Wednesday, December 22, 2010

Cutting Our Way to Prosperity?

Rick Snyder is a number cruncher, not an economist.

He thinks if state government would only cut everybody's wages, we'd all be better off, according to an interview in the Detroit Free Press on Wednesday (Dec. 22, 2010).

Let's review how that will work. Snyder waves his magic calculator and all the teachers in the state take a 10 percent wage cut, or maybe just 5 percent. They will all celebrate by going out to eat at one of the restaurants in downtown Brighton, right? Or maybe they'll head to the mall and buy some bling for themselves.

And the retired state employees whose benefits Snyder wants to cut? They'll react to smaller pension checks by playing more golf, eating breakfast every morning at one of our county's great breakfast spots. buying a little extra for their grandchildren at Christmas, which will make the cash registers ring, ring, ring.

Actually, no, they won't. They'll cut back what they spend. The economy will get smaller, not bigger.

What our economy needs right now is more consumer demand, more people willing to spend money rather than save it, so that businesses must restock their shelves, and their suppliers must add more people to produce what the businesses are ordering.

Snyder and all the Republicans who want to cut, cut, cut, are taking Michigan and other states in exactly the wrong direction. The sad thing is, they probably really do understand the economics of it, but just want to hurt public employees.

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