With all the current emphasis on the housing slump as the root cause of the possible recession we’re in, I keep looking back at posts written on Katrina and it’s eventual cause of a national economic downturn. After reviewing a handful of posts (I link to them at the bottom) my thinking leans backs towards the failure of our government to fully absorb the long term effects or that devastation and pin their hopes on the housing market bubble. It could be, as we learn about Alan Greenspan’s willingness to overlook the risky mortgage market, that our leaders not only failed to act, as is obvious today, but are complicit in the current economic struggles by their unwillingness to make hard decision back then (repealing tax cuts, raising a gas tax, forcing higher fuel economy on vehicles, and starting an aggressive energy plan moving away from oil (if not to increase efficiency and better refinery) to focus on native renewable sources. It’s the cost of gas that’s hurting us the most in tandem with losing the robust economy of a major metropolitan area whose reconstruction was and is greatly ignored.

The current hard decision are what? $600 tax breaks, tax write-offs for new business purchases? Come on!

1. The government needs to spend serious money on reconstruction in the gulf region, it can’t be left to volunteers and charitable organizations. It needs to raise this money either by repealing tax breaks or taxing non-renewable energy distribution while providing the oil/gas/energy companies serious tax incentives on their investments in refinement (short term) and the development of new energy sources (long term). NOTE: Many utility companies offer their customers the option to purchase energy from renewable sources, call yours to find out. It costs more, but it costs less than a recession.

2. Lowering the interest rates helps the banks for sure, which then helps companies spend more (but also borrow more), which ideally creates more jobs. But this process takes time and isn’t a quick fix, it reads more like a vehicle for companies to borrow more money to weather the times rather than build up the economy. What we need then is access to this type of capital for all sizes of businesses, even sole proprietorships which most creative professionals are. Let’s have a one year window where businesses can borrow between 50K and 100K locked in at a point point UNDER the current interest rate, call it a bridge loan. It costs more for the government, but it costs less than a recession.

3. Create an internal, national, peace corps. Offer people the same type of incentives we do for them to enter the military (housing, medical benefits, money for college), but focus their duties on economic reconstruction, civic duties, and community building. We need to focus on our own people as seriously as we focus on international relations. Have this new peace corps be part of the Department of the Interior in tandem with the Army and National Guard. This will inject money right into the areas where capital is needed most.

As creative professionals we’re trained, both in schools in our ongoing professional lives, to find innovative solutions, deal with rough economic roller-coasters, and be downright scrappy in our ways. We’re the early adopters, pushing the envelope. The creative pros drive a huge segment of the economy and are in some ways the weather vane (or canary in the coal mine) for new shifts in economics; we see it before the rest of the economy does, we deal with it before the rest do. With the impending recession we need to keep at it, stay innovative, stay scrappy, but also see it as an opportunity to drive a new path, uncover a direction, and to pull the economy along with us as best we can.

Here are some links to posts on Katrina’s effect on the Economy:

Katrina Day 2

Katrina and the probability of recession, August 31, 2005

Recession/Depression