The other day I was listening to a podcast from Mike Huckabee that talked about the recently released index that ranked 178 nations with regard to their economic freedom. The source of the report was the Heritage Foundation and the Wall Street Journal so there is probably some credibility to the report. The disturbing part of the report was not that the United States was not in first place, not second place, not even 5th place. No, the United States no longer falls even within the top ten of these 178 nations. In fact, it is now in 12th place behind Estonia. I was shocked, not that we were no longer in the top 10, but that even Estonia has surpassed us. Some of the factors that have contributed to our decline are a surprise though. Things like the fiscal soundness of our economy and the size of government compared to the total economy have clearly hurt us over the last several years. The ‘recession’ since 2008/2009 has had a devastating effect on our economy as companies shrunk their workforce and many closed their doors entirely. In the meantime, the growth in the government and their attempt to infiltrate every aspect of our lives telling us what we can or cannot do by passing hundreds of new rules and regulations has undoubtedly been more effective at hurting our economic growth rather than stimulating the necessarily growth to pull us out of that recession faster and stronger. Some people would even say that the supposedly good unemployment numbers have dropped only because so many people have dropped out of the official job market and are either depending on government handouts or are working in the underground economy where wages do not get reported or perhaps both. If we are really at around 6.5 to 7 % unemployment, that might be considered in past times as full or near full employment with that percentage representing the constant ‘friction’ of people looking for new jobs, starting new businesses, or just not looking in the first place. Yet at the same time, the government is looking to extend unemployment benefits. Why would they do that unless they knew things were worse than they are telling us or to protect the bloated bureaucracies that they have built around all the government programs to ‘help’ the poor.
A couple of indicators I’ve been watching are not the typical indicators that most people might think of. In fact, while I did not perform an exact scientific analysis, I can probably say that as a whole most people feel a little more optimistic about their own personal future than they did a few years ago. The first factor I’ll mention is the number of people visiting the theme parks here in Orlando. My unscientific study indicates that more people are coming to the parks. Not only are the parking lots fuller than they have been in years, but the number of people I have to weave around getting from one point to another has increased. Lines for the more popular attractions at these parks have grown substantially along with their wait times.
Another indicator is the amount of traffic on the roads at 6 AM. It was not all that long ago that the main roads were almost empty at 6 AM. Getting to work was almost relaxing, but not anymore. Now the main highways are full this early in the morning. While the traffic is still generally moving at highway speeds unless there is an accident, the traffic is much heavier with barely more than a 2 to 4 car lengths between vehicles. Some mornings it is even less. Where is everyone going at 6 AM if it is not to a job? Or is it that they had to take a job far from their home just to get a job and therefore leave earlier to try to beat the worst traffic? In any case, the roads are fuller.
The third indicator is the increase in the number of people in restaurants, not just on weekends, but during the workweek as well. Not too long ago, it was possible to walk into a major restaurant chain between 6 and 8 in the evening and get seated immediately. No longer. We again have wait times sometimes as much as 45 minutes at the more popular locations. And then when you finally get seated at your table and open the ‘new’ menu, you are greeted with new prices which are generally about 10% higher than just a few months ago. In a way I don’t blame them. If the restaurants are now full again and people are waiting in line to get in, you are leaving money on the table if you don’t raise your rates. That is the same philosophy of the theme parks. As long as people keep coming and the parks are full, you can raise your prices and improve your overall profit margin. If the parking lots are full, raise the cost of parking as well until your net profit stops increasing because fewer people are coming.
Does this mean that we are out of the recession? Or is the gap between those that can afford vacations, eating at restaurants, or going to sporting events and those that cannot afford to do any of those things is just widening? But as I mentioned last week, just raising the minimum wage will not solve the problem if that causes employers to higher few workers, cut worker hours, or go out of business. You cannot legislate equality, but you sure can legislate inequality. The economy is controlled not by one or two factors, but hundreds of intertwining interactive components which are difficult to model. As a result, attempts to modify the direction of the economy often leads to unexpected consequences like squeezing a water balloon in your hands.
Can we expect a Congress that cannot even pass a balanced budget and begin to pay down our debts to lead us out of a recession into prosperity rather than spend us into a deeper hole, a hole where our nation’s debt and future is held in the hands of other countries, countries that may not always have our best interests at heart? Again, such a decision to continue on this path or even to change paths might be fraught with unintended consequences. (Remember the water balloon.) I suppose I am looking for new bold leadership who can return America to the land of economic freedom that it once was, a time when the nation was prosperous. It was a time when you did not have to write or read tens of thousands of pages to understand a law. One law would serve where now ten now take its place. The laws were simple and easy to follow. People were free to start business as long as they did not hurt anyone else in the process. It was a time when politicians worked for the citizens they represented, not a time when the citizens worked to support the politicians. Will the next election cycle turn us in this direction or will it be more of the same?
C’ya next time.