Gloria: I have become a pessimist, I just kind of, lost hope. When I think about the European debt the mediocre economic growth we have attained, high unemployment here and around the world, a weak Real Estate and construction and market and the slow down in manufacturing production I can’t help but to believe in a gloomy future for our economy.
Mary: Right things don’t look too good.
Gloria: At least our industrial sector is making a great deal of money. I wonder how they do that.
Mary: By laying off workers and making the rest of them work longer hours. Eventually that technique will backfire since the unemployed workers have no longer purchasing power and therefore cannot stimulate the economy or contribute with their taxes to the well being of everyone else. Also those working harder, as it is already known, often develop physical or mental illness due to stress.
Gloria: Aha, That’s it! The large salary increases made by management and stock owners as a result of increase corporate earnings become mostly idle capital instead of being reinvested in productive ways, back into the economy, thereby creating more jobs and helping move the economy ahead.
Mary: As you probably already know there is something else that can improve to help our economy and that is top management decision making. They should invest in long term projects that are worthwhile instead of only looking only for short term profit investments.
Gloria: Right, furthermore we ought to increase investments in basic research and innovation. Banks should lend more money to creative projects that offer innovation and make us more competitive.
Mary: Also government should invest more in roads, bridges, schools and education. We need among other things more hospitals, airports and better transportation like the new fast trains built in Europe and China. Besides all that spend in infrastructure will create more jobs and help lift the economy.
I wonder why we don’t use all the knowledge we got from other previous recessions instead of letting greed control our behavior.