As we watch the world leaders gather to attempt to stem this pending disaster, we must keep in mind that they are politicians and not economic experts. No doubt they have consulted with the experts, but the remaining question is who will win out.
There are a few groups of people that don’t mix very well. Engineers and politicians are one such marriage on the rocks before they even start. Politicians often want things before they are physically possible. For example cement can only dry at it’s own speed. And no matter how angry and upset the politician gets, the cement does not care. So the politicians put pressure on the engineers to make the cement dry faster.
You can certainly start to imagine how a politician may interact with economic specialists and the I want it now attitude politicians seem to have in a lot of cases. Some things can happen instantly with the stroke of a pen, and other things take time. Much of this particular crisis can now possibly best be dealt with using mental health providers.
People are afraid to spend, and that is what drives or kills the economy at this point. The price of oil has dropped enough that there is some money to spend, but all the warning signs say don’t. Whether this is general lack of trust in the people that say it is OK to spend because they seemed to have cause the problem, or fear that there has been too little time to make underlying changes in the economic structure.
People are keenly aware how much the price of oil has influenced this crisis, and essentially nothing has changed to reduce oil dependency. That simply spells that this is a cat and mouse game and people are the mice and the price of oil is the cat. The time it will take to reduce oil dependency is measured in years and decades, and not days and weeks. So essentially what must be done is somehow turn off the survival instinct so people will spend money, and that is a tall order to say the least.
To do that, working economic models must be created and demonstrated to the public. People must be given the ability to move away from oil dependency on their own. Those two things should be enough to jumpstart the economy. People have seeen what the price of oil has done to them first hand, and one experience is enough.
So pumping raw cash into the economy is a noble gesture, but changes in infrastructure moving away from oil is a sustainable economic growth plan. The oil companies that are favored by politicians are now becoming toxic to the future growth of the economy. The days of oil based infrastructure must be allowed to fade by attrition and replace with new infrastructure that is based on renewable energy and earth friendly technology. There truly is no other answer. All that is being done by these meetings of politicians is looking for a bandage to put on the effect. The true answer is dealing with the cause. That means that the less than wonderful relationship politicians have with engineers is a significant part of the path out of this economic meltdown.
This is part of a periodic series. Click here for part 3