Our flawed economic mantra: spend! spend!

Think about this for a second: the entire U.S. economy is built on the idea that we can’t stop spending. Decide not to buy anything for a few days and suddenly you’re not contributing to the betterment of the economy and the country. A kind of crazy thought; spending is your patriotic duty.

But is that really true? Can we really live in a country where the tenets of capitalism and consumerism are indeed the very foundation of our nation? I think so…

I’m in an economics graduate class at University of Baltimore and one of the main concepts we’ve been exploring is how the right to own property is a necessary ingredient for any market-based economy, from the obvious accumulation of possessions to the more subtle motivational factors for people within their work environment.

According to the Bureau of Economic Analysis, we’re actually running a slight deficit, where people are having to eat into their savings to maintain their current lifestyle. That’s not too much of a surprise given the unemployment and underemployment of the last 18 months or so, but it does present a conundrum, doesn’t it?

If we ease back on spending to lower our cost of living so as not to have to eat into our savings to maintain our lifestyle, we spend less. If we spend less, the economy slows down, thereby, ostensibly, exacerbating the problem. If we live a life of indebtedness, however, we spend more, “oil the machinery of the economy” and things improve. But we individually fall further into debt along the way, and while the aggregate average of people might well be better off in 12 months, what of the individuals who end up declaring bankruptcy?

The (ready for this?) Socialist Worker has an interesting quote in this regard:

“The number of people declaring bankruptcy doubled in the 1990s–and not because they unwisely binged on luxury goods. Forty percent of all personal bankruptcies are due to medical bills people are unable to pay.”

While the source might be a wee bit dubious, the numbers are accurate: I’ve read that 1 in 5 Americans will declare bankruptcy and that personal bankruptcies are at their highest ever.

Maybe if we emphasized saving and planning, rather than spending and the liquidity of debt, things would be different…

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