Economic Paradoxes

What is interesting about economic downturns is that human emotion contributes to the problems.

In other words, here are some interesting paradoxes:

As the economy worsens, the savings rate increases, causing the recession to worsen.

As the economy worsens, the tax rate goes up, causing the recession to worsen.

Government handouts can stabilize prices, but may enable low productivity.

Capitalistic greed often destabilizes prices. It often promotes protectionism, restricting wealth creation.

Note to President Obama:

To maximize the benefits of the stimulus plan:

1. Higher prices are the recipe for a larger crop.
a. But unstable pricing causes unrealistic expectations and/or fear.

2. Energy and work overcome entropy.

3. Protectionism destroys wealth. Teamwork increases wealth.

I'm glad the economic stimulus plan has been approved and signed. It appears to me that it will help, even though the long-term benefits will be suspect and slow in coming.

The paradoxes of socialistic enabling and capitalistic greed are still with us, but maybe we'll learn from this experience and be better off for it.