Mesa State business department head weighs in on economic crisis
Morgan Bridge, professor and head of the business department at Mesa State College, has kept a close eye on the state of the national economy both for benefit of classroom discussions with her students as well as a professional fascination.
She has penned articles and given talks on everything from the economic impact of higher-education institutions to worldwide energy demands, and she sat down with The Daily Sentinel to share her views on the down-turning economy, the recently passed federal bailout plan and the effects strained credit markets have on everyday people.
Q: There’s a lot of talk regarding an immediate need for the government to jump in as soon as possible. In your mind, did you see it as a necessity for the government to intervene, or was there room in the market to let this play out?
A: The immediate need is for liquidity. And so, I think there’s multiple ways to go about getting liquidity, but the need for liquidity is still definitely there. Banks are hanging on to their cash because they are trying to shore up their balance sheets, and that cash is not available for businesses and people to use themselves. I think that’s probably the most immediate need. The other need, I think, is for people to feel more comfortable. Consumer confidence is really lacking at the moment, and so, if we could take care of the consumer confidence issue and if we could get access to liquidity, I think that would go a long way.
Q: With the bailout that was passed, the question on everyone’s mind seems to be, “How will this affect me?” What are some of those ways that the average person on the street or the average small business owner will be directly and indirectly affected by this?
A: Well, it will be interesting to see because we’ve all just been watching it and so far the stock market’s not responding, but I think the biggest way people will see the impact is through the liquidity again. So, if I’m not looking for a loan, if I’m not a small-business person, and I didn’t necessarily need access to that, I may not see any difference. Again, if you’re looking for liquidity, theoretically anyway, that was one of the things that was supposed to happen with the bailout, the increased liquidity, not only in our markets, but hopefully reassure the world markets as well.
Q: How realistic of a viewpoint is it that this bailout is a cure-all where we will be able to see immediate effects from it, or are we still in for hard times and have some work to do in the long run?
A: Well, I don’t have a crystal ball. What the long-term effect will be, we don’t know. One of the problems with the credit markets is that they’re not as easy to see what’s going on, and so, it may take awhile for us to actually see what the issues are. I don’t think the bailout is an immediate cure that tomorrow morning everything’s better. But hopefully again, the major issue is liquidity and, hopefully, this will address some of those liquidity issues.
Q: Speaking plainly and realistically and taking out all the speculation and fear, how in danger are the credit markets of seizing up?
A: There’s different parts of the credit market, and it’s hard to make an overall generalization about the different pieces, and unfortunately, consumer confidence plays a huge role in it because we can still have bank runs today. You know in “A Wonderful Life” they do the bank-run scene that is so classic that everyone recognizes. Today, we can still do the same thing, and the problem is, if we all go take out our money at once then the banks have a liquidity issue. Consumer confidence plays into the liquidity issue, which plays back again into the consumer confidence, and so it’s really hard to separate it out. It’s all tied together, which I think is one of the complicating factors.
Q: Many legislators have said there needs to be stricter oversight. With that and the current state of the economy in mind, what does that say about the free-market, deregulation policies that the Bush administration and previous administrations have pushed for?
A: A market economy needs to be able to function, and prices need to truly reflect what is going on. Then on the other hand, there’s our monetary system that is so important to our economy to make it function correctly. ... From my perspective, I guess I hesitate to get too much regulation into the economy because then it can’t function. The market system needs to be able to move up and down. That’s what makes it effective and efficient. Too much oversight can sometimes hinder that.
Q: What are some of the topics of discussion coming out of your classes centering on this topic?
A: It’s been a wonderful learning time for business students, because you can watch TV and get all the information to discuss as you go along to class. We’ve had some great discussions on how the economy works, what are the consequences of certain policies, some things we can do differently, and how these different pieces actually impact the economy. It’s been a great case study — a perfect case study.
Q: When we’re able to get some perspective and look back and see what worked and what didn’t, what do you anticipate seeing in five to 10 years when we look at the impacts of another market swing?
A: Money has been cheap, really cheap, lately, so perhaps we haven’t been as prudent as we should have with how we used that cheap resource. I think that’s one of the things we’ll see. As resources are more abundant, we’re apt to be less cautious about how we use them. So, as money becomes more expensive again, I think we’ll see a different perspective perhaps on how it’s used.