, but that’s too expensive, you say! Of course it is, when EVERYbody just assumes that the only possible way to pay is through insurance! And what about those millions of jobs being lost? How would anyone even think about buying their own medical services if they don’t have a job?

The government will pay for it. Right, except the government gets money from people who have JOBS! Tax money goes to the government, then that government spends the tax money. Unless the government borrows and borrows, or simply prints money. Let’s talk about putting everyone back to work, not about how we’ll keep an entirely unemployed country healthy!

We can’t continue to believe that goods and services come out of nothing. We can’t continue to use credit cards to pay for everything. At some point, we have to pay the credit card bills. At some point, we have to pay the national debts. And the only way that’s ever going to happen is by earning more money!

To earn money, we have to have something to sell! We have to create new products, create new services. We have to increase our market share for existing products and services. Do we have oil, corn, gas, coal, steel, wheat, cars, planes? Do we have engineers, scientists, firemen, doctors, teachers? Are we increasing the number of people who can actually do things?

No, we’re laying people off. We’re outsourcing jobs and manufacturing. The small business sector was growing up through 2007, but more and more regulations are impacting even that sector. If we tax anyone earning over $250,000 per year, that includes many small business owners who file their taxes as personal income.

Instead of building more, manufacturing more, and selling more, we’re doing the opposite. That means less money coming into the family or nation. And with less money, we can’t pay for things. So we cut costs, right?

No, we only cut costs as individuals. As a nation, our federal, state, and local governments just spend more and more, more and more. When they run out of annual income, they borrow more and more.

For the moment, China and Europe are acting like mom and dad. When we need more money, we just borrow more from those nations. What happens when they won’t lend us any more money?


1 Comment »

  1. […] Read more here: The Ever-Shrinking Operational Budget […]

    Pingback by The Ever-Shrinking Operational Budget « acc3ss.info — August 8, 2009 @ 5:54 pm | Reply

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