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Pomp, circumstance and the economy

As I See It

My son graduated from the University of Southern Mississippi on Aug. 1 with a degree in criminal justice. Job opportunities are scarce, and he is continuing to work two part-time jobs while awaiting word on several employment applications. Many recent college grads are experiencing the same difficulty in finding jobs in their degree field.

What’s going on here? Why isn’t our economy absorbing the new workers clamoring to join the workforce?

I finished college in 1970 and wanted a job with one of the big CPA firms, such as Arthur Andersen. However, the economy was in the tank then and no job offers were forthcoming. In those days, the national CPA firms did all their hiring on college campuses and so one either got an offer upon graduation or not at all.

Failing to get an offer from one of the big guys, I chose to go to school another year, get a master’s degree and hope the economy improved in the meantime. It was a good strategy, however, I was drafted into the Army and had to put my plans on hold for two years while I passed myself off as a soldier. Following my military service, I was fortunate to land a job with Ernst & Young and have always been grateful to them for giving me a shot at the big time.

Now, having been around a long time, I have seen lots of ebbs and flows in the economy. The current situation is nothing more than our free market economy clearing its throat. A major supply and demand adjustment was required and when that process is complete we’ll be back in gear again.

As a nation we became infatuated with technology in the 1990s. We were infatuated with technology for technology’s sake rather than as a tool for increasing productivity. Collapse was inevitable. Investments in technology companies went through the roof. Stock soared higher and higher and more and more capacity was built in the technology industry. We were convinced that technology could fix everything from a broken heart to the crack of dawn.

Don’t get me wrong. Technology is a good thing. It speeds up everything it touches. From medical procedures to engineering, everything moves more efficiently with the aid of technology. However, our “irrational exuberance” as Dr. Greenspan described it pushed technology-producing capacity over the top. Now we have to wait for the economy to absorb that capacity, and integrate the applications of the new technologies into profitable endeavors.

In addition to problems on the job scene, governments have been mightily impacted by this economic correction. According to news reports from around the country, just about every state is in deep financial trouble. Their problems are more the result of our political process than the economy per se.

There is tremendous pressure on elected officials at all levels of government to spend, spend, spend. Budgets are prepared based on assumptions about tax revenue collections for the coming year. Since our state is required to balance the budget on paper each year, the legislature merely manipulates the revenue projection to cover the budgeted expenses.

When tax projections are not met, such as has happened over the last three or so years, there is much wailing and gnashing of teeth. Our legislators have succumbed to the temptation to raid special funds to cover their unwillingness to face up to the declining economy. Thus the problem is magnified from years of accumulated budget shortfalls. This problem will not be fixed easily. We are in for a lot of fiscal pain and a tax increase to get the books in balance.

What does one do while all this is playing out? There is no quick fix. Periodic corrections are absolutely certain with any free market economy. Once supply and demand gets equalized we’ll be off to the races again. The choice would be some kind of managed economy such as the Soviets attempted during the communist era. With the utter failure and ultimate collapse of their system I believe it prudent to stick with ours, recession and all.

In the meantime, our youngsters looking for jobs are going to have to hang on awhile longer. Keep waiting those tables and have faith that better times are ahead. If my guess is right, those better times are not far away.

Thought for the Moment — One may go a long way after one is tired. — French proverb

Joe D. Jones, CPA, is publisher of the Mississippi Business Journal. Contact him at cpajones@msbusiness.com.


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