Thursday, February 7, 2008

What Has Happened To the Dollar?: Or, When Will They Admit We Are In A Recession?

The dollar has continued to slip in international trade, not stretching as far as it used to. Europeans have begun taking trips to America to buy cheaper products. Ah, remember the good old days when we would travel to Europe to buy things at discount rates? Those days are over. We have not really bounced back from 9/11/01.

Not that things are so bad, but everyone is feeling the crunch. Our dollars are not buying as much as they used to domestically as well. Further, those who are toward the bottom of the earning ladder know that wages are not keeping up with inflation. Our wallets are being lightened from two different directions. Houses are being foreclosed on, not many want to buy, and others are afraid to sell. The Market has taken a relatively consistent nose-dive, including huge losses in money-market funds, thought to be relatively safe investments. In spite of all of this, the Fed (and the President) do not want to speak the "r-word;" recession.

What has gone wrong? First, I would offer that immoral business practices here in the states have begun to catch-up with us. By focusing solely on the bottom line, creating a poor work environment for employees (corporate mistrust of workers, loss of overtime and lower wages, while increasing productivity rates and performing random or pay-based lay-offs), unethical hiding of true profit and loss/waste margins, obviously artificial constant sales, and catering to investors for the short term, have all contributed to an unsustainable faux economic boom. Well, the bubble has popped, and the truth has come out for many companies, just as it always seems to do. It was a good run for some.

Second, because of deplorable business practices as mentioned above, and because of other factors (gas prices, fraud, the war, etc.), there is fear concerning investments and spending for the average consumer. This has led people to hold onto what little money they have, which of course is a catch-twenty-two. If everyone holds onto their money, less money is put into the economy, which slows the economy and causes the very things that cause people to hold onto their money (layoffs, corporate bullying, recession).

The President's answer is overly simplistic, "Spend!" But this has been his answer for everything. I am very surprised the Liberals don't like him! Another answer may be that we need to see some changes in corporate policy with a movement away (slightly) from the almighty bottom-line. Everyone wants to make a profit, but that is precisely the point. The current system sees the corporation as the most important person in the employer-employee relationship, rather than there being an equality. The employee is abused for the gain of the employer. It would also be nice to see businesses aim at growing steadily over the long-term and offering quality products at reasonable prices, rather than seeking to only impress and entice investors. The question becomes, "Are you in business to make money, or offer a product/service?" If the answer is the first, you are just another opportunist. If it is the latter, make sure your act is clean and offer quality, even if it means you make a little less profit.

I know that this sounds like heresy and, to tell the truth, in the religion of the almighty dollar, it is. We have a corporate world that has divorced morality from money. It has reflected the culture that has consigned morality to issues of religion and divorced religion from "the public square." What is left are selfish and spoiled people who will not willingly help others, but will do almost anything to make a buck (including false helpfulness). And we wonder why we are in a recession.

I suppose you have already suspected my answer to all of this: corporate and personal accountability and moral reform across the board, transparency in both personal and corporate life, and a true desire to serve others. What made Europe and America great was not just science and luck, it was Christian moral living, exploration, and self-denial put to work. Capitalism is great, but not when it is divorced from Christian moral expression.

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Update 03/04/08: Warren Buffett has finally announced the dreaded "R-word."

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