PEORIA -- I am sickened to read the commentary on how consumers who can afford to keep spending are now economizing, sending the retail economy into the ditch.
The latest is Michael Kinsley in the New York Times.
"There also is some concern that the great American shopping spree may be over. We have all the stuff we need," he writes.
Oh really? Let me introduce the arrogant MK to some of my friends:
Susan (name changed) a 25-year-old single mother of three children has a part time minimum wage job. Try feeding and diapering young children on her pay!
She gets food stamps. They're gone before the month is over. Her kids have Medicaid coverage, thanks to Democrats in the federal and state governments.
The dads of her children -- an estranged spouse and a boyfriend (there's no money to pay for a divorce!) young, strong, white working class men, also have part time jobs. They help with money when they can.
A generation or two ago they would have been working in American's factories, producing prosperity, earning a living wage, buying modest homes and autos.
They're not geniuses, probably not suited for college. There are millions of them out there, wasting their 20s, turning to drink and even drugs from despair they can't even name.
Susan needs everything. Start with the basics: a better car, a washing machine and dryer, a stove with a workable oven, more sheets, towels, blankets, winter clothing. She certainly doesn't have "all the stuff" she needs.
If she can't scrape together the rent she'll be homeless.
Then there's Sally (name changed), also single. She has a job, as a contract worker for a large corporation. So she's in business for herself, takes all the risks and usually works 12 hours daily or longer. No union is there to negotiate for her.
She has no health coverage and of course no pension. An accident, an illness and she'll be in the street.
She owns a mortgaged house which needs a roof and other repairs that her budget won't fund. Her battered pickup truck has 200,000 miles on it.
Her children are in college, surviving on student loans which will burden them for the rest of their lives. They're bright, and hope to escape the fate of their mom who has a 2-year community college diploma.
The US government has failed these people who cannot afford to become consumers and buy the "stuff" produced by the factories in the US and elsewhere, stuff they need to survive, not just to feed their vanity.
Their situations are not their fault. They stem from the economic structure of our nation, which has deteriorated badly since the days when our parents were working.
They need living wage jobs. They need adequate health coverage. They need guaranteed pensions, because even if they can save enough money for a 401(k), as we've all seen recently that can become worthless in a matter of weeks.
They need unions to negotiate for them with their employers.
Sen. Barack Obama was elected president on promises to do something about this mess.
Will the Michael Kinsley's of this nation, the arrogant columnists who are maxed out on consumer goods and never give a thought to anyone else, allow it, or just attack Obama and call for even more austerity?
How long will the middle classes, many of whom never actually encounter the poor, buy into that ideology?
The US appears to be at a turning point in its history -- save it or lose it.
News accounts everywhere report that people are buying guns, apparently afraid Obama will ban them.
Or maybe they're arming for the revolution!
I'm trying to rein in my cynicism and develop optimism about Obama's chances of turning things around for Susan, Sally and the millions who deserve to share in this nation's prosperity they have helped and will help to produce, if given half a chance.
We'll see.
-- Elaine Hopkins
On Nov. 15, Ollie Nanyes commented:
Here is one aspect of the problem: Barbara and I are not rich but we aren't poor. Prices have gone up faster than our wages, so we have cut back; we travel less and buy fewer inessential goods. There are millions like us.
WE aren't harmed by this, yet. But this means that business is down at the motels, hence they cut back on their staff. Fewer maids get work. The stores that we normally shop at get less business so they cut back. Restaurants see their business go down so they hire less staff.
Hence people like your friend end up getting hurt as there is less work available for her.
Hence some think that a middle class tax cut might put more money in the hands for us to spend.
I am not sure that I buy this; I think that Robert Reich is on the right track when he says that we need to rebuild infrastructure. That will put money into the economy (blue collar jobs that can't be outsourced); they'll spend more money thereby providing more opportunities for people like your friend.
So the crucial questions become (1) how much will the government have to spend to get the economy back on track? and (2) what sort of spending will have the biggest impact on jobs and incomes?
The answer to the first question is "a lot." Given the magnitude of the mess and the amount of underutilized capacity in the economy-- people who are or will soon be unemployed, those who are underemployed, factories shuttered, offices empty, trucks and containers idled -- government may have to spend $600 or $700 billion next year to reverse the downward cycle we're in.
The answer to the second question is mostly "infrastructure" -- repairing roads and bridges, levees and ports; investing in light rail, electrical grids, new sources of energy, more energy conservation. Even conservative economists like Harvard's Martin Feldstein are calling for government to stimulate the economy through infrastructure spending. Infrastructure projects like these pack a double-whammy: they create lots of jobs, and they make the economy work better in the future. (Important qualification: To do this correctly and avoid pork, the federal government will need to have a capital budget that lists infrastructure projects in order of priority of public need.)
Government should also spend on health care and child care. These expenditures are also double whammies: they, too, create lots of jobs, and they fulfill vital public needs.
Expect two sorts of arguments against this. The first will come from fiscal hawks who claim that the government is already spending way too much. Even without a new stimulus package, next year's budget deficit could run over a trillion dollars, given the amounts to be spent bailing out Wall Street and perhaps the auto industry, and providing extended unemployment insurance and other measures to help those in direct need. The hawks will argue that the nation can't afford giant deficits, especially when baby boomers are only a few years away from retiring and claiming Social Security and Medicare.
They're wrong. Government spending that puts people back to work and invests in the future productivity of the nation is exactly what the economy needs right now. Deficit numbers themselves have no significance. The pertinent issue is how much underutilized capacity exists in the economy. When there's lots of idle capacity, deficit spending is entirely appropriate, as John Maynard Keynes taught us. Moving the economy to fuller capacity will of itself shrink future deficits. -30-