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• Tuesday, December 2, 2008 04:18 AM

  Not a paradox

  But then we get smacked in the face again by the paradox of the American economy. All those individual Americans making smart economic decisions have brought the economy to a grinding halt.

  This is an unnecessarily cynical way of looking at consumer capitalism. The American economy — or any Fordist economy — once depended not on the idea of consumer idiocy but rather on the idea of disposable income as the engine of sustained growth.

  In the pre-20th century industrial dynamic, at least as it was generally understood, people who worked for a living were basically assumed to spend all of their money on essentials, and the concept of having a steady surplus income with which one could indulge in all sorts of luxuries was reserved for the wealthy.

  Henry Ford's idea of paying workers enough to afford the products of their own labor was, by contrast, a radical idea with far-reaching consequences that created consumer capitalism and changed the way we think about work, social class, and economics.

  But all of that was once upon a time. Careful observers have long been aware that the basic premise of Fordism — mass disposable income — has been moot for a generation. Due to a combination of factors (including stagnating wages and the corruption of the free market, both not coincidentally heavily implicated in the latest financial catastrophe), an increasing proportion of Americans have been able to maintain the consumer capitalist engine only by spending on credit.

  And lately that proportion has hit a tipping point. The proximate causes of the mortgage market collapse basically boil down to criminal negligence, for which nobody substantially responsible will be punished — but fundamentally the corruption of the home loan industry took place with the explicit consent of the American public, and the reason why was because that was the easiest way to keep the consumer capitalist engine running.

  Sorry, American public, it's true. You wanted this, you agreed to it, and if you're suddenly shocked and surprised now, when the house of cards is tumbling down, it's only because you willfully ignored all the people who were saying that that was exactly what was going to happen.

  The thing is, it didn't have to be this way. There was no trick, no double bind. The tragedy is how not paradoxical the system is.

  Or was. For generations we enjoyed a robust, productive economy by paying workers higher wages than the market would bear, and aided by public investment in education and competitiveness.

  And then we as a people decided, largely for ideological reasons, to abandon those practices and operate our society purely on the basis of short-term profit. Now we're left — after a slow, gradual, but inexorable winding down period — with exactly what we chose.

  So forget federal spending as the way back to firmer ground. That might do for the next month, or maybe the next quarter, but if you really want your consumer capitalism back, you will need to do the following:

  - raise the minimum wage even more

  - restore collective bargaining to the American workplace, updated for an age of service sector predominance

  - start, or return to, massively subsidizing public education

  - drastically step up subsidies for microenterprise, basic research, and other fundamentals of innovation

  - slant the income tax again

  - start reasserting controls over monopolies, anticompetitive business practices, NAFTA-style "free" trade, and other cancers of the free market

  This is one of those moments that come along every once in a while in the life of a civilization, where you have to make a choice, either to succeed or to fail.

  So far, unfortunately, we seem to be stuck on "fail."

  —Amity Read Amity's other letters
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