Transitioning America's economy away from consumerism

[Susanann]

Originally Posted by Susanann
Nope!
Increasing consumption/increasing spending will decrease unemployment in China, Japan, Canada, Mexico, etc. (as well as get Americans into even deeper debt than they already are)
If the things people buy (toys, cars, car parts, computers, televisions, radios, telephones, tools, appliances, dishes, shoes, sporting goods, furniture, clothes, bicycles, etc.) are made elsewhere, then it is NOT going to help unemployed Americans.

@John_Mace

You make the assumption that factory jobs are the only ones that count in the unemployment number. Unless people are flying over to China to buy those things directly, then people in the US are employed in distribution and selling of those goods.

Small potatoes!

Distribution, retail clerks, and service jobs are small potatoes and not very important - every third world poor country has service and retail, hotel maids, restaurant waiters and burger flippers, and truck and cab drivers and they stay poor mired in endless poverty.

Manufacturing jobs are the jobs that count. Manufacturing jobs are what pay well. Manufacturing jobs are necessary to the security of a country, a la: *“The Arsenal of Democracy” * Manufacturing jobs is what distinguishes a rich modern developed country as opposed to a third world poor service economy.

Things are NOT going to get better. The United States, and the American people, are on their way to poverty, being hugely in debt with a worthless currency, and not self sufficient in energy nor food.

The current stupid policy of adding more and more people to our population while at the same time eliminating manufacturing jobs is going to result in much higher unemployment and a lower living standard in the future.

There is only “1” way to fix things and bring back American prosperity:
Reduce the population by immediately halting all immigration and deporting all illegals, and then bring back our manufacturing jobs.

Doing anything else is going to fail.
( Oh yeah, and stop spending so much and stop borrowing, instead start paying off the federal debt.)

Immigration and Economic Stagnation

**Immigration and Economic Stagnation: An Examination of Trends 2000 to 2010
**
New Census Bureau data collected in March of this year show that 13.1 million immigrants (legal and illegal) arrived in the previous 10 years, even though there was a net decline of a million jobs during the decade.

[John_Mace]

@Susanann

Small potatoes!

Not really.

Distribution, retail clerks, and service jobs are small potatoes and not very important - every third world poor country has service and retail.

Every economy needs them. No economy can run w/o them.

Manufacturing jobs are the jobs that count. Manufacturing jobs are what pay well.

Pffft. We have plenty of manufacturing jobs in this country. We just don’t make the stuff that people who are willing to work for $.50/hour make.

If you want to compete with a worker in Vietnam, be my guest. I’ve moved on to the knowledge economy, and I’m doing very, very well, thank-you very much.

Manufacturing jobs are necessary to the security of a country, a la: *“The Arsenal of Democracy” * Manufacturing jobs is what distinguishes a rich modern developed country as opposed to a third world poor service economy.

We’ll still be manufacturing lots of stuff throughout our lifetime. The stuff will change, and maybe we’ll be manufacturing less, but if you think it’s going to zero, you don’t know what you’re talking about.

[twistedwords]

How can you diminish credit? Our entire monetary system of money is built on credit. Did you know that our money used to be backed by gold and that was stripped away in the middle of the 20th century? Yes, we already had that in place and there was no real need for credit. You need to understand how our system works now. It goes like this:

The federal reserve is not owned by the United States of America. That’s a fallacy and a big misunderstanding by people. The federal reserve is owned by private wealthy investors or private banks that are owned by private wealthy investors. The United States issues a treasury bond and that bond is then carted over tot he Federal reserve and they lend the United States money in exchange for the treasury bonds. So in a big way these private banks owned by private investors/families own the United States of America.

Now, we do have a person who sits as chairman of the reserve who does work for the United States, he is bernanke at the moment. Now, he has limited power on what he can do while at this privately owned Federal reserve, so he just goes along with what the bankers tell him to do.

I am not making this up by the way, this is the truth.

So then the U.S. takes their new printed money and lends it back to the banks for a small interest fee. Right now its .25%. Then those regional banks lend it to state banks and state banks lend it to small banks and so on.

This whole system is built on lending, so we have to lend in order for it to work. Right now what is going on is the BIG banks are holding on to all the money. Why? They know that if they hole unto billions of dollars then when the tide turns and interest rates go up they will make a fortune on all the cheap cash they have on hand to lend out. Now, here comes the real kicker. For every 1 dollar the federal reserve lends to the U.S. 10 dollars is created out of thin air through lending it out. The only federal law requirement is that regional banks have to carry 10% of total cash borrowed in the vault. The rest they lend out 10 fold. So, it goes like this:

If I borrowed a dollar, I will lend out 10 dollars to whomever and charge them higher interest. Since I have all of these IOU’s on hand I can be safely assured that I can pay back the dollar I borrowed since I have 10 other dollars I lent out to 10 different people. Odds are I will get 8 dollars back with interest for every 10 I lend out and borrow 1. get it?

[John_Mace]

@elucidator

There is only one ethical course for a lefty who is committed to egalitarian democracy, and that is to educate the people. It isn’t so much the consumerism that is at fault, it is what is being offered to be consumed. If we demand green energy, we will most likely have it. If we are willing to settle for loud, shiny crap, we will continue to have that. What we have now is a vast arena full of gumball machines. The gumballs come in a marvelous variety. Shiny gumballs, colorful gumballs, lolcatz gumballs, gumballs that vote vampire over werewolf. And if we will buy poisonous gumballs, they will sell us poisonous gumballs.

I’m pretty sure that if you plot education on the x axis and consumption of “loud, shiny crap” on the y axis, the slope of the line you get will be positive.

[Rand_Rover]

@elucidator

There is only one ethical course for a lefty who is committed to egalitarian democracy, and that is to educate the people. It isn’t so much the consumerism that is at fault, it is what is being offered to be consumed. If we demand green energy, we will most likely have it. If we are willing to settle for loud, shiny crap, we will continue to have that. What we have now is a vast arena full of gumball machines. The gumballs come in a marvelous variety. Shiny gumballs, colorful gumballs, lolcatz gumballs, gumballs that vote vampire over werewolf. And if we will buy poisonous gumballs, they will sell us poisonous gumballs.

Legislation is only marginally effective. Our corporate insect overlords have lobbyists to water down legislation before it is passed and battalions of lawyers to find loopholes after. But if the people lead, the leaders will follow. We carry their balls around in our pockets, we need only reach in and squeeze. And its not the Republican Party we need to defeat, nor the Democrat, nor even the growing hegemony of the Libertarian juggernaut. Its the Apathy Party.

We know luci, you’ve told us enough. Everything you like is good, and everything you don’t like is bad. Life would be so much better if we poor stupid bastards just listened to you and did things your way.

Well, everyone has their own idea of how they want to run their lives. When it comes to the clothes they where or who they have sex with or what they smoke, you are all for it. When it comes to where they work and what they buy, suddenly you change your tune and want to impose your own ideas on everyone.

[gazpacho]

@Sam_Stone

Well, if you want to do that, it’s a lot easier - just raise the requirements for credit. No home purchases without 25% down. No car loans unless you you can put at least 25% down on the car. Eliminate credit cards and make everyone use debit cards. Banks cannot lend money to people unless they have been in stable jobs for at least two years and their total debt payments are less than 20% of their gross income.

You could also achieve something similar by making bankruptcy laws much tougher - allow banks to go after primary dwellings, primary vehicles, and personal belongings. Put people in debtor’s prison if they can’t pay.

No you should make bankruptcy much easier. Make the people that lend money really find out if you can pay or not. The sub prime problem happened because banks gave money to anybody secure in the knowledge that the government would help them get it back. If you can easily blow off credit cards then they will only give credit to people that are not over extending them selves.

[Sam_Stone]

It depends who we’re trying to incentivize. If we want to change credit on the supply side, you don’t want to do it with easy bankruptcy, because that also stimulates demand. Instead, just pass a law forbidding the government from bailing out banks, eliminate FDIC insurance, triple the cash reserve requirements for banks, do not allow banks to transfer ownership of the mortgages they hold, etc.

Basically you just want to make mistakes by either consumers or banks very expensive for them. By eliminating FDIC, you raise the stakes for both borrowers and lenders. By forcing banks to hold more cash reserves you help prevent runs on banks, but you also make mortgages more expensive.

The main point is that if you really want to change the credit behavior of the public, you need to change the incentives that cause the borrowing patterns they have now. There are lots of ways to do it.

Note that I didn’t say this was a good idea. The result of seriously curtailing credit would be disastrous to the economy. Business investment would be harder, the money supply would shrink, etc. Credit is important.

The Op’s notion is basically economic populism coupled with ‘common sense’ that leads to an erroneous conclusion. In economics, ‘common sense’ is often wrong, because good rules for individuals do not always translate into good behavior at a macroeconomic level.

Now, it’s possible that people are in fact relying on too much credit. If that’s the case, it’s because we’ve set up incentives to push their behavior in that direction. The mortgage interest deduction, artificially low interest rates, interest-free student loans, bailouts… We’ve incentivized excess credit, and that’s what we got. We should eliminate a lot of those distortions.

[Nobody]

Well, because of our crappy economy we are spending less and saving more site, but, at least as recently as last year:

@Forbes

We spend $1.33 for every dollar earned, according to the Census Bureau.

site

Although doing some Google searches it appears that things may not be as bad as I thought.
site

[Dinsdale]

Well, this discussion is about economics, an area that tends to make my head hurt. I sure don’t have any answers, but the discussion so far sure is depressing.

I’m not sure I agree with those who say “directing” the economy is paternalistic, and that the economy should be dictated by the combined judgment of the individual consumers. Am I completely off base in believing that as a whole people (American people at least) seem happy to OVER-consume such that they borrow and spend more than they can afford, and place high value on purchase the least expensive objects with little concern as to the externalities? I think one of the functions of a representative democracy such as ours is to not only do what the constituents want, but also to strive to meld that with what is best for the country as a whole. Oughtn’t SOMEONE be considering the big picture? Simply put, the individual is too localized to make good society-wide decisions, and I am not convinced that the cumulative effect of all of the individual decsions necessarily results in the best overall action.

People sure want their shiny toys. But are Americans living and consuming in a manner that is scaleable and sustainable worldwide and longterm? If not, why are we entitled to a lifestyle subsidized by the rest of the world, and what must we pay to continue it? If we see the current method as unsustainable, how do we effect change, or do we just press the pedal to the metal and keep cruising along until we crash?

I realize that for some time the trend has been for freer international trade. How can we assess the benefits the US derives from free trade as opposed to the costs? Sure, tariffs would make lots of things more expensive, but is tat entirely bad?

I get what folk say about economies serving little purpose other than to enable consumption. But is there any mechanism to assess the “quality of life”? Am I alone in believing that that quality of life is not synonomous with consumption?

I guess if I’m going to continue in this vein, I’d better go read up on tariffs, but I can already feel the strain on my feeble brain…

[FoieGrasIsEvil]

@John_Mace

Which specific products do the Chinese require to be made domestically?

Electronic dart boards, american flags and that hilarious rubber dog poop you find in novelty stores.

[John_Mace]

@Dinsdale

Well, this discussion is about economics, an area that tends to make my head hurt. I sure don’t have any answers, but the discussion so far sure is depressing.

It’s not called “the dismal science” for nothing!

I’m not sure I agree with those who say “directing” the economy is paternalistic, and that the economy should be dictated by the combined judgment of the individual consumers. Am I completely off base in believing that as a whole people (American people at least) seem happy to OVER-consume such that they borrow and spend more than they can afford, and place high value on purchase the least expensive objects with little concern as to the externalities? I think one of the functions of a representative democracy such as ours is to not only do what the constituents want, but also to strive to meld that with what is best for the country as a whole. Oughtn’t SOMEONE be considering the big picture? Simply put, the individual is too localized to make good society-wide decisions, and I am not convinced that the cumulative effect of all of the individual decsions necessarily results in the best overall action.

Well, “best” is pretty subjective, and consumption patterns are influenced by cultural norms and the laws we pass. See the current thread on how Americans encourage home buying. Used to be, you could deduct all interest on your taxes, not just mortgage interest. We changed that law, and that has to have had an effect on behavior.

People sure want their shiny toys. But are Americans living and consuming in a manner that is scaleable and sustainable worldwide and longterm?

I’m not sure why that matters. At least the second part.

If not, why are we entitled to a lifestyle subsidized by the rest of the world, and what must we pay to continue it?

It doesn’t follow that if it’s not scalable that we’re being subsidized. Those two things might be related, but they aren’t necessarily related.

If we see the current method as unsustainable, how do we effect change, or do we just press the pedal to the metal and keep cruising along until we crash?

You can’t predict what future technologies will allow us to do, so predicting “sustainability” isn’t much of an exact science. We used to worry about running out of whale oil. When was the last time you worried about that?

I realize that for some time the trend has been for freer international trade. How can we assess the benefits the US derives from free trade as opposed to the costs? Sure, tariffs would make lots of things more expensive, but is tat entirely bad?

I get what folk say about economies serving little purpose other than to enable consumption. But is there any mechanism to assess the “quality of life”? Am I alone in believing that that quality of life is not synonomous with consumption?

I guess if I’m going to continue in this vein, I’d better go read up on tariffs, but I can already feel the strain on my feeble brain…

Yes, at this point you need to read up on economics. And if there’s one thing that economists generally agree on, it’s that free trade is better, overall, for countries. It does hurt some people, but the alternative hurts more people.

[Dinsdale]

Thanks for your thoughtful reply, John, and I acknowledge my ignorance should keep me from further active participation in this thread. But a couple of your responses impress me to consider something other than pure economics.

You are not sure that it should matter whether our style of living is scaleable an/or sustainable? I’m no communist or new-world-order type, but isn’t there a “moral” aspect to comparing your livestyle/consumption to others’? It seems so much in American society today reflects greed, immediate gratification, and an exclusively short-term focus.

And I think it unsound to simply continue as rapaciously as possible, assuming some deus ex machina in the form of technologial advancement will make everything better somewhere down the road. It doesn’t keep me up nights, but it does give me concern that the world I am living in sure seems likely to be creating difficulties for my kids and future generations to deal with.

[Buck_Godot]

I think part of the problem that we are running into is that with the advent mechanization we are incredibly efficient producers. It takes much less labor to make an object than it did several decades ago. We also have both genders in the work force and so as a result keeping everyone employed for 40 hours a week needs massive amount of consumers to consume all of the stuff that we produce. Also since there is all of this excess labor, the value of labor decreases. So wages don’t increase with the increased production, instead the benefits go to those who own the factories. One factory owner won’t consume as much as 20 employees and so production outstrips demand and we end up with high unemployment.

One way out of this is a reduction of the average work week from 40 to say 35 hours, with some increase in pay to allow for 35 hours to still be a living wage. Thus turning the extra efficiency into more leisure time rather than more products. Of course the problem with this is that the markets place by its nature moves towards the more efficient solution and it is more efficient to have 7 people working 8 hours a day, than 8 people 7 hours a day when you include training and benefits. So I don’t see any real way to implement this, and we will probably be stuck with high unemployment for the foreseeable future.

ETA: of course I’ve never taken a course in economics so feel free to tear this apart completely

[Le_Jacquelope]

@John_Mace

Which specific products do the Chinese require to be made domestically?

You’re kidding me, right? Cars sold in China are required to be made in China, for one example. In fact, on top of that, only maybe 300K cars (out of nearly 14 million) were ever exported from China in 2009. Of course they’re about to shoot themselves in the foot if they let Tata motors export cars to their country instead of producing it domestically. If China changes course it will slam the door of economic opportunity in the faces of millions, just like what’s happening in America right now.

[Le_Jacquelope]

@John_Mace

You can’t predict what future technologies will allow us to do, so predicting “sustainability” isn’t much of an exact science. We used to worry about running out of whale oil. When was the last time you worried about that?

You can certainly ask what exactly is science doing to come up with a replacement for light sweet crude oil? Into the foreseeable and even distant future the answer is “nothing that’s as cheap”.

Light sweet crude was cheaper and more plentiful than whale oil in the outset.

The difference now is we had a better alternative than whale oil. We aren’t able to find a better alternative than light sweet crude. Even if we can put cars on the electric grid that does frak all for our needs for plastics and the like.

Yes, at this point you need to read up on economics. And if there’s one thing that economists generally agree on, it’s that free trade is better, overall, for countries. It does hurt some people, but the alternative hurts more people.

Wait, you really got Dinsdale bamboozled here.

Tell us again where this “free trade” actually exists? All trade is regulated. Regulated, last I heard, isn’t free. You need a new term; free trade does not exist.

[Le_Jacquelope]

@John_Mace

Not really.
Every economy needs them. No economy can run w/o them.

But we sure can and do pay them peanuts.

If you want to compete with a worker in Vietnam, be my guest. I’ve moved on to the knowledge economy, and I’m doing very, very well, thank-you very much.

Susanann, take note how silent everyone becomes when you bring up the fact that we are also moving knowledge based jobs overseas - such as research jobs.

It is rank bullshit to say we’re not competing against other nations for manufacturing jobs… and it totally falls apart when you look and see that knowledge based jobs are leaving, too.

Of course there are plenty of other gaping holes in the pro-offshoring argument but this one should be sufficient to drive your car through.

[Dumbguy]

@John_Mace

From my own standpoint, I would leave it to the marketplace to "figure out’ what the proper savings rate is.

The market figures it out based on prevailing interest rates. The Prime has been close to zero for quite a while, so borrowing makes sense and saving doesn’t. The government is already deciding how much we should save. As has been pointed out, the Fed is really a quasi-governmental institution composed of Bond Villains, but that’s pretty much the government these days.

[Ken001]

An interesting thread and if I may, I’ll throw my hat in the ring with an outsider’s view.

IMHO the OP poses two questions: Firstly, should the US export more? Secondly, should consumption be changed or reduced? I’ll deal with the first point only in this post.

Export more: this is a really tough nut for you to crack. From my perspective (in a small OECD country) the United States is at the top of the heap, the pinnacle of the economic pyramid. The $US is the world’s fiat currency. Your economy is the strongest. We want to sell to you.

We aren’t particularly interested in buying your goods in return although we like your high technology. Off the top of my head the only American products I can think of are the Leatherman, Benjamin Moore paint, and Harley Davidsons. Even then I personally prefer Ducati… Oh - and television shows.

Your goods are too expensive and cheaper substitutes are available.

The US government knows this and even as we speak they are pushing down the value of your $US to try and raise the trade balance. Unfortunately other governments are doing the same. Ironically the worlds currencies are making a race for the bottom.

How about trade barriers to protect your internal industries? Well, that may very well happen in which case it will be a return to the 1960s. But all the shimmery shiny stuff you like will cost a lot more. And you won’t be better off as a nation.

Just my 2 cents.

[John_Mace]

@Dinsdale

Thanks for your thoughtful reply, John, and I acknowledge my ignorance should keep me from further active participation in this thread. But a couple of your responses impress me to consider something other than pure economics.

You are not sure that it should matter whether our style of living is scaleable an/or sustainable? I’m no communist or new-world-order type, but isn’t there a “moral” aspect to comparing your livestyle/consumption to others’? It seems so much in American society today reflects greed, immediate gratification, and an exclusively short-term focus.

And I think it unsound to simply continue as rapaciously as possible, assuming some deus ex machina in the form of technologial advancement will make everything better somewhere down the road. It doesn’t keep me up nights, but it does give me concern that the world I am living in sure seems likely to be creating difficulties for my kids and future generations to deal with.

I’m not sure what the alternative is. Do we divvy up all the oil in the world based on the population of each country? It sucks to be born in the 3rd world, but until we institute a world government/welfare state, that’s just the breaks. Anyone with a guilty conscience can live a simple life and donate their money to the poor. I don’t mean that sarcastically, either. If it bothers you (the generic you) that your lifestyle isn’t attainable by everyone on the planet, then don’t live tat lifestyle. Even if the whole US population went on a “lifestyle diet”, that wouldn’t change the consumption habits of the rest of the developed world.

As we run out of oil, we’ll either scale back our lifestyles, or we’ll find alternative sources of energy. My money is on the latter scenario, as we’ve been through that cycle a number of times already. Solar power is expensive now, but only in relation to energy from fossil fuels. Plus. there are all sorts of potential energy sources out there-- there just isn’t a big enough need for them yet. Once the need arises, human inventiveness will do what it has always done.

[John_Mace]

@Le_Jacquelope

You’re kidding me, right? Cars sold in China are required to be made in China, for one example.

I guess that would explain why China likely to import 1 million cars next year.

China saw an explosive growth of imported vehicles in the first five months of this year on an increasing demand in the country’s auto market. If the growth can be maintained, volume of the imported autos for 2011 is likely to exceed one million units…

And… BMW says exports to China soaring

‘Rising demand in China has meant that our plants in Germany and the United States are at full capacity,’ said Krueger.

I guess the smuggling business is booming!