Getting Out of Recession Without Getting Into Trouble

In the 1960s, when the peace movement called for reductions in arms spending, otherwise 'neutral' economists would say "you can't cut back on armaments without destroying the domestic economy!" As President Eisenhower had said in his farewell address, we had become dependent for our prosperity on the arms race and the "military-industrial complex" the arms race supported. So peace was an enemy not just of war, but of prosperity too!

Fast forward forty years and we hear a parallel argument today: as the country stumbles into recession, people like me arguing against hyper-consumerism, the infantilization of adults as impetuous shoppers and the undermining of democracy by a privatized commercial ideology are told "you can't attack consumerism without undermining prosperity and deepening the recession!"

Too often capitalism has tied itself to American vices: an arms race, shopoholism, dependency on imported oil, and then cried foul when reformers try to treat the dependency. "See what you've done? You've stopped people from taking out mortgages they can't afford and now the housing market has collapsed! Shoppers are staying away from the mall and refusing to buy all those goods they don't need, and the economy's going down the tubes! Next thing you know, Americans will start taking public transportation instead of driving gas-guzzling cars, will start saving instead of spending - acting thrifty! -- and then we real really be in a mess!"

Almost all of the proposals for dealing with the looming recession are about getting bucks back in the hands of consumers so they will start spending again! But exuberant spending is what is inflating the trade deficit, wrecking the dollar, draining savings, and allowing foreign investors to buy up America -- not to speak of corrupting American morals.

So here's my question for the candidates: how do you suggest we get out of recession without getting into trouble? Without encouraging all those bad habits of too much spending, too little savings, too much foreign energy dependency and too much borrowing that have gotten us into our economic morass to begin with? How do we create a prosperous economy that does not depend on Americans buying not only more than they can afford, but far more than they need or want!?

Whoever can answer that question -- or even understand it! -- gets my vote.

Comments

[MrCoffeeCup]

Benjamin Barber do you remember the great 60's-80's music???

Here we go: Beatles Yellow Submarine(hated that damn song) we vault forward to "Ba-ba-ba-benie and the Jets and we all join in to sing:

BOMB-BOMB-BOMB, BOMB-BOMB IRAN! Recession cured, Middle East goes into raptureous peace, Chinese/Russian hegemony becomes our
dearest allies, Hugo Chavez resigns and opens a chain of taco restaurants, KimJong Ill marries a healed Britnay, Ophra is crowned Queen of Africa! It's just that easy!!!

And wait there's more......!

[robinhood1]

I noticed that Huffington Post has reported the death of Christian Brando, whose claim to fame was that he was a son of the late actor Marlon Brando. The recent death of former Budget Director Richard Darman went unreported on HP, but at least the guy got an obituary in the Wall Street Journal. I guess it says a lot about our culture. We are a country in a lot of trouble, but we worship our celebrities. I feel sorry for the next generation. They will get stuck with picking up the pieces of our failing political process and will have to pay for the tax rebate I'll be getting in a few months. Hooray for Hollywood!

[Rowland]

Not only must the United States find energy efficiency and pollution control for itself, it must lead the world by showing how quality of life is vastly improved by moving to a green society. If this is not done, no matter what we might do, the imitation of our lifestyle by others will swamp the planet. We must do and lead others to do.

In order to carry all this out, there must be a commitment on a scale rivaled only by the national effort in WWII. In fact, it must surpass that by an order of magnitude. Further, this must come at a time when we have maxed out our credit with China and other nations.

On a practical basis, only the election of Al Gore with a mandate that is truly impressive will enable the United States to convince creditors, friends and foes that we have turned about face from the profligate life we have continued after WWII in using up our resources and throwing the tailings in the yard and in the wind. Any other candidate and the political wrangling that is sure to follow the election of a lesser light will put our creditors in a wait and see mode that threatens to swamp us before we can carry out such an undertaking.

This time we must hold up an authentic icon to the world in order to expect a rally around our effort and undertaking. Our margin of error and patience for our undertaking has been squandered and yet we must spend our way out of the maelstrom we have created.

It is not what the candidate will do, it is what we can demonstrate to the world that we as a people can and will do.

[clarkbp]

I am wondering, where does the money for a stimulus package come from? Like if your boss gives you an incentive, but it comes out of your next check. incentive? Stimulus? HMMM?

http://thefiresidepost.com/2008/01/18/stimulus-from-where/

[GPMango]

Okay Mr. Barber, here's your answer. (at least, in part)

1. Stop the war in Iraq. That money could be better used for national infrastructure rebuilding projects, much like the WPA of the 1930's. We can create more jobs right here in the USA to help the unemployment rate.

2. Embark on an "Apollo" style energy project to make America energy independent. Take the saving from the Iraq war and invest it in the new technologies for energy production: ie. hydrogen fuel cells, bio diesel, cellulose ethanol, lithium ion car batteries, wind power, water power, higher mileage vehicles, etc. This program could create at a minimum, 2 million, high paying, high tech jobs for the economy. We could also sell these products to China and India, getting up back into the business of making products!

Those are just two ideas that could be implemented to stimulate the economy without all the drawbacks of buying things we don't really need. There is no shortage of ideas. There is however, a shortage of VISION and a shortage of willpower from the American people. I guess things will have to get worse before we wake up and screw our collective heads on right.

[deminmo]

Like you said at the beginning, war and any
business that supports it. Reform NAFTA so that
trade is more equal. Make incentives for the
manufacturing sectors so that the $25 hr jobs
don't go to foreign workers for $2 hr. More
descretionary money will mean more spending
by the consumer. Develope and implement new
energy sources, don't just talk about them.
Make product safety standards for every country
we trade with, and then give the power to
enforce it.
That's what a winning Presidential candidate
should be saying. The reality is the war thing.

[splashy]

How about getting off oil and onto alternative energy sources generated HERE in the US, creating all kinds of new jobs that will bring money to the actual workers, who spend on things like food, rent, homes, vehicles, heating... you know, things that the wealthy don't spend as much of a percentage of their income on?

Much of the wealthy are like black holes, or parasites, when it comes to the economy. They just suck resources out, but don't put much in because they don't PRODUCE anything of value. They just usually push numbers around.

[Geoark]

Great question! The answer centers on throwing out our current tax system and replacing it with one that encourages full employment, innovation, free enterprise, personal and government savings, economic justice, resource conservation, and an ecologically sustainable way of life.
There is a tax system that will do all the above as proposed by Earthrights Democracy and Geonomics.
Geonomics calls for the gradual (not to shock the system too much) removal of all taxes on labor and free enterprise while increasing fees on the use of our commonwealth natural resources. Geonomics also proposes that we are all entitled to an Earth Inheritance safety net dividend. Such a dividend could be paid monthly into our retirement, health savings, education, and resource conservation transition accounts.
Ultimately, with Earthrights Democracy, we would be true costing pollution, resource extraction, and resource monopoly.
Please Google Earthrights Democracy and Geonomics to learn more.

[wrabbitt]

We should have invested in health insurance companys many years ago! They raise prices by 6or7 percent every year. and co-pays have gone thru the roof, the health insurance industry has made money since Nixon signed the paper creating HMO a small group of letter that has struck terror into the hearts and wallets of the working class for many years, where else can a non- medical commission paid worker decide the fate of someone by denying claims? What happened to the case in California where the woman died waiting for a liver? after being refused the claim by K/P? did it get swept under the carpet???

[Wulfstan]

Over thae past 20 years or so working class wages have declined in purchasing power. Since the US economy is dominated by consumer spending, there comes a point when the working class cannot afford consumer goods without borrowing. This borrowing can cost them from 21% to 30% depending on their credit score. When they max out their credit there is nowher to go and the economy takes a nosedive, which is what we are seeing now.

A more equitable and even distribution of income and wealth would actually ensure a more stable economic growth and iron out some of the boom and bust effects of untrammeled capitalism.

Henry Ford had this figured out years ago. And he was the richest man of the world at the time.

[Arleang]

Actually a recession might not be such a bad idea. There is going to be an economic distortion no matter what action is taken by the FOMC and the federal government. Right now the focus is on creating another bubble by pumping more magic money into the economy.

Solutions need to be long term not bubble to bubble, collapse to collapse.

We could start now doing what we will be forced to do anyway should we insist on the bubble strategy:
1. Stop offering free military protection to governments that are beating our brains out based on "free trade".
2. Institute a tariff system just like the EU with their VAT that benefits exports.
3. Pass laws that make it desirable to locate businesses in the U.S. Our founding fathers believed in protectionism . . . so do I.
4. Fund a quasi-governmental oil exploration and development agency. Why is it that the oil in Venezuela belongs to the government but the oil in the U.S. belongs to corporations? Why did we give it away?

If we continue on the bubble trajectory the U.S. economy will, ultimately, collapse just like the USSR. Oil has made Russia well and restored some dignity to the Russian people. Putin is their hero.

Economic and social instability go hand in hand. Job creation is necessary and should be directed at infrastructure rehabilitation and making the U.S. energy independent. My dream is to have enough solar panels and wind turbines to not only power my house but charge my car. Why not?! Goverment spending should be directed to energy independence. A combination of massive tax credits and subsidies could get us there. Don't give me money to buy a new sweater, give me a tax credit to buy a new photovoltaic solar panel!

Make voting mandatory. The Australians got it right. If you don't like what's happening, do something about it. Vote, march, raise a little Hell.

[saami]

Ronald Reagan did not bring down the Soviet Union; they brought themselves down with military spending on Afghanistan and supporting their military industrial complex. George Bush is doing the same thing to us only faster. We must stop the war and bring our troops home. We need to build our economy on jobs here at home, on infrastructure (roads, bridges, mass transit), on educating our children, on ending poverty and bringing those people into jobs and becoming tax payers. We have the smarts, the good people and the stuff it takes to be an economically competitive country. We just need to get rid or Bush. I say impeach Bush and Cheny and get on with rebuilding our country and economy.

[almanojodo]

Having a leader who has experience with today's global marketplace, is a graduate of Harvard business school and Harvard law school, and a proven problem solver would be a good place to start. Our economy Needs Romney! Our nation needs Romney especially now as it is faced with adversity. We need a president who will fight for our freedoms, build our economy, strengthen our national defense, secure our borders, control spending, keep taxes low, eliminate red-tape and bureaucracy, and establish efficiency in government. Romney is the man who can do it (not just talk about it). He doesn"t make excuses or justify mistakes; he fixes them and moves forward. Romney is a man of conviction and integrity with a proven track-record of success. Romney"s goal is to improve the quality of life for every individual . Your support for Romney brings us closer to better America for all.

[davidpeace]

Instead of hefty cuts to the interest rate, the Fed should have added a couple points to it. This will make it more expensive to borrow, but at the same time more attractive to save.

[janmB]

AN ECONOMY BUILT ON CREDIT ----THIS IS WHAT WE HAVE.
JUST ASKIN--- HOW COME WHEN CLINTON WAS PREZ WE HAD A DECENT STOCK MARKET GOING ----CD RATES WHEN PEOPLE WERE SAVING MONEY WERE UP TO 7% AND SENIORS WERE SUPPLMENTING SOC SECURITY WITH THESE SAFE-INVESTMENTS AND PUTTING IT BACK INTO THE ECONOMY.
NOW WE HAVE NO ONE SAVING MONEY ---BUYING ON CREDIT---GOING BANKRUPT OR DELIQUENT ON THEIR LOANS AND CREDIT CARDS ---TWICE THE NUMBER OF BILLIONAIRES CAUSE ALL THE FOCUS HAS BEEN ON DOING NICE THINGS FOR THE RICH AND POVERTY HAS INCREASED 20% IN A SHORT TIME. ?
JUST ASKIN.