Consumer Spending, Bedrock of the Economy


That’s the common view by business. I
don’t happen to agree with it, but it’s the buzzword voiced every time ‘what’s
wrong with the stumbling economy’ is discussed, so I’ll accept it for this
column.

Seems to me it follows that, if consumer-spending is
truly the key to prosperity, consumers should have something beyond the
soul-killing basics with which to spend.
Agreed? I mean, that’s central to the argument.
Increasingly, inexorably and
heart-breakingly, they simply don’t. Not to try to draw that rusty sword of
economic inequality from the scabbard, but a frightening number of our citizens
simply are unable to contribute to
consumer spending. Yet expansion is the
key
, according to the pundits and (as Johnny Carson was famous for saying)
“if you buy the premise, you buy the bit.”
Okay, I buy the premise. But I have big problems with ‘the bit’ and
here’s why.

  • Millions of American families are one health issue or
    job loss away from bankruptcy.
  •  Student-loan debt
    now surpasses all credit-card and auto-loan debt combined.
  • About 50 million
    Americans live below the poverty line and a record 47 million of them get along
    on food stamps.
  • 3 1/3 million
    wage earners make less than minimum wage and more than half are below the age
    of 24.
  •  52% of college graduates, carrying an average $27,000
    in student-loan debt, are unable to find
    work
    upon graduation.
Not a pretty picture and I agree that
the answer is not to tax the rich to boost them up the ladder. That might make
a difference in quality-of-life, but would hardly solve the problem of America’s
slide into poverty and joblessness. Wal-Mart, McDonalds and others can (and
perhaps should) pay their workers fifteen bucks an hour, but I suspect they
will have to be yanked by the short-hairs to do that.
Side note: I just recently returned from Seattle, a
city that made that fifteen buck minimum wage decision by unanimous City
Council vote. Wal-Mart and McDonalds are doing just fine there and the economy
is booming. Surprisingly (to some), Wal-Mart employees can actually afford to
shop where they work and step up to buy a Big Mac on the way home. Americans will pay more for a stereo or hamburger
to support a living wage
. So there’s a partial solution.
But not a perfect one. If the consumer
economy is to recover in the sustainable long-term—and that means decades
forward—it need not arrive with pitchforks at homes of the 1% or run up social-net costs to
unsustainable numbers. We Americans have always been at our best with our backs
against the wall. What we need is jobs—good
jobs that cross over into all areas of our society and pay sufficiently to
sustain and ramp up a solid middle class. And that moment is here—that
opportunity awaits us.
Its name is infrastructure
and I can already feel your eyes glazing over, but the day will come (and come
very soon) when toilets won’t flush in our major cities, drinking-water will be
rationed and power outages will become the norm. That’s not going to be fun.
In many of our major cities, such as Chicago, sewer
and water systems were built soon after the Civil War and have been given
precious little maintenance since. Our national electric grid was established
in 1934, made its major expansion as part of FDR’s Rural Electrification
program in the Depression and (at 80 years old) has been patched together
since.
So, two needs present themselves almost
simultaneously, their confluence laying out a mutual solution and a route forward
toward renewed national prosperity. A mere glance at the job-reach might be
worth a look:
  • Planning, architectural and engineering firms (hiring
    at good wages)
  • Heavy-equipment
    operators (union)

  • Laborers and
    specialists, such as welders, masons, carpenters, electricians (union)
     
  • Truckers by the
    gazillion (union)
     
  • Suppliers of
    steel, concrete, piping, asphalt, lumber, gravel and middle-class housing
     
  • Supervisors, secretaries, accountants, food-service
    workers and on and on
Let you imagination run and the list grows
as your time allows.

Great idea, Freeman, but who pays for
it? The Federal Government and, before your eyes glaze again, let me make the
case between investment and spending:
When government throws money at Wall Street or further
social programs, that money is gone and adds to the national debt without
demonstrable value. Saving a fraudulent banker is less worthwhile than saving
the man who lost his job because of that fraud—but that’s another argument.
When government invests money in things that leave actual value behind (such as Hoover Dam, the Interstate
Highway program or even WWII’s Marshall Plan) that money enriches the nation as
a whole or, as in the last example, brings peace to Europe. Those investments
made America the greatest nation on earth and are the foundation of our wealth.
As wealth increases (yes, even among the
1%), social spending declines, jobs are available to our kids and society
advances. Three things are necessary to human happiness and progress: something to do, someone to love and
something to hope for
. They’re all there for the asking. As Winston
Churchill once said, Americans will
always do the right thing — after exhausting all the alternatives
.”
Perhaps it’s time to do the right thing.
We’ve had six years of alternatives.

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