... ask what you can buy for your country

November 18, 2008|By DAN RODRICKS

So let me see if I understand this: We're supposed to go shopping for the good of the country. We don't have a president standing on the rubble of the American economy saying as much this time, but that's the message again. If, this holiday season, we don't buy electronics we don't need, if we don't buy new cars instead of fixing old ones, then this whole thing is going to fall apart, and we'll be in for a much longer, colder recessionary winter than already feared.

That's what I'm getting from Washington and the Democrats' push for a new stimulus package of as much as $100 billion to consumers.

That's what we've come to - pinning hopes for a recovery on shopping.

Look, I know this is nothing new. I know this is the American reality. But you'll have to indulge me. I am still catching up. I grew up in an age before consumer spending was considered a patriotic duty, and I come from a family that only bought stuff it could afford and, in the main, only stuff we needed to get by. I realize that's old-school thinking and that there has been a whole magnificent age of consumer credit and conspicuous consumption since then.

It's just that the whole idea of this consumer-dominated culture, with its incessant spending, gives me a bad feeling for the long term. Like the soaring house values of just a few years ago, it has never felt like something we could sustain. Instead of just buying imported shoes all the time, I think Americans should get together and open a shoe factory once in a while. I'm a person who suffers from that kind of thinking.

So I admit to being delusional, and sentimental.

But let me ask my fellow baby boomers a question: Does the current state of the economy - the housing collapse, the credit crunch, the drop in retail spending, the rise in unemployment - convince you that our parents were right, after all? I mean, even a smidgen?

Does it make you wish you'd paid more attention when they were talking about money?

You remember our parents - the ones who didn't have much to begin with or, if they did, still practiced a kind of frugality-born-in-hard-times that went out the door about three decades ago. You remember our parents and their parents: They saved money. They didn't buy stuff they didn't need. They got by with one car and one house. They lived close to where they worked and took the subway or bus if they had to - or even if they didn't have to - or they car-pooled with a co-worker. They eschewed credit cards or only used one in emergencies. They borrowed money only for a car or house. They had Christmas Club accounts. They practiced cash-and-carry when it came to buying major appliances. Remember all that?

What happened to all that?

We don't like to admit this, but either intentionally - because ours was supposed to be a rebellious generation - or by the accident of having lived through a period of unparalleled affluence, we eschewed the lessons our elders taught us. We were determined to live better than our parents and grandparents did - that's what they wanted for us, after all - but the measure of that progress seemed to be in the accumulation of consumer products. Instead of being something you earned based on your history or character, credit became something you got by virtue of breathing. And the party was on.

We lived beyond our means, and we didn't save. We stood by as American manufacturing jobs, including the unionized kind that had provided a way for our parents' generation to ascend to the middle class, disappeared, and a new economy emerged, something based on people spending money they didn't have, based, in part, on inflated assets.

There's a lot of blame going around these days, most of it heaped on George Bush, the man who stood on the rubble of 9/11 and asked Americans to go shopping to stimulate the economy.

Yet what's afoot now? Another stimulus package tagged with the hope of rebuilding consumer confidence, this one from the Democrats who blasted Bush. I think it's better to use these billions to fix the roads and seed entrepreneurs who will create jobs than give taxpayers another rebate.

But many people wiser than me - the editors of Barron's, for instance - suggest this kind of direct consumer stimulus is needed to give the economy a jolt and avoid deep recession, maybe even depression. We need to throw money into the economy now, many experts say, and worry about the accumulating government debt later.

I understand that spending makes the world go 'round, and our local retailers, in particular, need us to patronize their stores. In the immediate, the stimulus makes sense.

But in the long term, you have to worry about a culture that asks its worried citizens to spend money, even when it's not prudent. If that's all there is - an economy so dominated by consumer spending - then we're in the kind of structural trouble that will require a long, hard fix.

Please note: We had a stimulus of $168 billion to taxpayers from the government earlier this year. An interesting thing happened: A lot of people used it to pay down debt or build up savings. Imagine! "The savings rate," Bloomberg News reported, "more than doubled to an average 2.3 percent during the last five months from a 1.1 percent average the previous five years."

Our parents would be proud to hear that - not much else, but at least that.

Dan Rodricks can be heard on "Midday" from noon to 2 p.m. Mondays through Thursdays on 88.1 WYPR-FM.

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