FAIRBANKS — As I watched the last two weeks of conventions, I was struck that not since the 1980 presidential race between incumbent Jimmy Carter and challenger Ronald Reagan has there been such a clear difference between presidential candidates, the two political parties and their views of economics.
If we believe the pundits and polls, our country is evenly polarized with the two candidates running head to head; each having approximately 48 percent of the projected vote. That leaves the election in the hands of only 1 percent to 4 percent of still “undecided” (e.g. disengaged) population who do not have a clue about what is going on and what is at stake economically.
Then again, a general lack of understanding economics by the vast majority of Americans should not come as a surprise. In 2010-11 the American Council of Trustees and Alumni looked at a list of “top” 100 schools, and at that time only the University of Alaska Fairbanks and The United State Military Academy at West Point required economics as part of the general academic core curriculum. This year, ACTA expanded its survey to the top 1,000 schools and only 36 of them have an econ requirement. That still puts UAF in good company.
A business person will understand the merit and wisdom of Albert Einstein’s quote, “Insanity is doing the same thing over and over again and expecting different results.”
If your business is doing poorly, then you change what you are doing. While there was a lot of insanity floating through the conventions, and the political broadcasters commenting upon them, I think the greatest insanity unveiled for the world to see was the debt clock predominantly posted at the Republican convention.
According to www.usdebtclock.org, we as a nation have allowed and accepted the following 2012 financial facts — accurate as of last Thursday:
• Federal Revenue: $2.4 trillion
• Federal Spending: $3.6 trillion
• Federal Budget Deficit: $1.2 trillion
• Cumulative national debt: $16 trillion
• Unfunded liabilities: $120 trillion
• Interest payments: $3.87 trillion
• Federal budget cuts in 10 years ($21 billion in 2012): $917 billion
These numbers are so huge that most Americans cannot grasp their significance. So let’s lop off seven zeros and pretend this is a small business’ financial performance:
• Annual business revenue: $240,000
• Annual business expense: $360,000
• New debt on the credit card: $120,000
• Outstanding balance on the credit card: $1.6 million
• Accounts Payable: $120 million
• Interest paid (or due): $387,000
• Total budget cuts this year: $2,100
If this was the financial performance of your business, would you make any changes? You might think about writing a business plan and create a budget. The U.S. Senate has not passed a budget for our federal government in the last four years and their plan, the national debt ceiling, keeps changing upward.
As responsible business people who are the economic engine of our county, it is absolutely vital that you focus your vote on the candidates, regardless of party affiliation, that you believe will take seriously their fiduciary responsibility and stop our collective economic suicide.
We soon will no longer be able to continue spending borrowed dollars over and over again and expect a good outcome.
Go online and check out the U.S. debt clock and see how much it has changed in just the last three days.
Charlie Dexter is a professor of applied business emeritus at the University of Alaska Fairbanks Community and Technical College. He can be reached at firstname.lastname@example.org. This column is provided as a public service of the UAF Applied Business Department. Copies of this column can be found at www.AlaskaLS.com.