The title was intriguing to me (man, I'm getting so old) so I gave it a skim, and then a more focused reading after picking up a few highlights. Here are the highlights:
"As families have repaired their finances, they have increased their spending;"
Here is my contention: the economy is in the toilet and the pundits are going on about how great the recovery is going. I guess when you pick yourself up off the floor the view immediately gets "better." But if you stagger to your feet and then fall down the stairs…
Anyway, my contention is really this: "Spending" on things we didn’t need or deserve got us into this mess in the first place. We bought houses that were too big, too many too big cars, credit card spending sprees months away from Christmas, new shoes to match the new outfits we didn’t need, fast food for every meal because we got too lazy to cook and we moved out in the hinterlands necessitating a fill-up every time we sneezed because our commutes are getting longer and longer.
I know that a halt in spending would be "bad for the economy." At this point I think we have to look to things more real than the "economy." Our resources are becoming more expensive. No amount of gift giving to ourselves is going to make gas less expensive. If you peel back all the layers of the abstract of economy you'll see it. We won big earlier in the 20th century will abundant cheap oil, a World War won with us as the shining victor and relative peace in the interim. Well, the party is finally over. That foundation of cheap, abundant oil has fueled the overgrowth of our economy and population to the point that as the oil infrastructure becomes more fragile we find ourselves looking for that big stick to prop up the economy to keep it from collapsing. There is no big stick within reach. Nothing we currently know of can replace oil in our globalized economy and society.
We can’t go back to "business-as-usual" from the 1990s and early 2000s. If we do we're dooming ourselves to certain economic collapse. The builders and developers I work with on a daily basis are always asking, with wild desperation in their eyes, if things are "picking up." I know they equate the building of more McMansions as a sign that the lean days may be coming to an end, but I think the blinders of money, strapped on with cheap oil, are leading them to tenuous conclusions in which they put all of their faith. And it makes sense. They have nothing else in which to put their faith.
Krugman goes on to say later in the article:
"But it’s still a fragile process, especially given the effects of rising oil and food prices. These price rises have little to do with U.S. policy;"
In fact, the rising food an oil prices have EVERYTHING to do with U.S. policy. The U.S. and Canada are the breadbasket of the world. When the cost of doing business goes up in the good ole U. S. of A. we transfer those costs to the poor nations we supply food to. When we dedicate scads of acres of food production over to ethanol we drive the costs up artificially. When those countries begin to see a spike in food prices they tend to revolt. Unrest in those parts of the world cause panic in the stock market which in turn drives up the price of oil and food in the U.S. These rising prices have EVERYTHING to do with U.S. policy, both foreign and domestic. The U.S. is the disgusting, scabby, oil junkie in the room.
"Of course, Republicans believe, or at least pretend to believe, that the direct job-destroying effects of their proposals would be more than offset by a rise in business confidence. As I like to put it, they believe that the Confidence Fairy will make everything all right."
I have to chuckle at this statement. First, "business confidence" against the decline of resources and the diminishing economic fortitude of working Americans is like a sneeze in the middle of a hurricane. I won't get a raise because "business confidence" is high. Gas prices won’t magically plummet (in a healthy manner anyway) and I agree that ONLY the Confidence Fairy can make right the mess we've made for ourselves no matter where on the scale "business confidence" happens to fall.
"Business confidence" goes back to the wild-eyed, desperate builders and developers I see almost every day. They are grabbing at anything bobbing around in the flotsam and jetsam of our Hesperus society as evidence that we're headed back to "business-as-usual." They don’t realize the ship has wrecked and there is no rescue boat coming.
Finally, Krugman makes a startling comparison to Britain's government cutbacks and our own impending slash and burn events on the horizon:
"And do you remember the lavish praise heaped on Britain’s conservative government, which announced harsh austerity measures after it took office last May? How’s that going? Well, business confidence did not, in fact, rise when the plan was announced; it plunged, and has yet to recover. And recent surveys suggest that confidence has fallen even further among both businesses and consumers, indicating, as one report put it, that the private sector is 'unprepared to fill the hole left by public sector cuts.'"
In the U.K. private industry isn't tooled up to step in and take over government services that will be (or have already been) lost. In the U.S. we have a lot of unemployed and flat broke people who would love to be entrepreneurs, but they don’t have even a jar of pennies to dip into, much less the startup capital to pick up where government left off when the BIG BUDGET CUTS came.
Don’t get me wrong, I don't hate the Right any more than I hate the Left. I think both sides are ignoring the reality dose that's lurking right around the corner waiting to take a bite out of their rumps.
What happened to the days when I used to blather about schemes of mountains and my pontifications on past mediocre adventures? I miss them...
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