American ingenuity

When you read certain news articles or watch certain commentators on TV, you find a lot of clear black and white views. One of the things that I think is overlooked is that most people when faced with a problem, actually try to do something about it.

Now, in an economy we have a broad spectrum. I will admit that there are a certain number of people, for whatever reason, who effectively fall off the cliff. You see them living in boxes, or under boardwalks. Many of these people have either mental or addiction issues and the status they find themselves in is normally not temporary. However, the vast majority of Americans who run into economic difficulties, say the loss of a job, do not join these ranks.

So what happens to them? They find some way to cope. First, there are things like unemployment insurance and after that runs out, other forms of assistance available. Further, in many of these families, there are multiple earners, so possibly there is still at least one income. The people who are out of work strangely often show a significant amount of ingenuity, such as doing odd jobs, possibly getting seasonal jobs and often these activities are part of the underground economy. As part of the underground economy, this activity is completely outside of normal economic measures. Of course there is the other underground economy involving drugs, gambling and prostitution and the amounts generated there shouldn't be ignored. However, more benign in many ways are those who work on an irregular on-call basis for things like movers, landscapers, painters, etc., who basically get paid "off-the-books".

I don't have a good way to estimate the level of this activity, but I have some anecdotal evidence that it is quite prevalent. Obviously, it is hard to measure, since there is no reporting either by the employer or the employee.

Another way people cope is by selling things. If you have been laid off and happen to have a fairly new big screen TV, you can use either on-line sales or word of mouth to pick up some needed cash to help you cope. Obviously, this sort of activity is also very much under the radar and hurts retail sales since the person getting the TV this way, doesn't go to Best Buy to get one. How much do these sales equal? Once again, I have no way of knowing, but it certainly seems that sites such as E-bay and Craig's list are booming.

Of course another way people cope is to do things themselves that they use to hire people to do. Now, this isn't considered economic activity per se, but if someone used to pay $50 a month to have a landscaper come in and now does that themselves, after buying some materials and tools from Home Depot or Lowes, effectively it increases their ability to pay a mortgage, or to buy other things.

I could go on but one of the things that shouldn't be overlooked is the ability of the Average American to find a way to "get by." Yes, it doesn't help the numbers, but it does mitigate the pain and provide a base of economic activity that is usually ignored by the prognosticators.