By Alan Caruba
One’s outlook on life depends heavily on whether you are by nature an optimist or a pessimist. That is especially true of economists of whom Harry Truman once said he wanted a one-armed one to advise him because the ones he talked to were forever saying, “On one hand and on the other”, generally from the same set of statistics!
Having plied the precarious trade of public relations counselor for much of my misspent life, I can tell you that there is no such thing as a client on which one can plan long-term. The vagaries of the economy are such that they often disappear the moment the economy begins to go south on them. In fairness, they often have no choice. Others fail to see that “showing the flag” in good times and bad is an essential part of doing business in America.
What those unschooled in business management often do not see is the wise decision to reduce outlets that no longer generate a reasonable profit margin in favor of opening others that will. The population shifts and with it the buying habits of people as they move around. Similarly new products are introduced and gain a foothold or are abandoned when they don’t.
For example, these days Eddie Bauer is closing more stores, having already shuttered 27 shops in the first quarter, but is planning to open two others by the end of the year. The Gap is closing 85 stores, in addition to others owned under the names of Old Navy and Banana Republic. The company will tilt toward its Gap brand. Another clothing chain, Ann Taylor will close 117 stores nationwide. There are any number of such chains that are restructuring in this fashion. The high-end seller of gadgetry, Sharper Image, has filed for bankruptcy protection and announced the closing of 90 of its 184 stores.
A casual glance at such news would suggest a nation whose economy is in serious trouble, but as Larry Kudlow, an economist and commentator, pointed out in May, “Corporate profits are outperforming all expectations. With three-quarters of the S&P 500 companies reporting, profits outside the banking system have increased ten percent over a year ago.” Unemployment remains at remarkably low levels nationwide.
The point being that, depending on your outlook, optimist or pessimist, there is ample news available to reinforce your evaluation of the economy, but a free-market economy is always subject to spurts of growth followed by slowdowns. This cycle is the only predictable thing despite mountains of statistical data. The U.S. economy is surprisingly, often astonishingly, able to adjust and adapt, even if some pain is involved.
Much of the pain consumers are feeling at the gas pump is the result of extraordinarily bad decisions regarding America’s energy needs going back to the days of the Carter administration and forward through the last three decades of environmentalism that continues to stymie any efforts to provide coal-fired or nuclear plants to provide electricity, and the thwarting of any ability to access our extensive oil and natural gas reserves in ANWR or off our coasts on the continental shelf.
The Congressional mandate for the use of ethanol is a classic example of what happens when politicians interfere with business decisions and they do it all the time!
Voters need to focus their attention on the platforms and promises of the two candidates for president. It’s worth noting that John McCain has begun to tilt toward favoring domestic oil exploration and production while Barack Obama seeks to impose an industry-killing windfall tax on the profits of oil companies.
The nation’s future economy literally hinges on your vote because, without affordable energy, America ceases to be globally competitive.
Optimists will vote Republican. Pessimists will vote Democrat.