The accident-prone economy

[1 December 2005]

By Rob Horning

The national savings rate for Americans remains a negative number, dropping from -.8 to -.7 percent, so collectively Americans continue to spend more than they earn as they move into the holiday season and the houses whose equity they have increasingly drawn on are starting to stabilize in price. You don’t to need be especially morally troubled by this national rejection of pay-as-you-go budgeting to foresee serious trouble on the horizon. Robert Reich predicts some here and Gretchen Morgenson has similarly gloomy things to say in Sunday’s New York Times business section, citing economist Paul Kasriel, who calls the American economy “accident-prone.” There’s nothing accidental though about overspent consumers; American culture often makes it seem as though one is a sucker not to be in debt, not to be taking advantage of every iota of leverage one can muster—the idea being that whatever you can get someone to loan you is actually already yours (just like government deficit spending, which “doesn’t matter” as Dick Cheney has told us). And the culture is so thoroughly saturated with the encouragement to spend more, to see the solution to all ills in consumption, to reject all nonconsumption solutions as mirages, as wacky or insane. Impulsive therapeutic buying is the American way, and to question that is to insult the way Americans live. Just ask the “liberals” who are now defending Wal-Mart as an important cultural institution. With 76 percent of the GNP coming from consumer spending, a record high, one might start to wonder whether we could be reaching the breaking point of the consumer society, the point at which consumer demand can no longer absorb increasing supply, can no longer sustain the imperative of perpetual growth, and no amount of badgering, cajoling or enticing can convince people to spend themselves into dissatisifed debt any further. I doubt that we are, but it is interesting to see the possibility entertained. It might be a brief window where the “downshifters,” who preach stringent yet sensible limits on the amount one consumes, might be able to sell their ideology to a broader base of Americans.

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