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

[LeonBNJ]

One small way might be to encourage modest levels of savings and investments. Perhaps the first $2,500 in interest and dividends(the interest, income of perhaps 80,000-125,000 of savings or bonds or stocks, depending on interest) on total gross taxable incomes of $100,000 would be income tax free on both the state and Federal level. That would mean a savings of $300 to $800 in taxes each year. This would put more money for investments, encouage saving up for major purchases and not penalize small savers and investors.

[Novista]

Hmmm, savings account interest rates at 4-5 % and real inflation at maybe 10% ?

Where exactly is the benefit?

[azrix]

Want to promote saving in the general population? Get rid of inflation. Inflation is at such a rate right now that anything you save is going to be worth 25-50% less ten years from now than what it's worth today. This is not the way to induce people into saving. This inflation is directly caused by the Federal Reserve. We have had continuing inflation ever since it's creation in 1913, to the point that $1 in 2008 dollars is worth $0.05 in 1913 dollars. One dollar today is worth what nickel was worth in 1913. Things have also gotten progressively worse since Nixon closed the gold window in 1971. This creation of pure fiat money led to the stagflation of the 70's. It has led to increasing disparities of income as the military industrial complex and financial institutions reap most of the rewards of fiat money, while the rest of us get hurt as our cost of living continues to go up whiles wages don't. Get rid of inflation.

[laocoon]

I always thought by definition a recession involved consumers not spending. If consumers were spending there would not be a recession. that begs the more fundamental question of what goals and benefits do "we" direct our natural and human resources . Does the economy simply direct our resources to turning more and more of nature into trinkets which advertising then convinces us that we need? Does the economy serve the welfare of human beings? Does it primarily care only about how many dollar transfers occur in a given period of time-- with certain people deriving inordinate benefits more or less as a commission of the total tranfers leveraged by the government defining and enforcing property rights.

[Nutcase]

Spending less will put us into deflation. For our leaders, that is an even more difficult problem, as they have absolutely no experience dealing with it. There are more creative ways of spending our money (taxes). We could invest in alternative energy. We could . . .

cognito ergo populistae

[WASanford]

Doctor Barber it seems to me that you’ve come up with an excellent plan to get us out of this mess. Our leaders either can’t or won’t lead us away from the cliff we are approaching so we have to turn away from it on our own. We need to cut our military spending to a reasonable level perhaps even bringing home all of our troops who are stationed overseas. We need stop buying stuff just because it looked good on television. We need to reduce our use of petroleum products. We need to resist the impulse to rescue the housing market and let the price of homes decline to something close to their true value. We need to pay off our credit cards and begin saving again. We must return to the idea that there is a reasonable limit on usury. We need to put some quality back into our lives by cutting back on the quantity of our possessions and we need to begin manufacturing this wealth ourselves. But most of all, we need to stop electing people to serve in our government who don’t reflect our values.

Each one of us has to do this on his/her own. No one is going to rescue us except ourselves.


“All oppressed people are authorized, whenever they can, to rise and break their fetters.” Henry Clay, speech to the U.S. House of Representatives, March 24, 1818

[Mutex]

For over two decades we have been living under an illusion of properity built on debt.

One way to look at it is:

There are three foreigners and an American on an island. One foreigner grows the food, one foreigner harvests the food and one foreigner cooks the food. The American eats the food...on credit.

What happens when the foreigners realize that the American isn't really doing anything that they couldn't do themselves and start to re-think their business plan.

There is a man at the door playing the flute and he wants to be paid!

[hellenhat]

JOBS, JOBS, JOBS, JOBS. Set up a WPA style job corp which concentrates on starting green businesses and the infrastructure necessary to get us off our dependence on foreign oil, help Detroit re tool their plants for energy efficient, alternative fuel cars which will put people back to work, stop subsidies and all tax breaks to corporations who move jobs overseas and/or outsource jobs, subsidize those manufacturers who will bring jobs to the US ---re open factories, start new businesses in the textile industry, rebuild the infrastructure...roads, bridges, rail lines, clean up our rivers, streams, and the Everglades, and put people back to work rebuilding New Orleans and our inner cities.

The answer is jobs, jobs, jobs. Trickle down economics have never worked...they didn't work under any other administration and have not worked here. By putting people back to work you create a new economy and new tax collections instead of incurring more debt.

Another idea is to create a bubble in social security tax collections. Say once you have reached 75,000 in taxable income, forgive the next 125,00 and at $200,000 start collecting again and then collect on another $200 to $300 hundred thousand (up to a maximum perhaps of $500,000). Bonuses, contract buyouts, "golden parachutes" should all be subject to the social security tax.

This saves social security and keeps it off the pile of debt we are passing on to our grand children.

IS ANYBODY LISTENING????

[schatsie]

Face it, National Savings went down the tube with Reaganomics.... check it out...

We need to get the tax system regened to something reasonable... and also support good jobs probably union cause otherwise they only want to pay minimum wage...

Limit capital gains, once you pass the median household income, then they are subject to SS taxes (both sides, employer and employee). Once they pass 100,000 up the ante to the income tax rate at the top....Extend unemployment insurance and make it exempt from federal taxes...Give a deduction for commuting expenses for jobs (just like they do in France)...etc

No more dumb republical ideas that result in inflation and more taxes on the poor!!!

[Sundialsvc4]

I think that if we look long and hard enough, you won't really find "hyper-consumerism" at all. A great many of the "results" you get from such measuring, depends on exactly what and how you measure ... and what "results" you want to obtain.

In the years since Eisenhower, we have lived in a curious world that was, on the one hand, 'drenched with money,' but on the other hand it was all 'leprechaun money.' Now the morning sun is rising and it's all turning back into straw. So was that money 'real' last night, or is this just the world's biggest hangover?

I think we'll discover that that 'money' never was real at all. Instead, it was ruinous inflation -- disguised by being pumped up with literally trillions of 'dollars.' All the while this 'money' was growing from our trees, our standard of living as measured by how much time we DIDN'T have to spend in pursuit of more money just to stay alive, has consistently decreased.

Much of this, I believe, was induced by a major shift in the flow of money. No longer did money flow from the local factory through the local bank to the local shopkeeper. Now the money was whisked out of town forever.

If you take the battery out of your car and cross the poles with a metal rod (DON'T try this!), soon you will marvel at the "miraculous source of energy!" you have discovered -- until the battery runs dry and now you want to start your car to go to the store to buy another battery.

The "boom years" since Eisenhower fed off a battery that had been well-maintained and handed to them fully-charged. They reaped what they did not sow, and lived off the land they did not plow.

The "money" was merely "securities," and those securities are worthless... debts that cannot be repaid. The factory is closed.

[LeftRight]

First and foremost, the federal gov't either needs to pay off the national debt, or at least get the annual budget deficit to a reasonable level. Second, the federal gov't needs to provide some things for the people, not so that they can keep spending (the reason why the tax cuts and rebates offered so far won't work) but so that they can start saving. Nationalize the health insurance market, place major restrictions on oil and gasoline gouging, and on usage, and actually provide a reasonable public transportation system.