What is an economic cushion?
An economist recently stated that more than half of those employed in the United States work for many governmental agencies, federal, state and local or for private firms associated with serving these agencies and for health and other social associated enterprises.
This is a difficult statistic to find, however, we might conclude that a significant percentage of workers in this country could be described as public workers. This is quite significant to economists seeking a strong combination of consumer elements that regularly contributes to the viability of our economy.
In addition, there are a large number of Americans who are retired with pensions, who are functioning as rather active consumers. Many are receiving Social Security benefits and others can avail themselves of Medicare and Medicaid benefits.
Others are receiving unemployment compensation payments and a significant number still receive pay checks within the private elements of the economy. After all, even a 20% unemployment figure means that about 80% of the employment pool are at work.
At the fall of the stock market in 1929, there was usually only one bread-winner in the family. Today when our economic crisis hit, most families had two significantly employed. Therefore, many families experience only one who might have lost his/her job.
None of these described situation existed in the thirties. We have today, a sort of built-in cushion which has enabled a good portion of the consumer aspect of our economy to remain somewhat stable but at a rather low energy level.
Therefore much of the media advertising is not calling for the type of consumer spending having to do with useless type products and services that people were we willing to consider before the bubble burst. Most of the recent K-Mart's ads point to food saving purchases.
Dentist, more that physicians might be experiencing some decline in demand for their services, but even these service are quite active as most of us are covered in one way or another by insurance for most of our health services but not so many covered for dental care.
Of course many have begun to lose their health care coverage as well, which will be reflected by decline in demand for these services.
This described collective economic cushion has eased our national economic fall, even without attempts to correct for the ups and downs of the economy that economist have talked about from time time.
Never-the-less, the economy is a difficult patient to care for. It tends to become obese during periods of prosperity and undernourished during periods of economic decline.
Then during these undernourished periods it seems that we are not able to afford the economic treatments nor is it easy to determine which of the long term treatments are most likely to improve our condition.
But in viewing all of these underpinnings within our economy we find that these are some of the reasons that explain some of our general economic stability. But of course, it will be difficult to maintain even this low economic activity over long periods of time without a strongly operating private economic sector.
Although there are disagreements as to the kind of treatment, there is good economic reason to understand how to deal with these ups and downs. But in actual fact this is difficult to do.
Perhaps this is primarily because in periods of good times we usually cannot remember nor prefer not to remember the bad times that usually preceded nor do we want to consider the conditions that often follow. Besides who is to help in achieving economic stability when things are going well.
As for our immediate future, it is difficult to imagine the types of industries that will employ the many who find themselves without jobs today.
Yet the economy will not work too well until most of these find employment that will begin to bring relatively significant standards of living. But because of many inherited institutions, pump priming is more likely to work sooner and therefore be less painful today than in the thirties.
Here we have focused more on the disease than on the treatment. Next time let's consider as to whether there are any treatments and how do we attempt to find the one that is most likely to work. Economic treatments are usually expensive and require some pretty serious social and collective decision making.