Tuesday, February 24, 2009

How to use the Stimulus for a Better Future

Economy Stimulus

Looking at the huge stimulus that the governments from all over the world are “dropping” into the economy, I was wondering who would ultimately gain from such a move. Does injecting more money into the system makes the world’s economy healthy again? Or are they prolonging the death of the companies that managed to convince the world that it is cheaper to put them under life support than to pay for their funeral expenses?

If you look closely at these failing companies, what causes them to fail is that they do have any more consumers supporting their business. So in terms of business evolution, you should just let the weak and useless extinct, and let the new and fit emerge and multiply! For example, if the dinosaurs did not extinct, do you think we human race can thrive in this world? And in today’s context, if the big auto cars manufacturer were to carry on producing their “offspring” – inefficient and environmental unfriendly vehicles, how are we able to shift the paradigm for consumers to drive in environmental friendly and energy efficient vehicles?

I strongly believe there are better and more sensible ways to spend the stimulus than to support these “dinosaurs”:

1. Saved it! There is no point prolonging the suffering of these companies and paying their management for the jobs badly done in the expenses of the tax payers and future generations. Let them reap what they sow!

2. Invest in entrepreneurs. New seeds must be planted to replace the unhealthy crops. Almost all the previous depressions or recessions recovery depends on new found sectors that change the world economy. For example, the auto/aviation replaced the rail, the electronics replaced the auto, the computer replaced the electronics, the internet replaced the computer. So where do you think will be the sectors that can shift the economy? It is unlikely to be in the rail, auto or aviation business.

3. Invest in clean energy. Which do you think is wiser, putting money to find more oil wells that will some how deplete in times to come, or putting money into technology to harvest free and ever lasting energy like solar, wind, waves and lightning for the long run? Obviously the latter should be the focus that we should be looking at and this is probably the new sector that will shift the economy.

4. Invest in minds not mouths. As the old saying goes, “Give a man a fish and he can feed himself for a day. Teach a man to fish, and he can feed himself forever.” Giving out spending vouchers for consumers to spend is like giving a fish to them. If it is any vouchers that they are giving out, they should give out education vouchers. In that way, consumer will still spend, but on education, and not a new high-fi or laptops. By the way, education is environmental friendly as it does not produce any waste and unlike most other investment, you can never loss money if you are investing in your brain.

Of course all these suggestion can only work if the government or corporate leaders can forsaken their personal “beliefs” and "political goals” for the future of our generations and mankind. Without a clear vision from these leaders, the world will just have be bear with the giddiness in this economy merry-go-round. Hopefully, it will stop or slow-down so that everyone in it can have a better view of their friends, family and environment outside the merry-go-round.