Monday, March 29, 2010

A Prediction Made in 2000 That Hasn't Come True Yet

I started reading the third edition of Barron's Marketing, by Richard Sandhusen, written in 2000 the other day.

Even written in 2000, I figured this could be a good little way to keep refreshed on marketing. It's written more so like an introductory class text than what I was expecting (not that there's anything wrong with that) but one passage really stood out to me today.

The italics were placed by me for emphasis. Taken from page 85, under the heading "Business Cycles Affect Buying Patterns:"

"Historically, business cycles have followed a fairly predictable pattern of prosperity, recession, depression, and recovery. However, by the late 1990s, after a decade of growth, some economists were beginning to argue that it might be possible to prevent future depressions and maintain an economic health indefinitely through a combination of sophisticated fiscal and monetary policies, enlightened global market trade programs, free-enterprise competition and deregulation, and technological revolutions in such areas as transportation and electronic communications."

Wow. Okay, so I know we aren't in a depression. The last depression was the Great Depression: May 1937 to June 1938, where real GDP declined by 18.2 percent. But if Sandhusen was correct, then instead of going straight into recovery when this recession if over, are we going to go into a depression? Are things going to get worse?

What happened to those economists and their predictions about being able to maintain an economic health indefinitely? If the United States really is standing on the brink of becoming a somewhat of asocialist nation (and it seems like we might up like that), then what does that mean for our economy?

From the Wise Geek site: "Some modern countries that are called socialist really refer to a few aspects of the country. For instance, most government-controlled health care is labeled “social medicine.” There are many countries with such health care plans, which are paid for usually through higher taxation of the people. Such countries don’t necessarily eliminate or dismantle class structure, or advocate rebellion toward the ruling class."

I can see the United States being a case of rebellion, since the health care bill is being crammed down our collective throats. I think that no matter how you look at it, socialism, like this health care situation, is going to split the masses straight down the middle as a very black and white kind of issue. Only time will tell if it will be good or not. All I know is this: I'm still not clear on what I think about it all.

2 comments:

  1. "it might be possible to prevent future depressions and maintain an economic health indefinitely through a combination of sophisticated fiscal and monetary policies,"

    Yeah, policies that nobody is smart enough to figure out yet...lol.

    People just don't get it, especially people that are paid to know such things. Economics is a constant ebb and flow. When you enact policy to try and control future outcomes, the human element intervenes and provides a completely different result.

    I believe the country is severely divided on the health care issue. I'm somewhere in the middle (health care reform is a good idea, but not 'this' type of reform) I suppose, but could definitely see this type of socialism creeping its way into other sectors like the automobile market (wait...), or the banking and mortgage industry (oh geez), or maybe even investments and securities (I give up).

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  2. Man, this marketing book is becoming more and more relevant to today, as I read it. Page 98: "A monopoly exists when a product or service is provided by the government [the author's example was the U.S. Postal Service...mine would be health care reform], a private regulated monopoly (a regulated utility) or a private monopoly (DeBeer's diamonds)...Up to a point, revenues [under a monopoly] would increase as prices were raised...too high a price could attract unwanted competition or bring on changes of price gouging."

    I'm sure you've seen the email that highlights certain questionable aspects of the health care bill (the government would have access to your bank account). According to http://healthcaredeciphered.com/, health care by the government would either be a monopoly or an oliogopoly: "a few large sellers of similar products dominate the market, with many smaller sellers following their lead."

    It's pretty amazing to me that the more I read this marketing book, the more educated I'm becoming about economics and health care. It's an odd pairing of things to learn. I hope more people are learning about this. We'll have to educate ourselves to get ourselves out of this mess.

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