Wednesday, February 13, 2008

Clock is Ticking for American Spending

A couple signs the consumer craziness days are numbered, the thin edge of the wedge:

1) the Wall Street Journal finds a) a rise in credit card delinquencies but b) an "abrupt slowdown" in new borrowing. People are getting in over their heads and they are saying "enough"--banks are tightening borrowing standards to stop the overdrawn from getting new credit.

2)Robert Reich's excellent editorial in the Times. "three decades during which American consumers have spent beyond their means" are "now coming to an end. Consumers have run out of ways to keep the spending binge going."

His solution: raise the income of the "bottom" two thirds of Americans, which has been flat for a staggering 35 years, during which the plums of economic growth have gone to the top 5 percent. Do this through redistributive taxes/income credits, more unions, better schools. He calls this "The only lasting remedy, other than for Americans to accept a lower standard of living and for businesses to adjust to a smaller economy."

As Yahoo commenters often point out, I am a big old commie and therefore predictably in favor of more unions, more redistributive taxes, and better public schools. But I think the latter option is not so unthinkable. A "lower" standard of living, meaning one where enough is enough, one not based on constantly increasing consumption and hours of work,
is exactly what this planet needs. A "smaller" economy, in terms of energy and material inputs, is absolutely necessary for our species' survival.


Anonymous said...

Turn up the volume on "smaller economy" :)

Patricia said...

Absolutetly agree! When banks and credit companies started to dish out instant credit cards and loans, people decided that they can afford mortgages and huge loans. The mortgage crisis and the recession that followed proved that it was a big mistake. Never take a loan if you know you're not able to pay off!