When I was young talk about millions of dollars impressed me. When I was older talk about billions of dollars dismayed me. Now, regular talk about trillions of dollars, especially government spending, nauseates me. People never seem to learn that they control the fate of the American economy.
It is far too easy to blame in bad times or thank in good times Wall Street, the government, or super-rich and powerful financial entities. In fact it is always the spending of money by the general population on consumer products and services, housing, cars, or investments that drives the economy. The core problem is that the public does not act in concert to serve its own interests but, instead, takes its cues from the external world and puts its trust in the wrong people and entities.
In other words, besides all the blame that rightfully can be heaped on many others for the current recession, it is also true that the public, through its dollars, drove the nation and the world into the current meltdown, mostly by far too much borrowing. They got suckered into using easy credit. True, in many cases, they acted on incorrect and intentionally misleading information and were taken advantage of. But so much of this consumer behavior was driven by greed or stupidity. Confidence was placed in government regulation, Congress, mortgage and other financial companies, banks, and more generally in the plutocracy that runs everything that matters. We had delusional prosperity because most of the population had willingly let themselves be deluded or manipulated by the power elite running the government and the economy. In essence, consumer power was usurped or pirated by the worst people in our society.
Here is the most critical fact. Consumers control over two thirds of the economic activity of the nation. Long before the current economic meltdown I kept writing about the potential political power of consumers. To get desired government action, millions of consumers could threaten to cut their spending in order to get results, like stopping the Iraq war or impeaching George W. Bush. But without leadership consumers just kept borrowing and spending, maintaining the delusional prosperity that they themselves propelled. Now they must act to fix things.
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Article comments
— go to most recent comments1 - Dave Nalle
Joel, there's a delicious irony in seeing you come full circle to where you are now saying exactly what Bush said in his first administration, when he advised us to take our tax rebate and spend our way out of recession. So I guess he was right all along?
Dave
2 - Mark Eden
So, we know what the top 1% must do to 'end' the crisis. Should the other 99% form roving bands of modern Luddites and smash the shit out of every factory and commodity they can get their hands on thus spurring demand? Do Your Patriotic Duty - Burn a Rich Man's House Today...?
Mark
3 - Clavos
Start with their yachts! :>)
4 - Baronius
There are only two things you can do with income, spend it or save it. Joel says that the economic crisis was caused by not enough saving. He also says that the way out of it is to spend more money (e.g., decrease savings). That makes no sense.
5 - Joel
To compare the present situation to 9/11 when Idiot-in-Chief Bush asked Americans to shop more is totally absurd. The crisis today is not terrorism, it is solely the economic meltdown. All I can hope for is that people actually read what I write with an open mind; this is a lot to expect, however, from the right-wing nut crowd.
6 - Mark Eden
Capitalism is loaded with such contradictions.
7 - Joel
I have not argued against saving, nor have I supported borrowing in order to spend; my argument is solid: spend some of what you have saved because consumer spending drives the economy; this is, in fact, far more efficient than depending on government spending of our tax dollars with the hope that eventually it produces more consumer spending.
8 - Baronius
Joel, if people follow your suggestion, there will be a decline in net savings. Now, that's also true with governmental deficit spending. It may even be a good idea to reduce net savings a bit to stimulate the economy. But it forestalls us from addressing the underlying problem of a low savings rate.
A substantial portion of our economic growth from the 1980's to the 2000's came from high-tech investment. That's what we're going to need for long-run economic health.
9 - Dave Nalle
Baronius, the mistaken assumption there is that there is a meaningful difference between spending money and saving it. What happens to money you save? It gets lent to people who spend it. What happens to money you spend? It gets put in a bank so that other people can borrow it and spend it or it gets paid to workers who then either spend it or put it in a bank, etc.
Dave
10 - Mark Eden
Dave, the relationship that you point to exists only in a 'healthy' economy where investment opportunities at 'acceptable' rates of return exist.
Mark
11 - Silas Kain
Throughout the current crisis I've maintained that the way out of this economic disaster depends on small business people and the consumer working in tandem. We need to be more involved economically AND politically. For far too long we in the trenches have been complacent in allowing the Federal government to drop the ball. We need to take our government back. We need a wholesale change in Congressional leadership. And. most of all, we need an equitable tax system that equally distributes the tax burden across the economic spectrum. We have the power to drop an intellectual bomb on Washington. Now do we continue down the lazy road and let others dictate our collective destiny? In two weeks Americans have an opportunity to send shock waves through the Capitol. After the parades Americans should march on The Capitol and send a clear message to Congress -- business as usual will no longer be tolerated.
12 - Clavos
After the parades Americans should march on The Capitol and send a clear message to Congress -- business as usual will no longer be tolerated.
From your lips (keyboard?) to the ears (monitors?) of the multitudes...
13 - Baronius
Silas, we have that opportunity every day. As for the wholesale change in Congressional leadership, there probably isn't a single high-level post in the House or Senate that's changing hands this year.
14 - Silas Kain
Indeed, Baronius. The fact that Harry Reid has more power to affect our lives than our respective Senators angers me. The remaining
99989796 Senators should get phone calls, emails and faxes from their constituents demanding that Senator Harry Reid be ousted from his leadership position. Senator Reid is far more polarizing than Bill Clinton or anyone on the Far Right. Nevadans may have elected him but the rest of the Senate can humble him. Personally political castration is in order where he is concerned.15 - Baronius
I was listening to Dennis Miller last night. The interviewee was talking about Reid's assertion that he personally won the Iraq War, by calling attention to the pre-surge failure. Dennis replied, "isn't this when your closest relatives have you committed?" As usual, Dennis Miller sums up a situation better than I ever could.
16 - Dave Nalle
Dave, the relationship that you point to exists only in a 'healthy' economy where investment opportunities at 'acceptable' rates of return exist.
Mark, I didn't actually mention investments in my scenario, just savings and spending. Normally investments would be part of the picture too, but even in an abnormal economy the key thing is putting money in the hands of consumers.
Dave
17 - Cindy D
Dave,
Your e-mail must be full. I wanted to change a word. The program told me not to make any changes.
TIA
18 - Glenn Contrarian
Dave - did you receive my synopsis and first chapter?
19 - Glenn Contrarian
Never mind. I think I have my answer.
20 - Roger Nowosielski
Good thinking, Joel. Consumers do have the power, theoretically. The problem is, they're senseless. They're not consumers for nothing. It's a degeneration of the individual and the nation, from the nation of citizens to that of consumers. So how do you get around this vicious circle? How do you turn a mass of thoughtless automatons to responsible citizens? "Mass consumption society" (George Katona, e.g.) is the negative (self) image and the counterpart of "mass production." We reap what we sow!
21 - bliffle
Joel is correct in the original article, economic power (in these modern times) is in the hands of consumers, not producers, which makes it all the more puzzling why George Bush, with all the best brains in economics to draw on, would champion handing out money to producers (tax cuts to the rich, bailouts to the improvident bankers). And then, in turn, even more puzzling that Obama (who we so ardently hoped was the un-Bush who would save our financial lives) should give over half of his 'stimulus' package to such idiocy, thus diluting the utility of any 'stimulus' by one-half.
Oh well, what can one expect?
22 - Roger Nowosielski
Bliffle,
But what do you think my comment just above. The consumers by and large, as a sector I mean, are dumb. They need serious re-education as to the power they potentially have in order to re-invest their savings in whatever resources wisely, away from companies and networks which harm us and drag us all down the drain to more constructive alternatives and projects. That's one import of Catherine Austin Fitts' comprehensive website and program.
Roger
PS: I'll take your response tomorrow.
23 - Clavos
Roger,
You aren't grasping Bliffle's central point. The principal economic engine of our economy is the consumer. Without him (and, obviously, his consumption), we don't have an economy. The current downturn amply and effectively demonstrates this point.
Most of the other First World economies are also consumer-driven. If you "re-educate" (1950s Soviet Union, anyone?) the consumer not to consume, you will have no economy left when you're done.
24 - Cindy D
RE #20
This might help Roger,
How do you turn a mass of thoughtless automatons to responsible citizens?
Take your kids out of school and put your TV by the curb.
25 - Roger Nowosielski
Clavos/Cindy,
I don't believe I am and I don't disagree with it either. My point rather is - and the context is, remember, Joel's article about "consumer power" - that all along we've been facilitating the climate of corruption, fraud and irresponsibility in government and corporate America. "Senseless consumer spending" only perpetuates and plays into the worst tendencies of the capitalist system. It only adds fuel to the fire. So in a way, my argument is that we get what we deserve. Dumb consumption on a mass scale is but a negative, a reciprocal as it were, of dumb-minded mass production: they're two sides of the same coin.
It's a conceptual point, really, but to grasp that is to grasp certain underlying realities about the system which is now failing us (as well as the possibilities which are ever-present.) So yes, I am saying that dumb American public is in no small measure responsible for the mess we are in. To use an expression from the 60s, misused too many times but very apropos the present case, "if you're not part of the solution, you're part of the problem."
That's my point, then, about re-educating the American public: to invest their savings and resources in outlets and channels which are likely to be productive and beneficial to the community - and not just in terms of dollars and cents but in real terms, promoting, that is, the welfare of the individual, their community, and generally speaking the quality of life. That's the real point of "consumer power" properly understood, and it is in this context that I made reference earlier to Ms Fitts' website and program (see #22), aiming at empowering the consumer, community by community, locality by locality, on a one-place-at-a-time basis. Which requires a re-education!
Therefore, I am not that much concerned, Clavos, about the size of the economy in terms of some macroeconomic statistics as you seem to be, which is why perhaps you haven't seen my point: my greater concern is with the economy's functionality in producing real products and goods rather than scale itself. All the bubbles we'd experienced of late have the quality of mindless and unreal expansion. We should downsize and decentralized. Bank of America or ATT&T, and all such, are no longer about America or the well-being of this nation. They're behemoths unto themselves. I wouldn't shed a tear to see them go.
Roger