Thursday, February 26, 2009

"Habits of Consumerism"

Daniel Larison, sounding positively left-wing:

The irony is that an economy and a whole host of policies oriented around facilitating consumption, which most conservatives thought...were wonderful, create a situation where money regained through tax cuts goes into paying down debt–because the first instinct of most people in a recession is not to overspend. In other words, the habits of consumerism (e.g., overspending) have reduced the efficacy of tax cuts as an instrument of economic policy, which is one more reason why you might think conservatives would come to recognize and oppose those habits.

However, it is important to bear in mind that some significant part of this build-up of debt was not simply profligacy, but seemed to be necessary for many households to make up for stagnating incomes that were becoming increasingly inadequate during the housing bubble. That bubble was fueled by the absurdly low rates that the Fed kept so artificially low, but I have yet to see very many movement conservatives questioning their traditional adoration for Greenspan and his works. Of course, there have always been principled exceptions to the cult. As we all know, income stagnation is something that most conservatives and Republicans have spent years pretending was not happening, because it did not fit in with the assumption that working- and middle-class Americans were thriving as part of the “greatest story never told.”

Now the focus of Larison's post is the failure of Republican ideology to adapt to changing political circumstances. But I think this also demonstrates that you don't need to be a cheese-eating surrender monkey leftist to think that a) for far too long people have spent-been encouraged to spend-more money than was wise and b) that many of these people did so at the same time that their incomes were stagnating. You need neither be conservative nor liberal to realize that fiscal recklessness is bad both for individuals and for governments (though conservatives and liberals will certainly disagree over what to do about income inequality, even if they agree that it's increasing.) Now, unfortunately, we're too busy bailing water out of a sinking ship to get a primer on how to avoid icebergs, but it seems to me that at some point after all of this is said and done, we need to have a very serious and meaningful conversation about the sustainability of our economic model and whether the economic health of our nation should depend on convincing people to buy televisions, cars and houses on easy credit as their wages stagnate.

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