How to (start to) Fix the Economy

We all know about the falling, and many say, crashing economy. Having been trained in business, I feel it is my duty to speak my mind on a fix.

I think first and foremost we can't and shouldn't give free rides. Free rides are bad. They reward poor business models. They allow poorly managed companies to continue to overpay failed executives. And, lastly, its darn expensive. We keep hearing all these ridiculous numbers $7oo billion, $775 billion, $1.9 trillion. The numbers lose all meaning. Just random jottings on a page. And giving people tax rebate checks. What's that going to do? I'm sure most people did what I did. They said thank-you very much and stuck it in their checking account with the rest of their general funds. I didn't say, "I'm going to put that money aside and buy a new car to help our beleaguered automakers." I'm sure you didn't either.

Why don't we do this. The U.S. Government will give a rebate to anyone who buys a car or a house within the next six months. If you buy a new car (American built only) and you can qualify for financing, the government will send you a check for $2000. If you buy a house, they'll send you $10,000. That way people will perk up and consider buying a car or a house who hadn't really considered it before. The banks would start lending again. Credit will flow. People could use the rebates to do whatever they want and a further stimulus occurs. Cars will sell, but only the ones people want. The cost? Lets say 8,000,000 households (8% of total households) decide to buy a car. That would be a good number considering 6,700,000 cars were sold in all of 2006. So obviously the automakers would do very well and there would be plenty to go around. But the cost, you ask, the cost? Well 8 million times 2,000 comes to a paltry $16 billion. A mere pittance.

Now on the house side. Lets say 5,000,000 households decide to take up the government's offer. The cost to the government is $50 billion. And the benefit? More houses would be built, workers would be working. Housing related business, many of which are small, will get a nice pop. Credit would be flowing. Psychologically, it would be a tremendous boost. We use the great aspects of the capitalist system to pull us out of this mess. Namely; competition and incentive (or demand).

The total cost of the program would be less than half of what we gave one company, AIG. I hope that gives some perspective on what $700 billion can buy. If it works, we could do the same thing for other industries or run the plan for another six months. Or increase the rebate amount. Are you with me? Tell your friends. Send an email to President Obama. Lets call it the Trickle up Plan.