This is not a recession or a depression. This is a long-term standard of living correction. For a long time, our true economy has been hidden from view by an unprecedented expansion of credit and now that the credit markets have frozen up, we’re left with exactly the economy that our wages say we deserve. Contrary to what Obama and his economic advisers say, we don’t need to “get the credit markets moving again.” We need to live within our means.
We might ask, “Well, how do you expect people to buy homes without credit?” But does a pile of wood, glass and concrete really cost $250,000? Also, should land values be determined by speculation? Does anyone really “own” land? If you didn’t pay your property taxes, to whom does ownership of the land revert back to? Do a man and his wife really need a large mansion while others sleep in a cardboard box? At what point does land usage and space economics play into our design of communities and towns? We really need to consider and reconsider some of the ideas of Henry George now more than ever.
“What about a car?” But do I really need a car? Why should we be living and working so far apart from one another? Why can’t we build communities in such a manner that everything we need is provided for within a mile? Why can’t we have groceries brought to us? Why can’t we bring the mountain to Mohammed? The automobile is a tax on the economy. For even after we were to develop a car that runs on saltwater, we still need to solve the problem of traffic congestion.
“What about a college education?” Public education should be fully funded, from pre-K to PhD. If someone wants to get a PhD, then they should be able to do so and money should not be an issue. If people still want a private education, then they should use their own money, with not one dime of taxpayer money being given to the private institutions.
“What about appliances?” Have you ever heard of this concept called “saving your money?” There’s even people who are willing to pay you interest just for the privilege of putting your money in their vault. Also, with the internet, there should be ways to develop community-based websites that help to connect people who have a need with people who can help them fulfill that need—like a community skill and resource inventory from which members of that community can draw upon.
Do we see a pattern emerging here? For every thing that one could use as an excuse to keep the credit markets moving, there’s an “outside of the box” alternative that can get what the consumer needed just as well.
Now you may be thinking, “Some of these alternatives are just too unrealistic. You can’t possibly expect such a radical change in our standard of living, can you?” All I can say in response to that is that if you don’t do this VOLUNTARILY, the economy will force you to do it INVOLUNTARILY. But, of course, you won’t believe me until you’re pushed into a corner that leaves you with no other choice. That’s human nature.
“But what magical force will force us into that corner?” You. You will be the source of your own predicament. Assuming that the country keeps its trade policies the same as they are today, the stagnancy in wages will continue. We used to have the wages we did not because there’s something inherently unique about manufacturing jobs that they warrant higher wages, but rather because of the efforts that organized labor have made in getting the wages that American manufacturing jobs have enjoyed. I dispute the notion that simply making something somehow adds value to the economy. It’s the good wages labor unions have fought long and hard for, that add value to the economy, not the mere fact that an entity is making something. Conceivably, if labor unions had worked as hard for restaurant and gas station employees, then we’d be talking about how important restaurant and gas station jobs are to the economy. We’d be saying that “serving customers inherently adds value to the economy.” But realistically, restaurant and gas station employees are easily replaceable—that is, it’s not skill-intensive enough to present any considerable degree of long-term job security.
When YOU, the consumer, always look for the cheapest deal, you also force economic entities to follow their competition, meaning the outsourcing of good-paying jobs. As long as you look for the cheapest deal, then you are eventually cutting into your own buying power.
It is this buying power that is the point of focus here. If you have lower wages, then in order to keep the same standard of living, you have to use credit. But now, the credit markets have frozen and I have a feeling that even if all bad debt were erased from the balance sheets of all lending institutions overnight and trillions were available for lending, the lending of yesterday would still never return simply because the banks realize what you now realize—that wages are the lifeblood of any economy, not credit.
We will simply have to redefine what “economy” means. This “modern” globalized economy is separating us from our true interdependent nature as human animals. We need to get in tune with that essence and structure society accordingly.