What if 10% unemployment is the new normal?
Randy Myers, CFO Magazine
November 1, 2010
How can we go back to 4-5% unemployment any time soon? Our economy was fueled by debt. Many employees had jobs simply because the average household debt was $8,000 (or something to that effect). Until banks allow high levels of debt again and allow people to buy houses they can't actually afford, and until people begin to spend money they don't actually have again, how will those jobs return? The economy as it was should never have been had Americans and banks both been more fiscally responsible.
Posted by Jamie Kendellen | November 16, 2010 01:46 pm
The analysis in this article seems sound, but there is one off note -- the claim that the difference between today's economic equation and yesteryear's is that taxes are higher now. Taxes were way, way higher in the 1950s, '60s, and '70s. What changed in the equation is the ratio of greed - the wealthiest, business-owner class of the "old days" was satisfied making 20 times or 50 times what their average employee made. Today, that ratio is in the hundreds, if not worse. Back then, a top executive could get by on four cars and two houses - now it's 20 cars and six houses, and untold amounts of luxury that are afforded to them even though they are not justified by their contributions to their companies. In short, what changed is greed grew exponentially. There's a lot more of it now, and that's what is breaking down the economic equation. And greed is not good, Gordon. Motivation to succeed and advance is good; greed is what happens when you care about no one but yourself. A note to the author: very nice nod to Tom Petty in the hed!
Posted by Br Crank | November 16, 2010 10:44 am© CFO Publishing Corporation 2009. All rights reserved.