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The next wave of spending won’t bring prosperity

Recently released surprisingly poor labor market figures show America lost 140,000 jobs in December. Much of the problem is that this is just one indicator of the carnage taking place in our economy. As small businesses close permanently, many of these jobs will never return. This leads to much higher deficits in the future as more Americans leave the workforce. Added to our dilemma is the answer to our present problem, including giving large sums of money to most Americans, which diminishes their incentive to go and hustle in search of work. This underscores the fact that we should not confuse what some call “recent economic recovery” with “recovery.”
After the numbers were released, Biden announced that his administration, with two newly elected Democratic senators, would begin work. “The price will be high,” Biden said of his planned aid package in Wilmington, Delaware. He promised to lay out his proposals before taking office on January 20, he also said: “It will be trillions of dollars.”

The package Biden laid out was just $ 1.9 trillion, which disappointed some of his followers. This is because there is not enough in him that he promised. Things like infrastructure costs and student loans were missing. However, this is only the first of many packages that will go through Congress to keep the economy from falling apart. To see how devastating the pandemic and the restrictions put in place to slow it down are on the economy, we only need to look at cities like New York, where it has become clear that the impact will be long-term. Recent reports that many large and established companies intend to move to smaller cities in the coming years will only exacerbate these problems.

While the national average unemployment rate is around 6.7%, Bloomberg reports that the unemployment rate in the Bronx is around 16%. Not only can the virus-induced recession ruin about a third of the city’s businesses. Cities, where tourism makes up a significant part of the economy, have been particularly hard hit. Hotels, restaurants and all businesses that serve them and their customers are suffering. The collapse of these small and medium-sized businesses is forcing people to leave these areas en masse. This, in turn, leads to a sharp increase in vacancies and a drop in rents. Just throwing money at the problem does not guarantee that it will stop the self-sustaining spiral from forming.

To be clear, the problem we face is that even trillions of dollars in poor spending does not necessarily create a strong economy. As usual, when it comes to government spending, most of the money is simply wasted. An example of this is how many people see government infrastructure spending as job creation and the ideal solution for our ailing economy. I would like to warn you, it’s not that simple. One thing is clear: when Washington starts talking about infrastructure spending, it spreads across America as politicians and businesses rush to endorse such programs. Of course, they argue that this must be done locally so that money is not wasted by ineffective Washington henchmen who do not understand the priorities before us.

This triggers the issuance of what is known as free money donated by responsible persons. In fact, there are more bridges to nowhere and wasted expenses than the taxpayer could imagine. Often, spending on infrastructure does not bring real prosperity to our country, but only fuel nepotism and ultimately fill the pockets of those in power and their friends. History shows that most of the infrastructure costs are spent inefficiently. In the long term, a country’s economic policy and taxation system is much more important to the economy than government spending.

With governments around the world embarking on similar spending programs, there is little that can be done to reassure Americans, given the explosive debt we have seen since 2008. A lot of problems arise with the economic downturn, and the working poor take on most of the pain, this becomes evident in the form of rising social unrest and rising violent crime. As rent and mortgages remain unpaid, don’t be surprised to see inequality continue to grow. We must remember that this is all an experiment aimed at creating a false economy that is so entrenched in incentives that it will not survive.

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