132. Economy-Size

On a flight last month I chatted up a married couple about where we were headed and what I was doing in school.  Whenever I tell anyone I study politics I'm guaranteed at least five minutes of follow-up questions.  In this case I got about half an hour.  It was interesting stuff.

They asked me something about the economy, not something I study, and got me off on a rant about middle class economics.  The never-ending recession has some folks sweating the lack of jobs and falling housing prices.  But... what if (and I'm totally serious)... the economy isn't technically recessed?  What if we've just been riding a post-WWII growth bubble and it finally burst, landing us right back where we shoulda been anyway?  Or somewhere close to it.

Here's my thinking.  Let's say a bunch of businesses close down and we lose lots of jobs.  On the surface, this is bad.  Because those people need to work to eat (they actually don't, but this post isn't about welfare policy so I'll save that commentary for later).  Conventional wisdom is that we need to seed small businesses and recreate those jobs.

But... Imagine that those small businesses were retail businesses.  Places like Starbucks and The Gap and Pier 1.  And let's say that most of what people bought in those places can be considered "luxury" or "leisure" items, meaning they didn't need the items, they just wanted them.  And let's imagine that some not insignificant portion of the money people spent there was actually borrowed (on credit cards, etc.). 

I don't think any of these suppositions requires a terrible stretch of the imagination.  And if these things were true, wouldn't it be better that those places closed?  If there was never sufficient wealth in the population to consume the goods and services those businesses offered, should they ever have been opened?  They would only have existed to sell people things they didn't need and couldn't afford.  Should we employ hundreds of thousands of people doing that?

Of course not everyone who finds themselves un- or under-employed worked at The Gap.  But that isn't to say that their jobs were any less superfluous.  If you worked in banking in a country where the population actually has very little wealth to manage, or if you built houses in communities where residents actually lacked the financial standing to take on a mortgage, should your job ever have existed in the first place?

I'm not arguing that anyone is supposed to be destitute.  I just think we have an inflated sense of "middle" classness and comfort in the U.S.  What passes for necessity here is rather luxurious when compared to mean standards of living around the world.  The idea that everyone should have a job with a wage that maintains them in their own private home, with their own private car, and their own private creature comforts is a fairly fantastic one when you think about it.  What are we doing to generate the wages that pay for all these things?

It was long ago recognized that we no longer make anything in the U.S.  So what do we have to show for all the 4-bedroom homes and the plasma screens?  Whatever we're doing, we're paying ourselves a lot of money for it, and we're spending even more money than we're paid.  If, as a country, we were forced to live on cash, how would our lives be different?  Already the idea of my own 2-bedroom condo overlooking the lake makes me think I'll spend most of my time psychicly atoning for my privilege.

So what if this is the new normal?  I'm sure it's not.  The credit lines will loosen up and we'll all be upgrading whips and wardrobes soon enough.  But it might be better if we didn't.  We could prolly do without it.