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Let's Think of an Elephant
February 22, 2009
Thoughts on reading "Bailout lament: What about me?" in this morning's Boston Globe:
Where to start, where to start?? Let's stop pitting "people who played by the rules" against the squanderers who didn't -- those terrible, horrible people who bought a house they couldn't afford, didn't understand how variable-rate mortgages work, and (worst of all: the horror! the horror!) shelled out for lattes rather than scrimp and save to pay the mortgage, the insurance, the utilities, etc., etc., on their house. Let's worry a little less about the perverse incentives that might prompt bailed-out borrowers and all those dutiful played-by-the-rulers to act recklessly in the future.
Instead, let's pay close attention to those rules -- the rules of the consumer economy, the "free" market economy, which a lot of USians think are more American than the U.S. Constitution. The consumer economy depends for "health" and growth on selling more and ever more stuff. If the population is relatively stable, that means selling more and ever more stuff to the same pool of people. Pretty soon most people have pretty much everything they need, so what do plucky, ambitious entrepreneurs do? Devote beaucoup bucks to persuading those people that they need stuff that they don't need and can't afford. The layaway plans and the scrimp-and-save ethic of yesteryear didn't generate enough consumer spending to satisfy the most ambitious entrepreneurs, the ones who aren't happy unless they're manipulating people and widgets and numbers and making lots and lots of money. So they made credit cards easy to get. Then they invented subprime mortgages. And they spared no effort trying to sucker people into overusing their credit cards and buying stuff -- including houses -- that they couldn't afford and didn't need.
This isn't an aberration: it's how a consumption-based economy works, especially in the absence of oversight and regulation. It isn't about greed: it's about an economic system that rewards irresponsible, antisocial behavior all the way to the top. What scares me most about the "economic stimulus" package is that it's stimulating a mindlessly, dangerously destructive beast. Maybe it's time to stop whining about how we played by the rules (I don't own a house either and I'm not in debt) and take a closer look at those rules.
If the mindlessly, dangerously destructive beast were, say, a rampaging elephant, it could be stopped in its tracks by a bullet. (OK, several bullets. Or a small atomic bomb. Or maybe a tranquillizer dart, but I don't think I'd bet my own safety on a tranquillizer dart.) But the mindlessly, dangerously destructive U.S. economy isn't an elephant; it's us.