Scene: Jordan and Sandy, a former business colleague, are having coffee.  The discussion begins Entry #121,.  This segment is a continuation of Jordan’s description to Sandy of a conversation with the Speaker of the House and the Senate Majority Leader, which begins Entry #123

John Boy:  “Your point about companies replacing debt with stock…equity…is something I never really thought about.”

occupations_lawyerMackey:  “Me either.  Wonder what would happen if the US Government issued stock instead of debt?”

Jordan:  “Interesting questions but obviously lots of barriers to make it happen.”

John Boy:  “And highly unlikely…no impossible…given the attitude of many Republicans.

Mackey:  “John Boy, I agree the chance of passage is slim to none.  But we should bring it up for discussion.  Doing so would at least make people think.”

Jordan:  “Think?  Ideologues actually think?  Surely you jest.”

man_with_speechJohn Boy:  “Alright you guys let’s get back to the issue at hand – debt as a percent of GDP.  How ‘bout looking at the 230th Century?”

Jordan:  “OK.  Debt jumps in the Civil War…”

Mackey:  “Excuse me, the War of Northern Aggression.”

John Boy:  “Mackey, put that idea to rest.  The war was more than 150 years ago.  And which side wanted to secede?”

US Debt Percent GDPJordan:  “Children, no bickering.  Debt as percent of GDP (gross domestic product) jumps during the Civil War, then declines, jumps again in WWI, then declines until the Great Depression.”

Mackey:  “Yes, and the crazy public elects that socialist, Mr. ‘spend-at-all-costs’ himself, Franklin Delano Roosevelt.”

John Boy:  “Right.  Just look at how much debt jumped under FDR.  Mackey’s right.  What a socialist!”

fdr_~FdrJordan:  “And just what happened to the economy?”

Mackey:  “The economy recovered…sort of.”

Jordan:  “Sort of?”

Mackey:  “Sort of.  The country didn’t need all those socialist program.  The country could have saved its way out of the Depression.”

John Boy:  “You’re right again, Mackey.”

Jordan:  “And just what do you think drives the economy?”

John Boy:  “Tax cuts.  Incentives to invest.”

TurtleneckJordan:  “Here’s a simple question.  For someone out of work…through no fault of their own…what good is a tax cut?”

Mackey:  “An incentive to work.  Go find a job.”

Jordan:  “And just who is going to hire that unemployed worker?”

John Boy:  “Create your own job.”

Jordan:  “Let’s put politics aside and think this through.”

(John Boy and Mackey both sigh.)

Jordan:  “You own a business.  Why would you hire someone?  Just because the person needs a job?”

Mackey:  “Of course not.  Jordan, where do you come up with these stupid questions?”

John Boy:  “Mackey, I think we’re about ready to have another ‘ah ha’ moment.”

Mackey:  “Whadda mean?”

John Boy:  “As much as I hate to admit it, Jordan’s right.  Why would you hire someone?”

Mackey:  “Because you were busy and needed more help.”

John Boy:  “You got the right answer – because you need more help.”

Mackey:  “Simple isn’t it.  People want to buy your product, eat at your restaurant, whatever.  You need help.  What’s wrong with you guys?”

John Boy:  “And where did the tax breaks fit into that decision?”

Mackey:  “The tax breaks didn’t.  Oops.  What made the difference was demand.”

Jordan:  “Waiter, may we have some more snacks and another round?  Time to celebrate.”

Mackey:  “What are we celebrating?”

mr_know-it-allJohn Boy:  “Our enlightenment…at least enlightenment according to Jordan.  OK Mr. Know-It-All, what’s next?”

Jordan:  “Look, all I’m trying to do is present some basic economic principles.  Not left, not right, just basic economics.”

Mackey:  “So you’re claiming…”

Jordan:  “I’m not claiming anything.  I’m just stating.”

Mackey:  “OK, since you’re buying…you’re stating.  And you’re stating the only real way out of a recession is to stimulate demand.”

Jordan:  “Yes, that’s exactly what I am stating.  Talk about all the other theories you want.  When you do, you have to go back to one basic question?  Is a company going to hire another employee…or even retain existing employees…if enough people are not buying the company’s products?”

John Boy:  “Why do you make economics so simple?”

Jordan:  “The fundamentals of economics are simple…but not always intuitive.”

John Boy:  “Next you are going to tell Mackey and me that if the private sector is not hiring people…or laying off people…then the government needs to stimulate the economy.”

Jordan:  “You’re on a roll.  I told you most of economics was simple.”

OppositeMackey:  “Wait, you’re saying the government should do the exact opposite of what a household should do?  I mean, rather than cut back on spending when times are tough like real people do, the government should spend more?”

Jordan:  “See how easy this lesson is?”

John Boy:  “I don’t believe it.  If it’s bad for business it’s bad for government.”

Jordan:  “I’m going to show you why business benefits and makes more money by supporting a Federal deficit when in a recession.”

(To be continued)