How to Fix the Economy
How to Fix the Economy
While our nation's economic recovery is progressing favorably, most families still haven't seen a rise in income.The gap between the rich and poor is the widest it has ever been, and the nation's poorest citizens are struggling to access the benefits intended to save them from starvation and homelessness.As consumers, voters, business owners, and politicians, we can stimulate economic growth by supporting workers, our local economies, and our nation's children.
Making an Individual Impact
Support small local businesses.As much as you can, buy locally produced, locally sourced products and services from small businesses in your community. Buy clothing made in the United States and sold by smaller stores in your town. Instead of ordering books online, buy from a local bookstore. Dine out at a local mom-and-pop, instead of at a fast food chain.
- Small businesses are standalone companies with fewer than 99 employees that are headquartered in the same state they operate within.
- Small businesses tend to hire within the community, and they spend their supply budget locally, more so than large chains.
- Money spent within a community tends to circulate more than money spent at large companies, meaning that it benefits more people and stimulates greater growth.
- Avoid large businesses. National and international chains employ a lot of people, but they actually depress economic growth. Money spent at large chains tends to circulate longer within the company rather than returning to the economy.
Locate your biggest expenses where they can make a difference.Where does the majority of your money go? For most U.S. citizens, the answer is either "rent" or "mortgage payments." Rent from a landlord who lives in your town and manages his or her own properties. If you're about to buy a house, get your mortgage from a local bank, one that doesn't sell its loans to secondary markets.
- Groceries are another major expense. Do your grocery shopping at the local corner store, coop, or farmer's market instead of a major chain or an online grocery service.
- The rise in online shopping means you may have less control than ever over where your money goes. Before you buy online, ask yourself if you can find the same goods at a nearby store. If you can't, try to find online vendors who sell directly from their own website and are located within your state.
Vote for economic growth.In national and state elections, get to know the stance of each candidate on issues such as minimum wage, small business support, education, and social welfare. While different political parties have various approaches to fixing the economy, support for a raise in the minimum wage, for instance, is bipartisan.
- Register to vote.
- When you find a candidate you support, do more than vote. Volunteer for your candidate's campaign, or volunteer to work the polls.
Stimulating Economic Growth as a Politician
Invest in small businesses.To support small businesses, cut taxes for small businesses seeking to grow. Offer loans for startups. Incentivize capital investment in small businesses. Support successful government programs such as the Small Business Investment Company (SBIC), which invests in small businesses and supports impact investments in communities that lack venture capital investors.
Invest in education.Politicians operating at a state and national level can help the economy by promoting an across-the-board investment in education. The economy of states with better-educated workers benefit from the higher median wages.Moreover, access to quality education in childhood is one of the primary factors in adult success.
- Fund early childhood education. Federal investment in effective pre-school programs can produce substantial economic benefits.Quality preschool improves lifetime educational and financial achievements for the children involved. Publically funded preschool could increase the future economic contributions of all children involved.
- Support measures to lower the cost of college. While it may appear that youth are over educated, the market for college-educated employees is growing, not shrinking.However, today's college-educated youth are saddled with debt that inhibits their spending and entrepreneurial activity.
- Provide training for laborers. High-skilled laborers are a boon to the economy. Support federal and state funding for training programs for high-demand jobs, such as nurse practitioners. Create tax incentives for companies to provide job training to veterans, high school graduates, and the unemployed.
Protect against the ravages of poverty.Higher rates of poverty lead to lower rates of economic growth.Poverty leads to high rates of incarceration and poor health. It limits the ability of individual citizens to study the skills that would allow them to contribute to the economy.
- Expand SNAP. SNAP is the Supplemental Nutrition Assistance Program, formerly known as the Food Stamps Project.It provides low-income families with nutritional assistance. For each dollar the government spends on food stamps, the economy benefits .84.However, only 75 percent of people eligible for SNAP apply.
- To increase the economic benefits of SNAP, advocate for greater outreach to eligible households. Advocate for a program to mail applications to the unemployed.
- Support the expansion of Medicaid. States that expand Medicaid under the Affordable Care Act see budget savings and, in many cases, increased revenue.
- Raise the minimum wage. More than 1 in 4 workers would benefit from an increase of the minimum wage, which would lower debt, increase spending, and benefit local businesses.
- Mandate the refinancing of private mortgages. The 11 million U.S. citizens struggling under the burdens of negative mortgages, in which the money owed is worth more than the house itself, are trapped in a lose-lose situation that has an enormous negative effect on the economy.
- Allowing these homeowners to refinance would allow them to forego desperate measures that depress the economy, such as foregoing necessary purchases or running up credit card debt.
Contributing as a Business Owner
Keep it local.Avoid purchasing or producing overseas. Hire locals, and stay headquartered in the same area as your business. Not only will this benefit the economy, it may be advantageous for your business. Purchasing locally solidifies your company's position in the community while producing locally not only creates local jobs (and therefore customers), it can also save your company money in the long run.
- Use local vendors for your company's goods and services. You will contribute to your local economy, and you will benefit your personal brand by building name recognition and loyalty in your region.
- Produce goods at home. While the immediate benefits of lower costs and fewer regulations may make it seem financially wiser to locate your factory abroad, the costs of doing so may ultimately outweigh the gains.
- Costly factors include underemployed, unskilled laborers (and a resulting drop in efficiency and productivity), the costs of relocation, and the dramatic changes to wages to which developing economies are prone.
Raise wages.As a percent of the U.S. economy, wages are at an all-time low.As your business grows, include your employees in the growth. You'll see greater productivity and greater worker loyalty.
Cut costs.Treating your workers well and supporting other local businesses is excellent for your company's long-term productivity and brand, but can be expensive in the short term. To remedy this, cut costs and increase efficiency. Get bids and negotiate for any expenses you plan to take on. Ask your landlord to renegotiate your office lease.
- Telecommute. Save money on office space and supplies by allowing your workers to telecommute all or part of the time. Productivity increases an average of 10-20% when workers work from home, and your business will save thousands of dollars per employee each year.
- If telecommuting leaves you with unused office space, sublet it.
QuestionDoes this only apply to the USA? Can it apply to Canada?Top AnswererWhile this article was written from an American perspective, most of its suggestions can be applied to almost any national, regional or local economy.Thanks!
QuestionWhy should the minimum wage be raised?wikiHow ContributorCommunity AnswerMinimum wage is a key element in making sure people are paid fairly for the work they do. When minimum wage is raised, average national income is increased, which is good for the country in general, and good for the economy. When people are too poor to spend money outside of the basic necessities, the economy suffers.Thanks!
Video: How to Fix the Economy: Scott Smith at TEDxCU
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