Economics is a simple discipline. It's people who EFF it up.
There is a school of thought that says by letting the value of the dollar slip again and again, we keep the price of our goods down, increasing foreign trade. You don't want a trade deficits, right?
Well, who the hell cares? Markets come and markets go. Exporting goods isn't the only means of creating revenue in this country. It is only when you form partnerships between chosen businesses and the government (subsidized pricing, protectionism, dollar devaluation) that everything goes to hell. The decline of the dollar helps only dishonest people in the larger scheme of things.
(Reminder: I am a free market conservative. I am not ranting about the 1% here. I don't begrudge anyone their money, honestly earned. This is about crony capitalism and economic ignorance.)
What people don't get is that foreign trade is not all we do as an economic power. We do more business inside our own borders than anywhere else. And the value of goods argument is a phony argument. There are trade-offs to having a strong dollar and a week one. Better to let markets rise and fall as they naturally would. A strong dollar is a strong dollar everywhere, including inside the United States. If deficits run too high, countries that sell us things will find themselves with full warehouses and have to adjust their prices or reduce their exports to the US. It all works itself out on its own. But when you have government patrons using phony arguments to prop up exports, the results are not as they are advertised. The long-term damage to the dollar will kill many times more jobs and shrink far more incomes than trending trade (im)balances.
Same Ignorance, Different Scale
There is a similar scam being touted by local politicians throughout the country. It has been a rising trend for years, but in some places it is becoming a real nightmare.
This story takes place in a once-sleepy Spotsylvnia County. Located in Virginia, near Fredericksburg, it is a place steeped in Civil War history. For a long time, folks who didn't mind a 60 - 90 minute commute from Washington DC could find a nice place to put down roots at a price far lower than what they would pay nearer the city.
During the housing boom, pre-2008, the whole area including neighboring counties exploded with no planning at all. As some counties began to see the writing on the wall and get a handle on their growth, Spotsy, as it is called by locals, continued on a reckless trajectory. The Board of Supervisors, peopled by developers and builders and/or friends of developers and builders, has not met a residential or real project they didn't like in years. The exceptions, of course, are projects that might park a Walmart across the street form places like Fawn Lake and Bloomsbury Farm Estates. But to plop more retail and apartment and houses anywhere else? No problem. This has all been done with no consideration for the exponentially expanding traffic on the Interstate 95 corridor. In fact, it is often done while pretending not to realize the problem they are intentionally contributing to.
Case in Point…
In recent years, it would be nothing unusual to spend two to two and a half hours making a commute from exit 166 to exit 126 on I-95. 3 hours is not unheard of. 4 hours on a summer Friday is common. This to travel 40 miles on a major freeway. All of this is due to rampant development without a plan to provide the required infrastructure. In a move demonstrating obtuseness on a scale few can imagine, this board of supervisors approved the construction of a raceway. Old Dominion Raceway is owned by the same (get this) real estate developer who had his raceway kicked out of Manassas, Virginia. After being laughed out of two other proposed locations, he found a friend on the Spotsylvania county board. Arguments were presented by a few concerned citizens against the raceway, with traffic being a major consideration, and by dozens of out-of-town members of the raceway industry telling touching stories of a boy and his go-cart to defend the raceway. The level of misdirection on the part of proponents was also breath-taking. One interesting exchange went something like this:
Board Member: (to the raceway lawyer) How can we be sure you won't contribute to the traffic problems on I-95.
Lawyer: As you can see on our application, we won't start racing until 7:00PM. The rush hour will be clear by that time.
Board Member nods.
Here's the obtuse part. Traffic is still quite healthy at 7:00 PM. To get to the raceway BEFORE a weeknight event, one would have to leave the DC area from the north and Chesterfield or Williamsburg areas from the south at 4:30 or 5:00, and incrementally later as you get closer to the target. A quiz for the minimally aware: What time does rush hour traffic start? Just this raceway will add thousands of cars to already packed roads and I-95. It was amazing to watch the lawyer and board members pretend not to know this. They all do, of course. But the commuters on I-95, the people who live in Thornburg, at exit 118 (new home of the raceway), and the general population on Spotsy don't grease their elections, pay their honoraria or promise them jobs for after they leave the board.
And the beat goes on?
In late May of 2014, this same board of self-serving misfits voted in thousands of housing units and tens of thousands of feet of retail space in an area near exit 126. This at a time when we are already seeing soaped up windows of closed retail stores. They have been approving developments, left and right, for thousands of units for the last two years.
Here's what the board understands completely. You don't serve your existing citizenry by allowing wild, unplanned development, especially in already congested areas. You only hurt home values and cause more congestion. It is sold as "progress". But what it is - is crony capitalism. And Boss Hogg runs the show.
The real way you bring up standards and home values and income and quality of life in a community is by setting very high standards for development, especially in congested areas. And in some areas, stop building altogether. By just allowing unchecked development to run amok, you do to housing what the Fed does to the dollar. You devalue it. And for their pain, the citizens are rewarded with more traffic.
Don't be an ass for these people, locally or nationally.
I called this a cautionary tale. This isn't just happening in Spotsy. In Spotsy, real estate development is not the only business in town and foreign trade isn't the only economic mechanism at work in America. And it isn't just real estate or the dollar being destroyed. Look at every single case of "government and the business community coming together for the common good" and you'll find people trying to suspend the laws of economics, which are as real as gravity, and making a mess of our economy FOR THEIR OWN GAIN. Whether it's sugar subsidies, Obamacare, green energy "initiatives",… the rule of thumb will ALWAYS be a harder life for the people who it is supposed to help and money for the winners picked by the government. And it is happening everywhere.
Sadly, the people of Spotsylvania County don't read the paper. They already hate the existing traffic pattern. But when all these plans come into being, they will be shocked. "How can this happen?", they'll ask. But it won't matter. When the county board was planning, intentionally, to make their lives harder, the citizens were blissfully ignorant. Don't let this happen to you. Read your local paper, watch local news and GO TO COUNTY AND MUNICIPAL MEETINGS. When the citizens are looking out for what is good for them, less of this stuff happens. It wouldn't hurt to keep an eye on the lunatics inside the beltway while you're at it.