Writing for CNN, Matt Egan recently reported, “US credit card debt suddenly reversed course in March and fell by the largest percentage in more than 30 years. At the same time, savings rates climbed to levels unseen since Ronald Reagan was in the White House.”
Good news? Seemingly so. Americans appear to be behaving in economically responsible ways, eliminating expensive credit card debt and bolstering savings. Founding father Ben Franklin would be proud of these fiscally wise Americans, no?
Well, perhaps counter-intuitively, Egan’s article does not frame this behavioral development in sanguine terms, introduced by a headline that reads, rather ominously: “New threat to the economy: Americans are saving like it’s the 1980s.”
In what kind of economic environment is the fiscally conservative and seemingly sound economic conduct of individuals—saving responsibly and maintaining low levels of debt—at odds with the health of the overall economy itself, understood as threatening the health of the economy?
The answer is in an economic system such as our current arrangement, call it capitalism, fueled by consumerism.
Egan elaborates in his article, writing,
“The dramatic shifts in consumer behavior reflect the unprecedented turmoil in the US economy caused by the pandemic. Although caution is a logical response to that uncertainty, hunkering down also poses a risk to the recovery in an economy dominated by consumer spending. A so-called V-shaped recovery can’t happen if consumers are sitting on the sidelines.”
Consumer spending accounts for 70% of the U.S. economy’s gross domestic product, and retail sales experienced their largest decline in April since such records started being kept in 1992.
Americans took to buying primarily the essentials, just what they actually need, tending to their own economic health.
As they tend to their own economic health and focus on meeting their needs, the health of the overall economy suffers diametrically, no longer being fed by consumer dollars.
So, we see, unless Americans consume well beyond their need, even to the point of maintaining high levels of the debt, our economy cannot sustain itself.
Does something seem wrong with this system in which we must behave counter to our own economic health to serve the health of the system?
We know it’s not good for our environment and that responsible stewardship of our environment requires curtailing our consumption.
And, of course, our history has presented this lesson before, only to have us resist it, neglecting to learn.
The Great Depression was caused by what economists call “over-production.” Companies produce too much such that that pace of consumption beyond need cannot keep up. When consumers cannot buy what is already on the shelves, companies stop producing and thus lay off workers. Then the workers cannot afford even to pay for the basic goods and services they need to meet their needs—for what is essential.
Because nobody is buying goods and services, prices plummet because of lack of demand. To bring prices back up—that is, to try to save the system—farmers start destroying crops, pouring milk down sewers, killing livestock.
Meanwhile, hungry folks are waiting in breadlines.
There’s the irony of the economic depression: amidst great abundance, people wanted for their most basic needs.
If you’re paying attention, you’ll see the same phenomenon is occurring today. As Adam Jeffery and Emma Newburger reported for CNBC: “As the coronavirus pandemic disrupts supply chains across the country, farmers are being forced to destroy their crops, dump milk and throw out perishable items that can’t be stored.”
Chickens are being euthanized in Iowa. Washington is experiencing a one billion pound surplus of potatoes. And Jeffery and Newburger report that, “At least $5 billion of fresh fruits and vegetables have already been wasted, according to estimates from the Produce Marketing Association, as many farmers plow ripe crops back into the soil.”
Meanwhile, we have record numbers of people waiting in lines at food banks, and the food banks do not have enough to go around.
After the Depression, the effort seemed to be to restore the economic system, a system that had just proven itself unable to the support the lives of those trying to live within it, a system that had just demonstrated itself to be informed by a titanic contradiction, creating a situation in which desperate want existed simultaneously with unused abundance.
Somehow we seemed to value more than the people living within it.
But the objective of any economy, you’ll learn in ECON 101, is to produce and distribute goods and services most efficiently and effectively to meet the needs of those living in the system.
We have the same lesson before us now. Will we choose a different response to it?
Will we choose a system that supports life? That is able to distribute the abundance we produce to satisfy our collective hunger? That doesn’t make one put one’s life at risk when going to work to help produce what we all need to live?
We are adapting to live on what we need—at least those of us who can access what we need.
Can we move beyond adapting our own individual behavior to adapt our overall economy to one designed first and foremost to meet our collective needs of food, shelter, health, education, clothing, entertainment, culture, and so forth?
It will mean not having an economy designed to produce profit and wealth first and meet need as subsidiary objective.
It will likely mean we all work less and will definitely mean that having access to resources to meet our needs is not dependent on the work we do, the job we have.
It will mean we contribute what we are able and receive what we need.
Ideally, all of these relief packages are or should be designed to give us all what we need to get through.
We seem to have enough if we could distribute it accordingly and effectively.
Maybe we can learn a lesson this time. We are already starting to adapt and change. Can we evolve for good into a system that makes sense, so our economy works for us, instead of us sacrificing ourselves for the economy?
Tim Libretti is a professor of U.S. literature and culture at a state university in Chicago. A long-time progressive voice, he has published many academic and journalistic articles on culture, class, race, gender, and politics, for which he has received awards from the Working Class Studies Association, the International Labor Communications Association, the National Federation of Press Women, and the Illinois Woman’s Press Association.
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