Happy New Year. Like many, I find it is a good time to reflect on the year passed and make resolutions for the upcoming year.
First, let’s be thankful the 2012 presidential election is over. We have been bombarded by enough economic nonsense to last us until … 2016. Ideology seemingly won over economic reality.
We also should be appreciative of moves made by the Federal Reserve, though less hopeful about its impacts. The Fed made increasing employment a priority and publicly stated so with adoption of increased transparency. Sure, the Fed’s dual mandate is inflation moderation and maximizing employment, but most of its policies historically have stressed the former.
Just as we applaud the Fed, let’s deride the European Central Bank and the European governments that fiddled while the eurozone burned, though less poetically. The ECB’s token gesture of buying European debt to lower interest rates is too little, and, possibly, too late.
Be thankful, too, that Superstorm Sandy has come and gone. But it was only one of many natural disasters of 2012.
While the horror of Sandy is real, the real economic cost has been the drought, the worst since 1836, that affected U.S. agriculture. Food prices are expected to rise sharply this year in response to dwindling supplies.
In the West, a large number of fires cost property owners $150 billion, and that is only part of the true cost.
So, I resolve to:
No longer listen to politicians when they discuss economic policy. Well, I will, to search for clues to their true intent. Are they, for example, in pockets of big business/labor/banks? Slaves to anti-tax crusader Grover Norquist (what are bona fides anyway?) Or, sadly, pandering to their left/right custom-made voting districts? Etc.
No longer be surprised by European economic policy: Go all in with real estate (Spain), state spending (France), low taxes (Ireland), profligacy (Greece), corruption (Italy), dissolution (Belgium), price-setting (Portugal), and/or austerity (all of the above).
No longer wonder about the pace of China’s economy which has been driven by state spending (about 50 percent of gross domestic product), and, instead, I will, more importantly, question the fate of said economy when the Chinese government inevitably reduces expenditures.
Keep an eye on Mexico’s recovery. As the United States’ second-largest trading partner, it behooves all of us to cheer its success. Canada, our largest trading partner, endured a mild recession, but it was never really a concern.
Assume more natural and human-made disasters are forthcoming and speculate how policymakers will respond in their aftermath – more bad incentives or perhaps forgo political expediency and actually lead.
No longer use sayings such as “fiscal cliff” and “debt ceiling” to exaggerate reality.
Adopt a gluten-free diet ... mostly.
Join us at the 2013 Southwest Business Forum on Wednesday at the Community Concert Hall at Fort Lewis College. A reception will begin at 3 p.m., and presentations will be at 3:30 p.m.
firstname.lastname@example.org Robert “Tino” Sonora is an associate professor of economics at Fort Lewis College and the director of the Office of Business and Economic Research at Fort Lewis College.