Go Back To Shopping, America

There's a story on the front page of today's LA Times that demonstrates perfectly the precarious ledge on which the US economy is built. So much so that newspapers feel pressured to devote valuable space to what amounts to corporate propaganda. Here's the headline of the article:

Spending Less? You're Helping Slow the Economy

That's right, America! If you aren't buying that 57th pair of sandals at Nordstrom, the terrorists have already won! I am proud to say that in my 33 years I have been fortunate to have not generated one penny of self-created debt. For that reason, I'm apparently a disloyal American who's ruining the economy and taking food from babies.

Every paragraph in the article serves to hammer home the point that anything that helps average Americans get by is a net negative, and anything that keeps them in debt up to their eyeballs is a net positive. Seriously, here's the lede:

Conserving her family's cash as costs rise, Riverside resident Laureen Pittman is postponing vacations, home repairs and other big purchases. For necessities, she is increasingly relying on discount retailers, shopping at Costco instead of Ralphs and Marshalls instead of Nordstrom.

Belt-tightening by consumers like Pittman is a key reason the U.S. economy is slowing. Inflation-adjusted economic growth fell to a surprisingly sluggish 2.5% in the second quarter from 5.6% in the previous three months, largely because of slower consumer spending, the Commerce Department reported Friday.

Bad consumer! Bad bad bad! Saving money and only spending on necessities? What will we tell the children?

It's not like she's cutting back out of spite for corporate executives who might not be able to get a companion yacht if she keeps this up. This and so many other middle- and low-income workers are hampered by record gas prices, skyrocketing health care and wages which have remained relatively stagnant throughout the Bush Presidency (until the last quarter or two, which the article unequivocally states as a bad thing).

This necessary cutbacks brutally illustrates the massive Ponzi scheme upon which the US economy is built. This is what happens when you throw out the entire manufacturing base of a country and rely on conspicuous consumption, and advertising that fools the gullible into desiring what they don't need, as the only viable engine for expansion. Did you know that there's a DIRECT correlation between consumer spending and economic growth in this country, more than ever before? Check the numbers.

Consumer spending grew by only 2.5% in the second quarter, down from 4.8% in the first quarter, mostly reflecting declining purchases of big-ticket items such as autos, according to the Commerce Department report Friday.

So first-quarter consumer spending was 4.8% higher, and the economy grew at 5.6% (I think that's been revised downward, too). Second-quarter spending "shrunk" to 2.5% more than the previous quarter, and the expansion "shrunk" at the same rate.

That's because consumer spending accounts for TWO-THIRDS of economic growth. This is why you see that spate of articles every Christmas about how retailers are really hoping everyone's been nice instead of naughty, and that holiday shopping will make or break their year. That's what we've come to as the most powerful country on Earth? Our life and death is related on whether or not I get my mailman a cardigan sweater? Does anyone else see how incredibly DANGEROUS that is?

In such an environment, the corporatists who increasingly run this government DEMAND that consumers remain in debt to finance their perpetual expansion. Look for the slant in this set of paragraphs from the article:

Consumers — accustomed in recent years to spending more than they earn, saving little and tapping home equity to pay the bills — have clearly been hit by $3-plus gasoline prices. Whether that and other worries prompt consumers to scale back even more will largely determine whether the economy can maintain a slower but steady "soft landing" or veer toward recession, economists say [...]

The cooling housing market does present a risk, and may be undercutting overall consumer spending as fewer people count on rising home equity to finance trips to the mall.

"People were selling part of their house to finance dinner at Olive Garden," said Dirk van Dijk, director of research at Chicago-based Zacks Investment Research. "You can play that game as long as the price of housing is going up. You take that away and it becomes a scary proposition."

See, if you aren't taking out a second mortgage or a home equity loan so you can EAT, we're in big trouble, capiche? This is an economy that REWARDS fiscal irresponsibility and scorns any attempt to get one's financial house in order. The lack of a manufacturing base and the conversion to a service-only economy, combined with stockholder zeal for permanent unsustainable growth, has put us in this position. We are literally being held up by corporate America every day. "Buy something or the economy will tank and you'll lose your job!" Who the FUCK decided it'd be a good idea to put the entire country on the same path of overextended credit that preceded the Great Depression? The corporations getting rich from it, that's who. And business law being what it is, they'd skate to safety if there were any major financial collapse.

Incredibly, the article then tries to paint globalization, the root cause of this mess, as the SAVIOR:

But today's consumers — whose spending accounts for two-thirds of growth — are increasingly resilient, able to maintain their standard of living thanks to the global economy, experts say. Such globalization has a dual effect: Although cheap labor abroad suppresses wages, it also provides consumers with low-cost goods, keeping U.S. inflation down.

"Without that international globalization, the consumer would probably be hit with an even bigger squeeze between income and outcome," said Ken Goldstein, an economist at the Conference Board, a New York business research organization.

See, nobody's making any money, but the good news is that you can get a six-pack of tube socks made in Taiwan for $1.99! Oh, and buy something else while you're at it, please. Because we NEED to make the Wall Street earnings number.

What kind of convoluted logic suggests that a system which keeps wages down, which hampers innovation because it disallows any entrepreneur to keep a factory in this country, which turns workers abroad into slaves for manufacturers and turns workers here at home into slaves for department stores, what kind of logic suggests that's a POSITIVE? Only one that has a poverty of imagination, that thinks all Americans care about are those $1.99 tube socks, and not re-imagining ways to lift our least successful out of poverty by breaking this paradigm of "free trade" that isn't free for anyone but the very rich.

Then there's this whopper:

Consumers also are protected by a more stable job market. Employers are trying to increase efficiency with more technology and fewer new hires than in past expansions, leading to fewer job cutbacks.

Any recession now is likely to be milder than those in the past, because many manufacturing jobs — once the most volatile part of the economy — have been outsourced, removing the possibility of massive layoffs that sparked severe recessions, said Edward Leamer, director of the UCLA Anderson Forecast.

Yeah, because in the event of an economic slowdown, employers in America would never think to cut jobs. It's not like in 2001 and 2002 we lost millions of jobs from a recession or anything, years after globalization and free trade agreements were in place. Notice the little reversal that layoffs cause recessions and not vice-versa?

The entire economy is being propped up on the backs of consumers instead of business. That's not sustainable in the long term. Sooner or later, through education or high prices beyond the control of the $1.99 tube sock people, people will stop buying everything they see. They'll stop spending money they don't have. And if the stability of the country relies on the opposite, we've got a serious, serious problem that will not be able to be managed.