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You and Your Buddy and the Economy

2012-07-15

Category: politics

You and Your Buddy

Imagine that you and you buddy each have five dollars. Now, you build something neat out of scrap lying around and sell it to your buddy for his five dollars. You have ten dollars, your buddy has zero dollars and something you built that may have some slight value.

As a group, your overall increase is just the value of the thing you made. It may or may not be a great increase in overall wealth. The group's overall change in cash was zero; there is just the same ten dollars.

Now your buddy cleans your house for you for five bucks. This is a service instead of a physical thing, and you cannot sell the results of that service, so it can't be seen as adding to the group combined wealth. Even though money changed hands, there is zero wealth building for the group.

At some point, your group will be hungry. Neither you nor your buddy have food, so you must find an external source. You find a food vendor and you purchase and eat ten dollars worth of food. Once eaten, you cannot trade the food for anything else, and all of your cash is gone. The group's total wealth is the thing you made and sold to your buddy earlier. Since you will probably want to have food again,

The only way you will build your wealth is to make things and sell them, or to sell your services. Neither of you have any wealth to trade, so you have to find outside customers who have something to offer and who want what you are selling. Unless you can find someone who isn't also selling services, you are in bad shape.

The Country is your Buddy

This is one of the big problems facing the American economy right now. When we say "Buy American", it is like when we buy from our buddy. It does pass the cash around and is good. We produce enough new goods, like when making something out of scrap in the above example, that we can build some wealth, but it is slow. What we need are external customers.

For a nation, external customers are other nations. We need to export our products to spur faster economic growth. Unfortunately, most countries in the world are in as bad a shape as, or worse than, we are. They are in no condition to buy from us.

South-East Asian markets were growing very fast, but they stumbled a bit and, in their panic, reacted poorly. It will be a while before they become strong markets for our goods. African markets have never been that strong to begin with. China is having the same trouble we are having, so they aren't ready to resume buying our stuff. Our big hope would be in industrialized Europe.

Europe is a special problem. Some years back they decided to get one currency that all the countries would share. Most European countries use the Euro, but they still handle their internal economic policies internally. That means that if one country has a really bad economy, they pull the rest of Europe down with them. That is what has happened to Europe, and it keeps them from being good customers.

The larger, more stable European countries have made great strides to help the smaller ones, but they have limited legal strength to do anything. Countries like Greece, where strong socialist leanings had loud-mouthed citizens demanding no austerity measures until recently, consistently refused to do the things needed stabilize their economies even with Germany and France willing to forgive debts and refinance remaining debts. Every time Greece did something new and stupid, the European markets would shake and the American stock markets would panic.

How Do We Fix It?

With all of this in mind, how do we fix our own economy to encourage job growth and wealth building? We have two primary paths, and will probably have to do a combination of them.

The first path involves patience. That is not an inherent human trait, apparently. Still, we must move along and try to enjoy our slow wealth building while taking care of those who cannot yet take part, i.e.: the unemployed. While we are doing this, we need to do the "value added" thing. Improve education, train people to provide services that are needed, encourage production of useful things, and so forth. Tough times are good occasions to rummage through and get rid of things that are no longer needed.

The Second Path

The second path is more nebulous. Good customer relations involves helping keep your customers in a condition where they can continue to buy from you. We have to do things that will improve the economies of other countries. That gets tricky.

Sure, we could invade a country like Greece and, under martial law, make people behave in a way that stabilizes their economy, but that may strike some as unethical. After all, we have not yet declared war on stupidity. Besides, only some of the Greeks were particularly stupid; most were like Americans who just want to go to work and live their lives. (I'm fully aware that the United States has plenty of morons too; I'm just referring to the majority that is not really stupid.)

Nope, our best bet is to do some of what we do best, advertising. Yep, our advertising industry can convince people of damned near anything. If we can convince people that spraying oneself in horrible stench will result in instant, multiple sex partners, we surely can convince people to take up the measures needed to economically responsible.

Of course, we have a terrible record in convincing Americans to be economically responsible, but that's because our advertisers have seen the populace as customers instead of partners. If we can coordinate a little, we can everyone working together to treat the rest of the world as customers instead. That improves most things.

There are ethical concerns here too, but they are far less concrete than the war angle. The victims in the advertising path are victims wearing the latest fashions, watching the latest programs, eating pleasant foods, and are generally contented. That's appreciable different from living in a bomb crater and mourning those who aren't as lucky.

Conclusion

Therefore, if you really want to fix the American economy at a faster rate, you really need to get our customers into better shape. The best route is through applied marketing. Use our Advertiser Mind Tricks to guide those poor souls to a better way where they have blue jeans and pop music. Do them that favor, and while you're at it do us that favor.


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