Anyone who has watched the Lion King has listened to the song Circle of Life as they talked about the food chain. Grass is eaten by antelopes who in turn get eaten by lions. When the lions die they decompose and fertilize the grass that the antelopes eat. Each plays their part in the food chain and the transfer of energy along the way.
In nature the food chain in this scenario is simple: grass, antelope, lion, grass
The economy has its own food chain. An idea is generated and a product created. Something that is deemed to have value. This product is manufactured, whether it be cars, wheat, or LED light bulbs. People purchase the product because they deem it to have value. Money is paid to the inventor who then can go out and spend it or create more items that have value. The inventor hires a Salem Oregon real estate agent (okay I couldn’t resist…of course an inventor would hire me) to buy a house now that he has money he got for making a valuable product. This real estate agent gets money and can go out and buy some more of the inventor’s product or a new product. Completing the circle of economy or the economic food chain.
In this scenario the economic food chain is simple: create product, sell product, make money, spend money/invest money in new product, create product.
I am so excited for my local Salem Oregon area home buyers that are able to take advantage of the $8,000 tax credit. As some of you know, the debate is on about whether or not to extend the credit. The National Association of Realtors is lobbying to extend the credit. The credit would absolutely help me in my business. It would be a good thing for the Melina Tomson economic chain, but I think it is a bad thing for the US economy food chain. Here’s why…
It doesn’t solve the problem that the bottom of the food chain has gone away. Imagine if there were just antelopes and lions on the Savannah. What the heck is the antelope supposed to eat…the lion? The US economy has the same problem. We have very little grass, but someone decided to cart some hay in instead to feed the antelopes in the meantime. We are a bunch of antelopes and lions running around with not enough grass but we have a temporary solution to the problem. Just as the grass is the starter of the food chain, so is the manufacturing sector. The fact is that we as a nation have to MAKE something that has value.
I’m opposed to extending the $8,000 tax credit because the fact is that funds are limited. We can’t be all things to all people. Some people will win and others will lose: not because I want it to be that way, but because it is reality. For me, the goal is to do what helps the most people. The fact is that having a solid manufacturing base would help more people than the tax credit. As such, any monies that would be “given away” should be given to new innovative businesses as low cost loans, grants, whatever...to create jobs producing something of value.
It is better to spend our tax money to create new jobs than it is to help prop up one industry, the housing industry, to help a few. While I know many of my clients would benefit from the tax credit, the fact is that our economic food chain is broken. Our grass is gone. The only question that remains is what are we going to do to start planting some more. It takes a while to grow you know.
For a local Portland Oregon real estate blogger who wrote an opposing opinion on the subject read this blog.