Quote of the Day: “The reports of my death have been greatly exaggerated.” –Mark Twain
TB’s been thinking about the state of politics in America lately, and trying to set aside my ingrained bias against the Republican Party to consider objectively what they can do to resurrect their fortunes. Today’s party shift by Senator Specter in particular got me thinking about what has become of the party that only six years ago was generally believed to be in the midst of an extended, if not permanent period of majority. My task as an uninvited, uncompensated and unsympathetic consultant is not to re-hash what led the GOP to this point, but to offer a blueprint for how they might regain relevance on the national scene.
I start with the premise that current Republican leadership has revealed only one plan so far. That is to simplify their message, reinforce their traditional conservative tenets of fiscal responsibility and strong national security, and remain confident that the Democrats are screwing things up so badly that if they do nothing they will be perfectly placed to regain power in 2012. That may well happen, but (a) it may not and (b) it may not be as bad as what the Bush era is currently considered. It is natural that Republicans would favor this plan because it is essentially what Democrats did to take over in the first place. I don’t think the circumstances are similar enough between now and 2000 for that plan to succeed however, and so I offer an alternative that involves putting the “Old” back in GOP–a return to their roots.
Before determining where they should go, Republicans need to take a step back and see how the world has changed since 1980. First, there are a few issues that Republicans like to focus on that they have already won. Tax rates for the wealthy are not 70% or even 50% any more and have not been for longer than half the electorate can even recall, and are unlikely to ever return anywhere near those levels. The second amendment is safe. Really, it is. Probably a third or more Democrats in Congress are unelectable if they turn against the NRA. And finally, the whole country is now “pro-military” save for a few far left enclaves. There will be no drastic cuts to the military the way there were in the 1970’s. After these big generational victories, comes the stalemate issue–abortion. Neither the pro-choicers nor the pro-lifers are going to get the result they want so this battle has been reduced to small scale changes depending on who’s in charge at any given time. The changes do not justify the resources nor the political capital invested to fight for or against. Finally, the GOP needs to realize that they have lost the fight on what used to be called “family values” but now is called “gay marriage.” There are still many battles left over gay marriage, but the same way I can tell you by late in the first quarter each year that Mississippi State is going to lose to LSU I can tell you this issue is lost. The other major lost issues for the right are keeping the status quo on health care and energy/climate change policy. Most people want health care and big business can’t compete internationally without it. And most people think global warming is a threat while virtually all Americans want to gain energy independence from the Arabs.
With all of the above in mind, here’s my advice to the plank writers of the Republican platform:
- Take a few pages out of the Democratic plan. The Democrats engage in internecine warfare on a regular basis and it often weakens them on certain issues. However they seldom spend more than a few days beating wayward Dems or even Blue Dogs over the head, and they are strengthened in the long run. They have a bigger tent. They may resent their conservative leaning brethren, but they don’t crucify them the way the Republicans do their dwindling number of left leaning members. Republicans need a few yankees, even if they have little in common with the southern base of the party. And they need to put California or New York back in play in presidential politics if for no other reason than to cost the Democrats a little money in exchange for all those electoral votes.
- Collect their winnings on the issues on which Republicans have traditionally excelled. Drop guns down a few notches in importance. Re-focus on national security by advocating smart spending on new technology and a smaller, more mobile and efficient force. Highlight programs that need to be canned and others that are underfunded. Push for the establishment of a commission similar to the one that closed bases all over the country in the 1990’s to lead this effort. Try to make defense spending have a greater positive impact on domestic stimulus. And establish a civilian jobs division under the control of the Army. One of the undeniable modern uses of military force is to stabilize and rebuild conquered states, what used to be called “nation building”. One of the lessons of Iraq is that it cost too much to pay Halliburton to do all the building, cooking, public relations, teaching, and whatever other non-fighting tasks were necessary. Use the pool of Americans who want to serve their country or even those that just want military benefits but don’t want to carry a gun. It will make the military more cost effective and during times of peace this civilian force can be deployed in areas of need in the US or abroad. And though part of what I’m describing involves fiscal discipline, take that a step further and drastically limit earmarks from your membership. Set a cap, like the salary cap in the NFL, per Representative or Senator. Do this and either the Democrats follow suit and the whole country benefits or they don’t and you have a great issue for the next election cycle.
- Take their lumps. The religious right ain’t goin nowhere. It’s time to embrace civil unions for gays if not marriage outright. In fact, if enough states hurry up and pass civil union legislation it might be enough to stop the gay marriage momentum. And figure out a way to support universal health care. Maybe let the government pay for new medical educations or pay off student loans of doctors in exchange for a set number of pro bono days in service of the poor. Maybe push for dollar for dollar tax credits for all medical expenses for everyone making less than $250,000 a year. Maybe shorten the amount of time a drug company or medical device manufacturer can hold a patent. Hell I can’t do it all for them, but all of these ideas at least in some way are consistent with traditional conservative values and I’m sure the think tanks could come up with some more. On global warming, just ignore it and focus instead on alternative energy business stimulation. Business support is where Republicans are best. Help people and companies make money in wind and solar and be amazed at the way the climate issues will resolve on their own.
- Finally, get out front on a couple of things. Neither party wants to really address immigration, for different reasons. The left is afraid of alienating minorities and the right doesn’t want to deprive business of the benefits of cheap labor. It will hurt, but this issue is waiting to be won and all it will take is support for enforcement of existing laws and harsh penalties for businesses that exploit this illegal labor supply. Success for corporate America is good, but it must not be seen to come at the expense of citizens and with the help of politicians. Republicans also need to dust off the old Teddy Roosevelt model and update his trustbusting ways to address the problem of overly powerful multi-nationals. They need to drop the mantra that all government is bad and recognize areas where it can be used wisely and with restraint. Bring back the Bull Moose, I say, and save the Gipper for when he’s needed again.
There are plenty of other issues that are important, but my research shows these to be the ones with the most potential to recapture the portion of the electorate turned off by niche wedge issues, religious hypocrisy and profligate spending by both parties. Maybe Republicans are right in their current policy positions. At the very least maybe they won’t change their feelings on the inside. But to regain their lost stature, this is a blueprint, errr redprint for success.
I know that a lot of you who read my blog are either conservative or lean conservative and I’m interested in your thoughts on how the Republicans can regain their strength. I genuinely tried to brainstorm a new course that I thought upheld conservative values while moving them a bit toward the center. My bias is acknowledged from the start, but I endeavored to approach the issue as objectively as possible.
So let’s hear it. Am I completely off base or on to something? Is it the prevailing view that the Republican Party is handling things well already or do you agree they need a new game plan? Are you at all concerned, as I am, that the GOP is becoming a regional party and entrenching themselves as a solid bloc in opposition to the rest of the country? Or is this just a swing of the pendulum which is reaching its zenith to the left?
Travellinbaen 
I feel like I should clarify my aim here after re-reading. The question is, what should the GOP do in order to win, what is politically smart, rather than what one feels is right or wrong on a given issue. For example the Specter party change was expedient for him personally and for the Democrats in the short term at least. I don’t think he suddenly woke up and saw the world differently. But his switch gives him his one and only hope of staying in the Senate come 2010 as he was sure to lose his primary.
I dont know enough to offer many good solutions for the GOP except to present my views and say I feel they are commom ones.
I dont care if gays get married. I dont think it will cause a massive increase in the gay population allowing them to take over straight America. I do thonk its one of those Things left up to states because of the varying culutres of different parts of the U.S.
I like Gun rights but do not care if assault weapons are banned I don’t believe in the mantra “if it starts there, where will it end” Maybe just really regulate assault weapon purchases or something.
I dont mind regulations on companies such as Insurance companies and banks, and oil companies. Again regulations of these companies dont mean that the government will take over the whole free market system.
I dont think global warming science is settled. But it cant hurt to become more green. In a responsible manner. We are not going to get off oil in our lifetimes. But we as a country caould become the leaders in green technology. We need to lead the world in some kind of manufacturing again. I think that advancements in such technologies could be an economic and stock market boom. But take it slow. Use all energy forms now and it will still decrease our dependence. By all, I mean Natural gas, Oil(drill more but dont go crazy), green and nuclear. I do belive in protection of the enviroment because I like spending time in the outdoors.
I do like the cap idea. Make them show some constraint and budget ability.
I dont like the far left atmosphere that seems to run the dem party any more than the far right of the GOP. Even less. I am not convinced Obama is not far left either yet.
I think Health care can be improved and a system of that has aspects of both could be used. I don’t think a system like Canada’s, for instance, is very good. And I wouldn’t want to see it completely socialized. The U.S. has made most major advancements in medicine and i think socializing it too much would hurt. But pharmacuetical companies are in that “regulate” category. I also think cracking down on the insurance industry would improve it greatly by itself.
Overall, A+ for your ideas… I guess.
I read this morning where Limbaugh said “good riddance” to Specter and “take McCain and his daughter with you.” I also have heard the same sentiment about Olympia Snowe. It sounds like there is a debate in the GOP about whether they need to be moving further right or toward the center. When thinking about this it seemed so obvious to me that moving to the center was the way to go I didn’t even consider that moving right might help them win outside the South.
Maybe I just have tunnel vision and can’t see the benefit of that, but I think a move to the right will result in additional losses for the Republicans.
Smiley, your paragraph on global warming–while I disagree with you on the state of the science, regardless of that your approach to the issue is almost identical to mine. I don’t see why its so hard for the politicians to take that approach.
No thoughts MD? This isn’t a bait post, I’m really curious.
Looking at the situation from a historical perspective, the Dems were in a very similar spot not that long ago. At the time, I would not have guessed they could gain control by essentially doing nothing. Well, they did do one thing. They adopted the “50 state strategy” that the party bosses in DC thought was a terrible move. It basically has led to the election of conservative Democrats in the midwest and upper south, hell even in MS. The conservative Dem was once given up for dead but came back. I think the moderate Rep is going to be necessary for the GOP to come back, as I mentioned, but I’m curious about what conservatives here think. It may be that nothing is exactly what the GOP should do, but it seems like a risky strategy.
I suggest the following:
1. Be against wasteful spending (including projects in your district); be the anti pork party
2. Be in favor of term limits
3. Be against involvement in wars unless this country is really at risk (TB you know I have credibility on this);
4. Be against illegal immigration
5. Be in favor of individual freedoms
6. Be in favor of reasonable regulation of things like banking (the laws are already there enforce them unlike the idiot Christopher Cox)
7. Be very much in favor of energy independence (I think I am a conservative (not a republican) and my family has two hybrids because I hate Chavez and that idiot from Iran that much). If we own it be in favor of it. Nukes, wind, solor, coal, etc.
8. Suggest a more simply taxation process. I will pay 1% more if you make it 50% easier.
I agree with you in principal about health care. I just think government will make it worse.
Makes sense. My suggestions on health care though were not my own. I actually think some sort of tax credit would be a good plan for helping folks out and something the GOP could sink its teeth into, but I personally am in favor of a much broader overhaul. I tried to view this from a detached perspective.
I think Republicans can make some hay with your list, particularly 1, 4, 6, 7 and 8. They are in a position to put their money where their mouth is on those. On 2, 3, and 5 I think they have to save for when they regain power. They promised term limits back in 92 but reneged in droves, and their record on the Iraq War (both parties excepting Obama and a few others for that matter) and individual freedoms hasn’t been good in quite a while.
What are your thoughts on the gay marriage thing, again, strictly from a political perspective, not what you favor? I said I think this is a lost issue and the reason is that once it is entrenched in one state, the full faith and credit clause of the Constitution will essentially make all other states recognize it. Of course, I made a C in Con-law. Anyway, I think these morality issues have turned against them everywhere except the deep south.
I saw Newt on TV tonight say “let Snowe go” too or words to that effect because the party needs to get back to its basics and define a clear line between them and the Dems. For now, it looks like this is the way they are playing things. I don’t discount the chances this may work, but my opinion as of today is its a big mistake.
Q, Zeek? I know y’all have opinions on this. Irv? Everybody lost their taste for politics all of a sudden?
BTW, my consulting for the Dems consists of (1) avoid hubris (2) let the torture issue flame up and then fade away fast (3) don’t be afraid to pass your agenda, but don’t overreach (4) don’t underestimate the pendulum effect of politics (5) avoid hubris
Man, TB, I tried to stay away because I tend to get a little carried away. I don’t think I can look at it from a distatched perspective or anyone else for that matter. Same reason why justice is not blind. People are biased about stuff, it’s human nature. I don’t know what the Reps should do to regain power,frankly I don’t care. I’m over the parties and the shenanigans. I want these pols to do their job, which is what the vast majority of their constituents want and need. I have a few quick ideas that I think would help all around. Bear in mind that I am aware that some of these would need tweaking and would welcome better ideas or ways to improve on mine.
1) Legalize Mary Jane- For the love of God, what is the problem? I mean seriously, do we have to wait until our generation hits 60 to get this over with already? Point blank it is less harmful than alcohol or tobacco so quit SPENDING billions (no telling how many if everything is considered), MAKE billions (again, no telling how much,uh, how much did Phillip Morris and Anheuser Busch net last year?) Here’s the ingenius part–If it turns out 5 years down the road, for whatever Godforsaken reason, that legalization doesn’t work,change the law back,i.e. the exact opposite of prohibition, neat little thing about our constitution.
2)Raise minimum wage or lower the cost of living.Oh,just like that,huh? Hell yes!! I don’t wanna hear about employers couldn’t afford it. This wage effects what everyone else makes guys, and it has only gone up @ $4/hr in the past 25 years while the cost of living has atleast doubled, if not tripled. I don’t know how some people make it, I swear to God. But, i know if they make more they are happier, and work better and produce more, and make more so they can spend more. We are losing our middle class.
3) Vastly simplify and reorganize tax code and IRS or dump it all together– “Eat a fat d**k, IRS!!”, that is all I have to say about that.
4) Abortion- Don’t care about your morals and beliefs. While I am personally only in favor of it if the situation clearly means saving a child from a most likely miserable life or rape, I still believe we have the personal freedom to do what we think is best for our bodies, so it should be done as safely and humanely as possible, not in a bathroom with a coathanger.
5) Gay Marriage– I couldn’t care less, again with the religion and morals. What is it hurting? Why is it ok for the gov’t. to take prayer out of school,so as not to oppress another religious belief(separation of church and state and all that) , but bans gay marriage because it offends certain peoples’ moral and religious interpretations???? How about a little consistency with the strike zone, huh ump??
6) Healthcare– I have no clue, honestly. I want the best, but I know it is far too expensive for almost all of us. Bigger gov’t involvment is not the answer, but I have no clue what is. I don’t like Pharmaceutical Co. or Insurance Co. They are the greedy bastards who started this bulls**t.
7) Welfare-Medicare– Do not get me wrong, sometimes people need help,I know this all too well. But people have to be held accountable for themselves. The plain and simple truth is that some people will live in a housing development and eek out an existence if they don’t have to work for it. Term limits just like pols. Give assistance for 5 years and help with education or trade that will enable them to provide for themselves when help ends. No more than two babies, after that, tie the tubes. I know it sounds Red China-ish, and I just talked about personal freedom, but when it affects all of society, I think the fact that the child may not be adequately cared for and the burden on society outweighs the carelessness / inconsiderateness of the mother / father of possible child. Once the term is up, the recipient is own their own. I know there could be a problem with homelessness and innocent children suffering, etc. But that could be handled hopefully with privately owned children’s homes and flop houses for adults. If done wisely, the theory is that people will work and prosper, or live a spartan existence in some dormroom-like apartment after losing their kids. Once people understand “no gravy train forever”, they’ll get with it, it’s self preservation. And if privately owned and operated by caring, intelligent people, the kids will be educated and nurtured and contribute to society.
8)Torture–Said all I’m saying on that already.Dead horse.
9) Energy- Be smart, develop greener ways so the problem is solved in 25- 50 yrs. instead of causing the end of the world.
10) Term limits, cut wasteful spending, both “parties” coming together in the middle so things can get done for the good of the people?–YES, YES, and YES!!
That was me above, if anyone couldn’t tell.
Damn Zeek, we could just about start our own outfit if I could ever straighten you out on torture.
TB, I am here, bro. Many a beers consumed so far and still working on it.
Zeek, I agree with a lot that you say, but raising the minimum wage only inceases the prices of goods and/or drives jobs overseas. Otherwise, we could just raise the minimum wage to $100 per hour so that eveyone could be “rich”. Do you think that would work? NOT.
Wow, I am happily amazed with how much I agree with many of the above positions from my friends of a different party. I agree we should just get rid of parties and vote on issues. I have more thoughts but don’t have the time to write as I am heading down to FL to join SHRAKK (well really SRKK as H and A can’t come) for a weekend in the sun.
I tell you friends, stick with TB. I picked up the morning paper, well, clicked on Google news anyways, and the first thing I see is a NY Times article saying McCain, Jeb Bush, and Haley Barbour are leading an effort to be unveiled today to refocus the GOP. Conspicuously absent from their efforts, at least so far as the article goes, are Newt, Rick Perry, Limbaugh and all Fox News pundits. Another article on SC Senator Graham about losing young people because of the unpopular moral issues and another about Sen John Cornyn and his decision to adopt the Democratic strategy of recruiting candidates in “blue” states even if they are not on the same page with him ideologically.
RMac, thanks for the dynamite drop in! Hope you can find time to come over a bit more. Read Trainstopping and the Proud Larry’s story, I think you will enjoy and let me suggest no “truth or dare” on the beach with the girls down in FLA. But I send my love.
I would counsel the GOP to tap into Haley Barbour’s brain, connections, and money, but stop short of implementing any of his governing ideas. Stated another way, Barbour is a very smart and politically astute guy, but he governs with the same in-your-face, 50% plus one attitude that helped make the GOP the minority party.
I would tell Cheney to shut the F up. On policy, no question they have to marginalize the “Christian conservative” folks. When my in-laws (fundamentalists) are taking up for moderates like me, you know the Dobsons of the world have gone too far. This goes for all the “value” issues.
I would also counsel the GOP to be more cooperative on economic issues. They all looked like complete idiots when they continued to say nothing more than “cut taxes and deregulate” in the face of the recession. They epitomized the definition of insanity. I’m not saying they should go along with every thing Obama does — quite the opposite. I’m saying there has to be some things that they agree with him on. They need to publicly state that so they can appear to be part of the solution and not just the party of “No.”
I continue to be baffled by just how strongly the GOP has pushed back on alternative energy. I understand the oil companies are highly influential, but still. The party of business should be out front on innovative technology ideas.
Finally, I’d tell them to not listen to me. Nothing will prove me wrong faster than someone relying on my opinion. (Except in the legal world. I do ok in that arena.)
TB I don’t know about the gay thing. Frankly, I could care less about that as it impacts my life exactly 0%.
I think there is still a lot of bias against gay people and a lot of people that think that marriage should be between a man and woman. That is Obama’s stated position. If he thought he could get away with it he would be for it.
My personal libertarian bent on it is way don’t they have to suffer the marriage penalty? Also, if it was harder to break up, perhaps some of the conduct that is/was so destructive to that population would change.
Basically you have to come out and be for something. Immigration control and less reckless spending and bail outs are probably the places to start. There will be a time for a hard energy push. It will come when the economy can handle more expensive energy and the price of the energy itself makes alternatives cost effective. We will get there soon. Next 5-10 years is my guess.
Another thing,
Someone needs to talk about what all the borrowing is going to do to our children. We are literally mortgaging our kids future to maintain our life style. It is really unacceptable. If you want to get back in power, figure out how to explain that so that everyone can understand it.
I think the tea party thing is trying to do this. The people who are going to those things have never protested anything before in their lives so they are kind of clumsy at it but booing republican politicians off stage because they are no better than democrats on spending issues is a good start.
The people that believe in that movement (and I think there are many that do) need to either hijack the republican party or destroy it by becoming a viable 3rd party.
Problem they have with the money thing is they spend just as bad. But maybe people will forget by 12. That’s why I said cap the earmarks. It’s a chance to walk the walk.
I’m concerned about the debt too, but that alternative is prob worse. But this thread is only about how do they win anyway, rather than personal positions. And from that standpoint I can see how arguing the reckless debt angle could work if done right.
Change we can believe in!!!! Government by blackmail. Nice.
_____________
Jake Tapper is ABC News’ Senior White House Correspondent based in the network’s Washington bureau. He writes about politics and popular culture and covers a range of national stories.
May 02, 2009 3:17 PM
A leading bankruptcy attorney representing hedge funds and money managers told ABC News Saturday that Steve Rattner, the leader of the Obama administration’s Auto Industry Task Force, threatened one of the firms, an investment bank, that if it continued to oppose the administration’s Chrysler bankruptcy plan, the White House would use the White House press corps to destroy its reputation.
__________________
MD, I infer you think the rebuilding plan should consist of non sequiter blog commenting showing the administration has no sympathy for hedge funds…an interesting tactic
MD, I am late responding, but in response to your minimum wage comment– Do you propose that it stays the same while prices go up?? Jobs going overseas? If these greedy bast**ds want to send jobs to foreign lands instead of hiring Americans who need them, then we should boycott their product. Seems to me prices go up no matter what, how bout letting more people keep up?
In the immortal words of Sweet, “Can somebody explain Inflation to me, anybody?”
TB,
Exactly, and I think that tactic will work.
Zeek,
I think wages should be set by the free market, just like prices. The price of a good is set by what a consumer is willing to pay for it and what the seller is willing to sell it for. If the price is too high, then few items are bought, so the price drops. If demand is high, the maker raises the price. It is a beautiful thing to watch the “invisible hand” (Adam Smith) of the free market work its magic—no government intervention needed.
Why should the government set a minimum wage? That just discourages companies from hiring workers if it is set too high. If it is set too low, then it is irrelevant because the company will have to pay more for the labor of the potential employee.
Why not let the invisible hand do its magic in the labor market? Conversely, should we let the government set a “fair” price on goods? What will happen if the price is set too high or too low? How many thousands of bureaucrats would we have to pay to constantly set and reset prices? How ridiculous would that be?
MD, where does it stop? or does it? 50 years ago eggs were a dime a dozen, milk was a half dollar, a new car was 1500, a middle reliever was making 20 grand etc, etc. Somewhere along the line somebody decided that wasnt good enough and wanted to make more money so a price got raised and other prices were raised. Now to keep up with this, wages had to be raised. This process continues to this day where a gallon of milk is 3.30, a new car is 20G plus, a serviceable middle reliever makes 2 mil and the pricetag on a college education is 6 figures which you could basically get the same thing for free at your friendly local library. As far as I know there has not been a shrotage of cows, or hens, or steel, or home building materials. Is the reason pure greed? or something else? tell me, I want to learn
MD,first of all, it would behoove you to watch the tone, Secondly, I think you know me well enough to know that I do not want the gov’t. interfering. I am well acquainted with the law of supply and demand thank you very much. However, as Sweet points out, prices go up every year, and its relation to per capita income and supply and demand is virtually non-existent. Sure, people pay the price because they really have no choice. What are their options,not eating,coming home from work to go fishing for their meat? I realize our society has evolved into a highly material one, and there are many things we could go without, but the cost of living does not adequately represent the common mans’ wages anymore. I would like to hear your take on this if you made $25k instead of $125k or whatever it is you make. I am not criticizing you for being successful,on the contrary, I’m proud of and happy for you. But there has to be someone or something out there that says, “Hey, enough is enough!! This has gotten out of control!!” Common sense is all I’m asking for.
Get religion out of politics and get politics out of religion. There are Christians, Jews, Muslims, Atheists, etc on both sides. Just and unjust actions aren’t tied to religion. If you want to wall paper your cubicle in the Koran or Bible go for it.
Find someone to challenge Rush and not back away two days later. Those people will vote Republican 95% of the time anyway. Newt G. comes to my mind as a good person to rally around.
And keep defense spending as an issue. TB don’t be so sure we aren’t marching towards drastic cuts to the military spending. Almost all ship programs are being looked at for being reduced. We already have one less carrier than we require through a wavier from congress. It costs more to keep many of our ships in operation than it would to build new ones, but acquisition cost get the headlines more that operating and support costs.
Either way republicans will be back (unless a charismatic and wealthy Libertarian comes riding in) once people inevitably tire of the politicians in office.
TK I agree totally with your last paragraph and all the rest makes good sense and I would have them in my plan too. I know things ebb and flow but the amount of time it takes can vary. It seems to be a pretty good consensus of our collective brainpower here at TB that they need to get religion out of politics. I think if they reduce the religious business and tone down the rhetoric about fascism (you really addressed this re:Newt and Rush, but somebody better talk to MD) they will be back in very short order.
PS, I have a feeling the pirate affair was very good news for the shipbuilding industry.
I’m taking that as none of you can explain inflation to me. Fair enough
inflation \in-fla-shen\ n 1 : an act of inflating : the state of being inflated 2 : empty pretentiousness : pomposity 3 : an increase in the volume of money and credit resulting in a continuing rise in the general price level.
Sweetness
Here ya go
Causes of Inflation
There is no one cause that’s universally agreed upon, but at least two theories are generally accepted:
Demand-Pull Inflation – This theory can be summarized as “too much money chasing too few goods”. In other words, if demand is growing faster than supply, prices will increase. This usually occurs in growing economies.
Cost-Push Inflation – When companies’ costs go up, they need to increase prices to maintain their profit margins. Increased costs can include things such as wages, taxes, or increased costs of imports.
Costs of Inflation
Almost everyone thinks inflation is evil, but it isn’t necessarily so. Inflation affects different people in different ways. It also depends on whether inflation is anticipated or unanticipated. If the inflation rate corresponds to what the majority of people are expecting (anticipated inflation), then we can compensate and the cost isn’t high. For example, banks can vary their interest rates and workers can negotiate contracts that include automatic wage hikes as the price level goes up.
Problems arise when there is unanticipated inflation:
Creditors lose and debtors gain if the lender does not anticipate inflation correctly. For those who borrow, this is similar to getting an interest-free loan.
Uncertainty about what will happen next makes corporations and consumers less likely to spend. This hurts economic output in the long run.
People living off a fixed-income, such as retirees, see a decline in their purchasing power and, consequently, their standard of living.
The entire economy must absorb repricing costs (“menu costs”) as price lists, labels, menus and more have to be updated.
If the inflation rate is greater than that of other countries, domestic products become less competitive.
People like to complain about prices going up, but they often ignore the fact that wages should be rising as well. The question shouldn’t be whether inflation is rising, but whether it’s rising at a quicker pace than your wages.
Finally, inflation is a sign that an economy is growing. In some situations, little inflation (or even deflation) can be just as bad as high inflation. The lack of inflation may be an indication that the economy is weakening. As you can see, it’s not so easy to label inflation as either good or bad – it depends on the overall economy as well as your personal situation.
All you ever wanted to know and more about inflation http://www.investopedia.com/university/inflation/inflation1.asp
Just yesterday the front page of our MS Press/Mobile Register had an article on the shipbuilding industry and how they were splitting contracts between Bath Ironworks and NGSS basically to keep them both in business was the way my uneducated mind interpreted it.
Thats some good info TK and answered some of my questions. BR, you didn’t help me at all.
Hey Sweet.
Hey you
I saw a republican candidate for California on Cavuto’s show today. Her name was Meg Whitman. I thought she nailed it on what republicans should become to get back. This was the first I’ve heard of her and was very impressed. She’s the former CEO of Ebay. Ya’ll probably have heard of her.
I believe Meg Whitman and John McCain are buddies. In fact, I thought she might be his VP pick at one time if he was going to choose a woman but we all know how that story ended. Do you know why she left Ebay? Was she fired? Or am I confusing her with someone else from HP that was also a McCain person? I’m sure someone here could set the record straight.
The HP lady, Carly Fiorina got fired and deserved it. I don’t know anything specific about Whitman, but have heard a lot of positive buzz as far as her potential for holding office.
Thanks for the name – I still could not think of it.