Dec 4, 2011

What Shall We Do with a Drunken Economy?

What shall we do with a drunken economy
What shall we do with a drunken economy
What shall we do with a drunken economy
Early in the century

Okay, so this will most likely not become the next big sea shanty hit, but it does describe the current unsteadiness of our economy. The song can just as readily be applied to the legislative and executive branches of (most notably) the early 21st century when it comes to their willingness to spend. In either sense I shall compare the current economic situation to a drunken mess, that is, the way in which a free market supporter views the United States’ economy.

The picture that some people create when it comes to saving our economy is to relate to that of a burning house. They state that the economic trouble represents flames burning everything we own. The only way to continue living then is to spend more money to repair or buy a new house. Once that new house is acquired then the economy will return to a more stable, and overall better, environment.

The free market image of the economy is that of a non-sober individual. In this picture, Congressional spending is considered the alcohol while the economy is personified. As the bartender (Congress) dishes out more and more rounds to the economy, it becomes more impaired. At the same time, however, the economy continues to live on false happiness that it experiences from its uninhibited state. Thus at first glance it appears everything is fine and possibly better than the economy in a sober state.

There are two paths the economy can take from this point. The first is that the economy can submit to its alcoholism and continue receiving its shots from the bartender. In this scenario the initial drunken happiness begins to wear off and it begins to become unstable. If the economy continues to drink, bringing the country further into debt, it will eventually black out, symbolizing an economic collapse.

The alternate scenario involves the economy admitting it has an addiction. It can begin a regiment to be weaned off its alcohol cravings. Then what would occur is a period of sobering up followed by a period of withdrawal. The happiness that was felt during the spending period will wear off and the road to recovery may seem harsh. This will be especially true under during the withdrawal stage. It may appear to be better to continue drinking away the depression (in both psychological and economic terms), but the sooner the intense spending stops, the faster and easier the period of recovery will be.

This analogy can be taken a step further to Congress’s relationship to the Federal Reserve. The Federal Reserve acts as the bartender while Congress becomes the drunk. In return Congress shares its alcoholic wealth with its friends that are high up on the economic ladder.

The question that thus remains is, “What shall we do with a drunken economy?”