Getting and Spending

We are all economists now. It astonishes me how all the news—radio, print, internet, magazines, telegrams, whatever—assume that we are deeply interested in and follow closely the stock market, the jobless numbers, the GDP, and all that. In the olden days, when economics really was the dismal science, we left all that to the economists. In the public sector, they did what they did to keep things more or less humming along. There was a business cycle when things were good and a lot of engineers were being hired, and then there would come along the part of the cycle when things were bad and all the engineers lost their jobs. The market went up, the market went down. But people like me (the middle class) really didn’t pay all that much attention to it.

But just start the sentence, “The economy …” and everybody now has a dozen ways to finish the sentence. We act as if we knew what the 'economy’ is, or was, or might be. This month’s issue of Harper’s (and let me confess that if Harper’s were a church, I would join it) has an extremely helpful article on what we talk about when we talk about the economy. It is by Jonathan Rowe and is titled ‘Our Phony Economy.’ You might be able to read it here, but it might be available under subscription only.

In any case, what Rowe is talking about is what the economy is and what the economy isn’t, and when he said all this (in March), he was actually talking to some subset of the U.S. Congress. One reason to care about this is because of the rebate checks currently being sent out to most U.S. taxpayers to make up for the fact that the housing market has collapsed and there’s the credit crunch and all that. We have become, in the last fifty years or so, nothing more than a nation of consumers. No longer are we freedom-loving Americans, or wild and crazy Americans, or an independent and hopeful people, or a resourceful and inventive people, or any of that stuff. We are just a nation of spenders, and when times get hard, when the engineers lose their jobs, our job is not to knuckle down, to help one another through the difficulties, to cut back, to scrimp and save, etc. No, our job is to spend some more and if the hard times we are going through make it difficult to spend some more, than the government will send you some money (which it, of course, doesn’t actually have but is borrowing from the Chinese, who are getting tired of lending to us) and they will tell you to spend it on whatever you desire.

What is wrong with this picture? How can the economy improve from almost random spending? Will we be better off for spending our rebates on additional driving, buying gas that will go to oil companies and Middle Eastern treasuries? Or on vacations or casino gambling or pricey handbags or any of the things we buy? There are people who really may need this money and I expect they’ll be spending it on food and heating oil and gas to get to work. But a large chunk of the recipients are in no such need and the cash that is coming to them might be better sent to their local food banks (who have had substantial increases in numbers of people who are asking for help right at the time that food prices are going up significantly). Or they ought to put it in the bank for their children and grandchildren who will, of course, be the ones who have to repay the money when the Treasury Notes come due. No, that’s no good: it has to be spent now. For the good of the economy. For the good of the country, we could at least spend it on something worthy of spending. I vote for the Food Bank.