Local view: Incentives, not entitlements, will restore our economy

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If indeed the U.S. is the world’s richest nation and has the largest economy, why are we borrowing money? China is a huge stakeholder in America. We should not idly flatter ourselves that other nations seek us out for our stability. Are we really that stable? Why then are we printing more money?

It is precisely such importune actions as borrowing and printing money that imperils our economy.

Somehow basic economic fundamentals have been forgotten.

As humans, we still respond instinctively to various stimuli: incentives and disincentives. Let’s examine America as the “land of opportunity” and, in contrast, the “land of dependency and entitlement.” America is indeed still the land of opportunity, but seemingly more so as seen through the eyes of potential and recent immigrants (both legal and illegal). With regard to our resident population, how much of our unemployment problem is an unwillingness-to-work problem? How can migrant workers, typically at the lower end of the wage scale, live here and still afford to send money home to their native countries when most Americans would not even consider such work? There are construction, driving, infrastructure and service jobs available for those willing to put forth the effort. It may not be specifically a person’s area of training, education or expertise, but there are jobs out there.

The most recent jobs report showed a decrease in unemployed persons, citing in part folks coming off unemployment benefits and seeking self-

employed opportunities. Imagine that! (Query: Might our unemployment figures have dipped further and more rapidly if benefits, as an example, were scaled back to 75 percent after three months, 50 percent after six months and 25 percent after nine months, etc.?)

As a “rich” nation, have we become too complacent? Are we squandering this land of opportunity? Have large firms become too greedy? Why is government unable to neither create new policy nor regulate existing policy?

Stop for a moment to consider the primary contributors to the Great Recession of 2008, whose effects still linger. Our government, in its infinite wisdom, decided everyone should have a home (fairness?) via easy money and easy credit. Home prices skyrocketed. Large lenders jumped in, making ridiculous loans and creating complex financial instruments that insulated the involved parties from each other — mortgagor, mortgagee and investors. Such degrees of separation made restitution impossible and foreclosure inevitable. We are still sorting out this mess.

How to deal with such issues? Restore incentive. People need to work, to contribute, to give back and to feel good about themselves. People need to be rewarded based on effort and merit, not just “fairness” (although we do have an obligation to the truly needy).

When we reward people for not working (entitlement), a dependency is created. It’s a tough task to unwind.

We need to revisit and refine our system of economic incentives and related disincentives. Recognize the fundamental economic principles of supply and demand. Too much of anything breeds complacency and lessens demand; scarcity (our need for money and self-worth) creates demand.

Adam Smith envisioned all of this in his book, “Wealth of Nations,” which was published in 1776. Human nature has not changed all that much — with the exception of our expectations.

Let’s get to work and restore America as the land of opportunity. Then we can quit borrowing and printing money, and create instead a true stability for ourselves and future generations.

Thomas B. Wheeler of Duluth is president of Wheeler Associates, an independent, family-owned employee-benefit and financial-planning firm.

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