Spend Matters Pile-On: Will a Stimulus Package Improve Things?
I'll go on the record as a fellow Republican Libertarian (thank you Alan Greenspan, for coining the term, and self-selecting yourself as one) that George Bush has been the most irresponsible Presidential spender in recent memory. Seriously, you need to go back to FDR to find another President who loved signing pork-filled hand-outs into law with as much aplomb (incidentally, Greenspan remarks in his new autobiography that Bush has never taken out his veto-pen to a spending bill, not even one whose trough is overflowing with handouts). Of course now we're paying for this spending malfeasance with a downturn where our Fed -- thanks to a lack of maneuvering room due to the fear of China, Japan and other holders of billions of US debt dumping their dollars if their investment keeps dropping -- only can go so far from a rate cutting perspective without risking a dollar meltdown which would lead to further inflation.
But fear not! There are more steps that the free spending US pols can take to avert a recession (at least as they would have you believe). And that's to run up the debt further with a stimulus package. I won't bore you with the details here, but I'd be curious to get the opinion of Spend Matters readers about their thoughts on whether or not such a stimulus approach will be positive or negative for the overall US economy. Personally, I reckon that such an action will certainly impact procurement organizations by impacting overall supply and demand for commodities -- most likely driving up demand and prices for certain categories -- not to mention potentially having yet a further deflationary impact on the dollar relative to other currencies. But what do you think?
- Jason Busch
But fear not! There are more steps that the free spending US pols can take to avert a recession (at least as they would have you believe). And that's to run up the debt further with a stimulus package. I won't bore you with the details here, but I'd be curious to get the opinion of Spend Matters readers about their thoughts on whether or not such a stimulus approach will be positive or negative for the overall US economy. Personally, I reckon that such an action will certainly impact procurement organizations by impacting overall supply and demand for commodities -- most likely driving up demand and prices for certain categories -- not to mention potentially having yet a further deflationary impact on the dollar relative to other currencies. But what do you think?
- Jason Busch
Luckily, I don't think the gash in our hull is mortal, but some more icebergs lie squarely ahead (Medicare, Social Security, etc.) and we better start getting the budget balanced and making some hard choices vs. the latest "politicians on parade". Reminds me of Deming somehow. He was a caustic old fart, but he made some excellent points that we should think about applying in our government, in our businesses (and in Procurement -see #4), and our daily lives. RIP Ed.
1. Create constancy of purpose toward improvement of product and service, with the aim to become competitive and to stay in business, and to provide jobs.
2. Adopt the new philosophy. We are in a new economic age. Western management must awaken to the challenge, must learn their responsibilities, and take on leadership for change.
3. Cease dependence on inspection to achieve quality. Eliminate the need for inspection on a mass basis by building quality into the product in the first place.
4. End the practice of awarding business on the basis of price tag. Instead, minimize total cost. Move toward a single supplier for any one item, on a long-term relationship of loyalty and trust.
5. Improve constantly and forever the system of production and service, to improve quality and productivity, and thus constantly decrease costs.
6. Institute training on the job.
7. Institute leadership. The aim of supervision should be to help people and machines and gadgets to do a better job. Supervision of management is in need of overhaul, as well as supervision of production workers.
8. Drive out fear, so that everyone may work effectively for the company.
9. Break down barriers between departments. People in research, design, sales, and production must work as a team, to foresee problems of production and in use that may be encountered with the product or service.
10. Eliminate slogans, exhortations, and targets for the work force asking for zero defects and new levels of productivity. Such exhortations only create adversarial relationships, as the bulk of the causes of low quality and low productivity belong to the system and thus lie beyond the power of the work force.
11. Remove barriers that rob the hourly worker of his right to pride of workmanship. The responsibility of supervisors must be changed from sheer numbers to quality.
12. Remove barriers that rob people in management and in engineering of their right to pride of workmanship.
13. Institute a vigorous program of education and self-improvement.
14. Put everybody in the company to work to accomplish the transformation. The transformation is everybody's job.
What I mean is, with all the talk about recession, companies and consumers are thinking "Hmmm, there might be a recession. Maybe I should be more careful with spending."
And what happens when companies and consumers are more careful with spending?
That's right. There's a recession. Whether there was gonna be one for real or not, that perception becomes a self-fulfilling prophecy.
So what does a stimulus package do?
It creates an opposite perception.
It gets companies and consumers to think "Hmmmm, maybe there won't be a recession. I don't feel so reluctant to spend."
And what happens?
Spending happens and the economy continues a positive climb.
So if a stimulus package can help everyone feel more comfortable spending money on things like sofas, Spend Matters sponsorships, purchasing training, and anything else, I'm all for it!
I liked Randy Pausch's description of his mother saying to her friends that "my son is a Doctor, except not the kind that helps anyone".
The problem with the 'prime the pump' theory, besides increasing inflation by pumping more bills into the economy, is that people might not spend it on new services (and certainly not on invented purchasing certifications), but rather will try to save it for a rainy day or make a dent in the average $9K household credit card balance (which seems pretty rainy to me).
I ask because I really don't know how that went down in history as a success or failure of a stimulus package. I do know that it was a comparatively mild and short recession except in certain industries that were particularly affected by 9/11.