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Sunday, Nov 8, 2009
Took forever to get Pablo's math corrected, and now these Friedman nuptials, noted in that entry's second letter. So I'll say it again and perhaps get the attention of an editor:
Milton Friedman and Anna Jacobson Schwartz collaborated on a book together. They were not husband and wife. The HTTW post "Dow plunges again, Friedman fans despair" should really be corrected.
When I came here from the UK to sunny Florida from cold Britain I was naturally frugal. I have splashed out and been very conservative both in my 58 Brit years. I had the latest equipment to watch TV but had a cooker from the second hand store after my divorce. I have HAD to be frugal for the seven years I have been here due to an atrocious bureaucracy. I might one day get the right to work? In Gulf Breeze FL on the water people threw out things for no good reason. A loose screw fell in the fan workings. After a storm a great TV was put out. It had popped. Still watch it after a $30 investment. I moved to Jacksonville. Less wastefulness but still on craigslist stuff given away. Boats, Cars, motorbikes, singlewides, animals. I live happily near the ocean without a flat screen TV but with a great flat PC monitor that went for a song. We have no cable but hundreds of videos for entertainment that people dispose of by the box. I enjoy the weather and the water and all the rest but some think that it is all unobtainable and that Florida is expensive. Greed may have been good for a while but it imploded. Now you have to fix the lack of care factor. Ill health and mental health which is all too often fixed with a bullet. From the bottom up is THE right way. I know no one in the UK worried about health care.
When the financial services industry began to collapse, I was angered by the fact that the government - meaning us - was going to bail them out. I fired off a number of angry letters to senators and congressmen. Then I stopped. I recently retired - a great choice - so I stopped working. I stopped spending except on essentials, and I stopped shopping! I have been going to therapy for years for an anxiety disorder, but the collapse of the economy has worked better than therapy and drugs. Now that I can't buy anything I want, I realized I didn't want anything in the first place. I especially don't want the junk for sale in most of our discount stores and outlets. I agree. Let the government do the shopping. The government is already corrupt, spends money on more useless garbage than my second wife. Even she didn't buy a bridge to nowhere. Okay, but just one. The Government pays through the nose for high tech stuff like hammers and toilet seats. What could be more in the spirit of Christmas. I am finally free.
The consumers were not at fault. The banking industry issued toxic mortgages. The $700 billions lent them went for everything else but curing the credit crunch. Consequently,consumers and small business lack the credit to go forward. Thus, the threat of being homeless and jobless causes most Americans to see a bleak future. Of course, increased spending by them is not in the cards.
The average citizen needs a good job with the assurance it will continue. Job creation results when small business see a ready market and a chance for prosperity.
We need solid products that fulfill a real need not just paper shuffling. Over 40 years of artificial bubbles, get rich schemes and criminal enterprises have robbed the nation of common sense, innovation and resourcefulness.
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."
Much of the initial coverage about Fort Hood turned out to be wrong. Is there anything wrong with that?
The accountability imposed by another country for the CIA's kidnapping and torture reveals much about our own.
Fox News' morning show plays to type, talking about whether Muslims in the Army should face "special debriefings"
The survivor and author is upset about comparisons some on the right are making to genocide
Once seen as a lunatic fringe, reactionary anti-women groups are courting respectability
Salon headlines in your mailbox
