UDM economics professors see no quick recovery for nation’s troubles – The Varsity News – University of Detroit Mercy.
Robust growth may not be on the immediate horizon in the U.S., according to three UDM economics professors.
“We are doing no better than showing very slow growth,” said UDM Prof. Joseph Weglarz. “Many (economists) are predicting more of the same for the next couple of years.”
Prof. Bruce Brorby agrees.
“The current problem with the economy is that it is not growing fast enough,” he said. “It has been growing for the past year but at a slow rate of approximately 2 percent.”
How did the country reach this point?
“Over the past half-decade, our economy has had to weather or absorb an unrestrained legislative spending agenda endorsed by both major political parties that have racked up debt of around $14 trillion and counting,” Weglarz said.
Brorby said businesses are not ready to risk their capital.
“The traditional measures of ‘consumer confidence’ are low right now,” Brorby said. He said that it is difficult to determine how much of an effect that is having on consumer spending as retail sales and auto sales are increasing every year.
Both professors underscored the effect international problems have on domestic life.
“There is an extremely volatile securities market fueled by speculation and international crises, especially the most recent revelations of Greek and Italian debt,” Weglarz said.
“The debt crisis in Europe has many in the financial community, including banks, worried about what would happen in the case of default by one or more countries,” Brorby said. “This probably leads to uncertainty and some reduction in lending.”
From here, the question comes: How does the country fix this?
“There is no simplistic answer to ‘what needs to be done?’ or ‘what has not been done?” said Prof. Raphael Shen, who is a Jesuit priest.
He said people can question what problems have led the country to this point, including the percentage of single-parent families, causes of school-dropout rates and incidents of violent crimes while contrasting those with previous American generations.
Weglarz said the debt must be addressed.
“Real cuts will have to be made to various government programs that have expanded in scope and reach,” he said. He cited a study done by economist Gary Shilling that pointed out that 52.6 percent of all Americans receive some form of income from government.
Weglarz said people must remember that the private sector creates jobs.
With a divided Congress, Weglarz sees something that would bring certainty to businesses.
“A revised and simplified tax code and regulatory environment that eliminates dead-weight costs would go a long way in allowing companies and corporations to plan and act wisely,” he said.
The three faculty members do not see politicians helping the economy.
“Since the lifeblood of each politician is the vote, each politician in a representative democracy like the United States listens most intently to organized special-interest groups,” Weglarz said. He said that politicians do this because they provide the politicians with campaign funds, vocal supporters and lobbying power in Washington and beyond.
Shen thinks it is more complicated than that.
“Self-interest has metamorphosed to extreme greed on nearly all fronts,” Shen said. He said that it is also apparent in CEOs and organized labor.
As a result, he sees the entrepreneurial spirit declining.
“The spirit, the drive and the readiness for self-sacrifice that once epitomized the forefathers’ attributes have been on the wane for decades,” Shen said.
As these problems come to the forefront, people begin to ask whether things will get better or not.
“The energy that once empowered the pioneers to propel this nation upward needs restoring,” Shen said. “Unless and until there is a renewal of spirit within, a rebirth of the bygone glory would be a page in the future history.”
Weglarz is more optimistic on the subject.
“If economic history is any indicator, despite various voices in many quarters that have proclaimed the ‘end of America,’ our economy will re-constitute itself and re-invent itself as it has done in the past,” Weglarz said. “The stagflation of the late 1970s provides us with a clear example of an American economy that finally flexed its muscles after a lengthy economic downturn by stimulating the supply side.”