OK kids, put your thinking caps on. I just spent an hour on the phone with a journalist for a household outlet, who is trying to give the “rest of the story” regarding the so-called fiscal cliff. He is saying that the conventional treatment of this story is, “Oh my gosh, if the government cuts spending at the end of the year, it will be so awful because all those people will get laid off and then they won’t have as much to spend.” So he wanted me to help him understand the offsetting benefits of government spending cuts.
We spent a lot of time walking through the economics of it, with me explaining the various mechanisms by which lower government spending could lead (eventually at least) to a stronger economy and higher standard of living. I told him upfront that first I wanted to make sure he himself believed in the story, and then we could worry about how to make it compelling to the masses.
One argument I used (in case you’re curious) went like this: “Look, we can all agree that it would be inefficient and make us poorer, if the government literally spent 100% of GDP every year, right? That would clearly be ‘too much’ government spending, on just about anybody’s criteria. So if we somehow found ourselves in that predicament, then it would have to be true that cutting government spending would be a good thing. Even though we could look at the businesses who saw their sales plummet, and the employees getting laid off, it would have to be the case that other businesses and individuals were benefiting, at least eventually. If we couldn’t point to such winners–to more than compensate for the short-run losers–then it must not be the case that 100% government control of the economy is a bad thing, after all.”
OK, so I think most of my readers will agree that this is a sweet argument. However, we can also agree that the average reader of a financial news story will roll his eyes and move on to “the real world.”
So here’s what the journalist wants: He wants to be able to actually interview and quote specific business owners who say, “Oh heck yeah, bring the fiscal cliff on! My revenues would go up 30% in the first quarter if the government cut spending 5%.”
See why that would really seal the deal for the average Joe reading the article? So please give me your ideas on this kind of thing. Off the top of my head, I only came up with three:
==> People in the health care sector who lie outside the official nexus. For example, chiropractors and more “out there” alternative medicine people, might see their business go way up if the government slashes its support for pain pills and other really expensive treatments. So can people give specifics?
==> Operators of vocational schools. If the government totally eliminated all federal support for higher education, then there would be a massive outflow of potential students from conventional 4-year colleges. Many of them might apply to trade schools to learn how to be a mechanic or whatever. Specifics?
==> Operators of small firms in Silicon Valley. If Halliburton, the Rand Corporation, etc. are laying off workers, there will be plenty of highly-skilled individuals who are now willing to work for a lot less. Specifics?
==> Other major categories of immediate “winners” you can think of?