Economy: Sometimes good enough is good enough

Maybe we would be better off with more frequent economic recessions that last a little longer and involve bigger declines in gross domestic product.

For the past quarter of a century — sometimes called a generation — we have had fewer recessions, and they involved shorter duration and less decline in economic activity.

From 1959 to 1983, recessions were about four years apart on average, lasted about a year, and involved economic declines of a little more than 2 percent.

The recession that began in 1990 lasted eight months, resulted in a 1.26 percent decline in gross domestic product, and occurred after seven years and eight months of economic growth.

Another recession began in 2001, lasted eight months, occurred after 10 years of growth, and involved a decline of only 0.35 percent.

In short, there have been only two recessions in 25 years — both of which were shorter and less severe than those of the previous quarter century.

To many people, almost continuous economic growth broken by rare and mild recessions seems to be the natural order of things, and they behave accordingly.

Few of them save enough of their earnings. Many who have heard the expression, “make hay while the sun shines,” don’t seem to realize that the “hay” is what will get them through the time when there is little sun.

This tendency to expect good times and underestimate the impact of bad times is probably the main reason for the business cycle of alternating growth and recession.

It also might be a reason why local government entities appear to plan for more spending than the taxpayers can afford.

In the past few months, the soaring cost of petroleum products and the decline in the construction industry have affected Kitsap County tax revenues in much the same way a recession would.

With significantly less new construction, sales tax revenues have declined compared to the same period last year.

When people have to spend substantially more on motor vehicle fuel than last year, they can spend less on things to which the sales tax applies. So county tax revenue either declines or grows less as a result.

Even if our economy does not fall into a recession this year, county government has to find ways to reduce spending — just as it would in the event of a recession.

And the county appears to be searching for ways to cut spending or at least reduce the size of increases.

Using less motor vehicle fuel and less energy to heat or cool government buildings may seem like obvious things to do when those costs have been rising quickly, but finding ways to reduce consumption substantially may not be so easy.

After many years of relatively cheap vehicle fuel, electricity, and natural gas, the government — just like the rest of us — has become accustomed to doing things in ways that now are unaffordable.

County officials and employees will undoubtedly find ways to live within our means, because they have no other choice. The budget has to balance.

Since we are also accustomed to the way government performs its functions, the reactions of county residents may play as important a role as the efforts of government to figure out how to cut costs.

Rather than having government offices open five days a week, for example, they might be open for more hours each day on only four days.

When roads are repaired, they may be patched more often and repaved less frequently.

Just as government employees must change their usual methods of doing business, we must expect and accept required changes.

The alternative is to provide more revenue — that is, increase taxes and fees — to cover any budget shortfalls.

There might be a silver lining. If government entities make it a custom to consider whether each spending item in the budget is a cost-effective use of public funds, we may not often need to go through drastic changes.

Deciding what is cost-effective involves us as well as government, since we are the ones for whom the functions are performed.

We might prefer having the best roads and readily available government services, but both we and government officials have to consider whether they are affordable.

Sometimes, government services that are merely “good enough” really are good enough.

Having “world-class” or “first-rate” services is fine when we can afford to pay for them, but expecting them without paying the cost of providing them is not possible.

We older folks who experienced the economic effects of much higher petroleum prices in the decade after 1973 have an idea of what may occur in the near future, but many younger people don’t.

What residents don’t know from personal experience will have to be explained by government as we go along — and explaining may be as hard as figuring out how to cut costs.

Robert Meadows is a Port Orchard resident.

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