It could be said this article is meant to scare people. It could be regarded as a doomsday proclamation meant to dispel any hope of fully reviving our economy. Some may even see this concept as a strike against the building industry.
I have none of those thoughts in mind. Rather than doomsday or a vitriolic dialogue aimed at the building industry, this represents accumulated experience of continuing the same old boom and bust economic cycles. My solution:
• Plan first.
• Then build.
History teaches us what we did wrong, but only if we pay attention to the lessons.
Our economy has been held hostage to the idea of funding more construction with taxpayer dollars since the Great Depression. “It worked once, so it ought to work again,” seems to be the only answer. But it isn’t working anymore.
We’ve had 13 tries at this broken concept in the past hundred years. Economic recessions are coming faster, and each one is more virulent than the last one. Each time our economy tanks, Wall Street and Madison Avenue squeal and government reacts by going back to the same formula — build it and they will come. Now we’re hearing from news hawks and legislators alike: “We need to pour money into building again.”
But we’re broke and have been for quite a while, and we will need to borrow more. Debt ceilings go up, credit breaks out everywhere, and Americans lose a bit more financial security.
Credit was used rarely until the late 1800s and early 1900s. Paying it off was a priority.
That has changed. The borrow-to-build concept only piles up more debt. The result: higher debt levels, fewer regulations in banking and larger and larger bankruptcies. Soon enough, we’ll be hearing another tale of woe from some corporation who is “too big to fail.” Is that where we want to wind up again? I believe we are capable of honest reflection on old programs. I believe we should rethink and chart a better course to financial stability. Let’s take time to plan first, then build — keeping the focus on progress.
We know “who” and “what” happened “when” we stepped on the slippery slope of credit. Everyone is paying attention. We’re living “where” the economy tanked, and know “why” displays of excessive credit in both public and private economic indicators sent us. We’ve been shorting ourselves by not exercising the “how” part of progress.
• How can we stretch capacity to hold against further decline today? The answer: identify system failures, modify production to match demand.
• How do we design and develop solid plans for recovery using available financial sources that do not encourage rampant haphazard short-term solutions?
Remove all exclusions from tax codes to equalize taxation. Permit growth by linking the necessity of development to needs identified in the service area, not potential short-term profit to developers or jurisdictions.
• How should we develop regional resources that can remain focused on local issues?
Channel more government grants through state, county and city agencies so funds can be applied where they do the most good.
• How should we design local grassroots style regulations to protect ourselves from predatory lending in the future?
Convene business owners and professionals from local organizations to explore and develop ideas for changing local codes to control lending practices. Building a path that makes steady progress toward solid financial footing will require more than the same old dogma about building more. That’s what caused the meltdown in the first place.
Ron Lawson is serving his first term on the Lacey City Council.