Obama’s Gurus May Be Falling into a Cost-Cutting Trap

You’ve probably heard the story about the old farmer who grew more fruit and vegetables than he needed so he displayed the surplus by the side of the road, accompanied by a “for sale” sign.

Tourists saw the sign and stopped to buy his wares.

As time went by, he noticed that some drivers didn’t see the sign in time to stop, and he decided to rent a space a few hundred yards down the road to give them advance notice. This resulted in a big increase in business, so he decided to rent a space in the other direction to erect another sign.

The resulting boom in revenue made it possible for the farmer to send his son to college. The son graduated in Economics and decided to get involved in the family business. He prepared a thorough study of the economy and concluded that the future was daunting. He advised his dad that belt tightening would be in order and suggested cutting costs by getting rid of one of the signs.

Sure enough, business declined. And the son proposed ditching the other sign…

You can guess the rest.

The secret of success in business is not cutting costs; it’s spending wisely.

The same is true in running a country. Money invested in programs that produce income is not wasted. Money spent on bombs that blow up other people’s countries does not yield dividends.

Someone should remind the gurus in the Obama administration – and their allies in Congress – of this basic fact before they start cutting back on social programs, while investing more and more of the nation’s resources in military adventures. The way things are going this could become a really ugly society. And a bankrupt one.

Republicans and conservative Democrats are using the U.S. deficit as an excuse to cut back on such basic social services as unemployment benefits and health care for the unemployed. And the Obama administration is reportedly listening to them – even to those who advise slashing Social Security.

It’s part of a mean spirited mood that’s sweeping the nation.

Several states are throwing people in jail for failing to make credit card payments. The Minneapolis Star-Tribune reports that in Minnesota alone, 845 people were arrested for being in debt in 2009, up 60 percent from four years ago.

I bet you thought debtors’ prisons were a thing of the past. But they’re making a comeback.

I always thought debtors didn’t go to jail in America. I was wrong. In some states, it’s a crime to ignore your credit card debt. Fail to make that minimum payment and you could end up in shackles.

And in the prevailing economic climate, debt collection agencies have been more successful than ever in persuading judges to put borrowers behind bars.

Tell me, if some poor wretch couldn’t come up with the minimum payment while out trying to make a buck, how is he (or she) going to do any better sitting in a jail cell?

In Jamaica we call that kind of thinking “puss logic.”

It’s also “puss logic” to try and revive a consumer based economy by choking off the spending power of people who are too old to work. Or by cutting off unemployment benefits so that people can’t pay their debts and end up in jail. Or by denying poor people health care so that they become sick and unproductive – and spread disease to the rest of the population.

Wise governments invest in the health, education and welfare of citizens, enabling them to produce more. This keeps the economy strong, producing dividends that can be reinvested in the public good.

Mean spirited governments squeeze money from citizens and use it to wage war all over the world. As the citizens become poorer and poorer, there is less and less money available to wage war – or to invest in dividend-producing programs, such as alternative energy.