CAPITALISM WITHOUT CONSUMERS
This blog post has been many years in the making. I am not an economist, but I have some common sense. I’m not a politician, but I am not a crook so I feel like I can look at our two-party system and intelligently discuss how broken it is. I have been reading about our broken economy and what is wrong with both Republican and Democratic rhetoric, and I finally think I can point my finger at it. I know what is wrong. I also know the how to fix it. No one wants to hear it, but I know. And so I will attempt break this down in a digestible format for you here. Discussion is welcome. An open mind is needed. A change in your viewpoint (no matter which side of the aisle you sit on) is required if you want to wrap your heap around this.
I want to borrow a piece of pop culture for my first point.
Here we have Princess Leia, telling Grand Moff Tarkin how it is, “The more you tighten your grip, the more star systems will slip through your fingers.” This is true with just about any system which includes tyranny and injustice. And this is true of our own socioeconomic system. (BTW, there is actually a site called http://www.leiasmetalbikini.com. I found it while searching for the above Youtube clip, and it has changed my social and political views. Every guy should have a girl who is willing to dress up in Leia’s metal bikini. If I ever run for office, this will be the linchpin of my campaign.)
There is only so much debt a blue collar worker can incur before the average Joe wakes up and says, “Goddamn, I need to cut up all these cards and live within my means.” As a country, we are there. No amount of stimulus will replace the sinking feeling that comes with debt. Yet all of our financial analysts who are smoking the crack of the ‘wealth without limits’ mindset still firmly believe in a model that includes an economy that expands forever without collapsing.
Here is where some of the common sense creeps in. I am not an economist, but I am smart in other ways. If you are an economist who believes in this ignorant pipe dream, can you please point me towards another system in the history of this planet that survived under the same parameters? Please enlighten me and point to any ecosystem, any species, any economy, or any social system that was able to survive with constant growth and expansion. So…you are unable to do this? With all of science and academia at your fingertips, you are unable to show me one system that expanded constantly without collapsing or failing for hundreds of years on end? Then why in the hell would you be so ridiculous as to consider that our economy could survive under a set of parameters where there are no other successful examples in the history of the world? I’m sorry, but your own greed and egocentrism has gotten the better of you. Not one scientist in America believes in the existence of a perpetual motion machine. Why is it that every economist is convinced that our economy is one?
Jeff Jarvis is a very interesting pundit and analyst. This blog post by him has been discussed all over the internet over the last few days. This post makes the argument that the jobs that have been lost by this country have been lost forever. Severe changes in the way we live, consume, and make a profit have marginalized a certain segment of our society, and these jobs will never return. I couldn’t agree more, but the criticism does not end there. He is just skimming the surface. I would like to make a few points and illuminate a few truths that will never be discussed by politicians. Why won’t these things be discussed? Because it would be political suicide. But I am not running for office, and I have nothing to lose. So here it goes…
Truth #1: Not everyone in this country is bright enough to get a masters degree and pursue a promising career. Some people have to mow the lawns and mop the floors.
I have been responding to 911 calls for sixteen years. I have seen the not-so-well-to-do segment of our population. You could get Ed McMahon, (if he were alive) drive to the trailer park, knock on a door, and tell one of these families that they have won the education sweepstakes. All the little kids in this trailer can go to school for free forever. They can go to college, grad school, get PhD’s…the sky is the limit. I don’t think anyone would take you up on it. (I have often thought that the trick to fixing some of our nation’s woe’s is not to provide more services, but simply get the people living here to use the services that are already here. But that’s the source of another blog post.) No politician will ever tell you this, but it is simply impossible for everyone in our country to be successful. Politicians have learned to soften the blow of this truth by painting Americaas a place where everyone has the possibility of being rich and successful. And it is up to each and every one of us to maximize this possibility. This is the same reason why the lottery is so popular with the poor. Let’s all go to the convenience store to buy our beer, cigarettes, and lotto tickets. Isn’t that productive? But I have digressed a bit.
I hear entrepreneurs, politicians, and economists all talk as if there will soon be a day when everyone in America is well educated and working productively in the information sector. America will be a leader in technology and innovation, and we have no need to rely on production as long as everyone gets with the program. I’m sorry, but I have run calls in the trailer parks and the projects. Some of these people are simply not going to get with the program, no matter how free, advanced and wonderful it is. The change you are suggesting would be nice, but it’s just not possible.
Truth #2: Infinite growth is not possible.
Every for-profit company I have ever worked for labors under the delusion that every year must be better than the year before. The investors who own stock in these companies, and therefore a share of the profits, could care less whether or not the company is successful or not. They just want to make sure the price of the stock goes up in a certain way that they can predict so that they can later sell the stock at a profit. Therefore the long term success of the company is not a factor in any decisions that are made. As a matter of fact, long term success may be undesirable when compared to a quick meteoric climb. Whether or not the company can survive the meteoric climb does not matter. If things start to go south, just sell the stock and move on to the next company that will make them a fortune.
Again, step back and look at this system for a moment. The losers litter the base of this ivory tower. The bodies are stacked deep and thick. How many times do we have to see white collar crooks redline a company into the ground only to float away in their golden parachute just before impact? How many times can we be fooled by this before attempting to regulate it? But wait…everyone in America has a chance to be one of those successful executives. If we regulated this, then the average Joe would no longer have the chance to make it big. So let’s just look the other way so that we can continue to buy these lotto tickets.
Truth #3: The market will not successfully regulate itself.
Greed will always trump responsibility and accountability. Have a look at Ralph Nader’s career before everyone labeled him as a crackpot for trying to create a third political party. (The “I Actually Give a Shit About the American People Party.”) If you ask the average guy on the street what he thinks about Nader, you will usually hear something like, “Oh, that guy is a crackpot.” If you ask the same person what Nader did before he ran for president, that person will say, “I don’t know.” If you don’t know either, I will tell you. He was a tireless consumer advocate who shaped regulation and policy for decades. Seatbelts? That was Nader. Airbags? That was Nader. Cigarette pack warnings? Nader. His work has literally saved thousands of lives. And you know what? American business fought him tooth and nail every step of the way. Not just every step, but every millimeter. Every nanometer. Both Republicans and Democrats are responsible for the deregulation of mega corporations that sodomize you everyday. People whose lives have been saved by Nader’s work call him a crackpot because he dares to try and regulate our precious church of Laissez-faire.
Mortgages weren’t regulated enough and look what happened there. Derivatives? Please. So this is also something you will never hear a politician say: “We need more regulation. No just a little, but a lot of regulation.” Why won’t a politician say that? Because his campaign is funded by business, and what business wants to be regulated more heavily? Is there still anyone out there who doesn’t get this concept?
Truth #4: We have been living way beyond our means. We are all going to have to dial it back and lower our expectations.
We are going to have to make do with less money, less services, less energy, and smaller houses. No one wants to hear this. Interestingly enough, Jimmy Carter once got on TV and told this to America during a national address. So confident was he in his convictions that not long after that speech he fired his entire cabinet and replaced them with people who would help him convince the American people that they needed to conserve and live with less. And you all know what happened to him, don’t you? We got his ass out of office as fast as we could, and replaced him with the nearest Republican that would allow us to run up our credit cards again. Hey, who is handy? Some old actor? Yeah, why not? Let’s put him in office for the next eight years. Whew…that’s better. Man, that Carter guy…can you believe the nerve of that guy wanting me to live more responsibly and frugally? Fuck a bunch of that!
Truth #5: At some point we are going to have to pay back every cent that we owe with interest.
In order to do this, we will have to sacrifice comfort and do without some things. How many times have you heard someone bitch and complain about the deficit and in the very same conversation complain about taxes and budget cuts? Have I missed something here? Have the laws of physics and math somehow changed? Can we actually expect to pay back trillions of dollars with nothing but procrastination and selfishness? I can only shake my head at this one and say, “What the fuck?” I have never had a bank loan me money and later tell me, “You know what, we were kidding. Go ahead and keep that money. We don’t need it. You don’t owe us a cent.” Yet most of the people who are reading this right now are somehow able to reconcile in their head the retarded notion that as a nation we can borrow trillions of dollars, and that will in no way impact any of us personally. You would never vote for any politician who got up on TV and said, “You know what? We’re boned. We all need to raise our taxes a bit and do with less services and comforts until we pay off this debt and get the books balanced.” Who the hell would vote for that guy? Well…I would, but I’m weird.
The Point?
Okay, the title of this post is ‘Capitalism Without Consumers.’ I need to explain that. Remember Princess Leia talking about star systems slipping through the Empire’s fingers? Well, that is what has happened to America. The banks, government, and big business have squeezed way too tight and millions of American consumers have slipped through their fingers. You bled them dry, and they have no more money or credit, so they have stopped consuming. And capitalism without consumers just doesn’t fucking work no matter how many pep talks you give or how much fuzzy math you apply to the numbers.
Banks make a profit by collecting interest on money they lend out. So banks want to lend you money and charge you interest. They want to do this as much as they possibly can. So, they try to convince you that buying things you can’t afford and paying for them later is a good idea. And they actually succeeded in doing that. I’m so confused by this, that my confidence in humanity is gone. If they can convince a nation of 300 million people that living beyond their means and paying 20% interest is a good idea, they can do anything. What are they going to tell me to do next? Periodically go out in the backyard, find a brick, and smash my junk with it? Or maybe go find a stick and beat myself? Cause that makes about as much sense as paying 20% interest for a bunch of shit I don’t need while my government borrows trillions of dollars without raising my taxes. Sure, this will all work out. We’re going to be fine.
There has been a lot of speculation as to why this bailout hasn’t worked. Tax cuts and incentives haven’t worked either. It’s all very simple. Like so many people I know, I have stopped buying things I can’t afford. I haven’t borrowed money or used a credit card in a couple of years now. I stopped smoking the crack the banks were dealing and I have simply decided to go cold turkey and live within my means. Every time I get a little extra money, I pay down debt. I imagine a good percentage of us are doing exactly what I am doing.
And this is why the banks perceive this as not working: they make money by loaning money. A bank’s idea of a stimulus is to get people to borrow money again. But if any stimulus money trickles down to me, I take it and pay off debt. By doing this I am actually reducing the amount of profit made by the banks by reducing the amount of revolving interest I pay to them. And I am sure that I am not the only one doing this. I have heard several reports that this is exactly where much of the stimulus went.
So isn’t that a good thing for the consumer at least? Can we all finally say, “Yay stimulus!” At least the part that trickles down to the consumer after executives skim their bonuses off the top is getting us out of debt, right? Not exactly…you see that stimulus money gets transferred to the national deficit which is the equivalent of using one credit card to pay the bill for another credit card. So, my own government has created a stimulus package that has reduced the amount of profit the banks are making and creates debt that I will some day be liable for in interest. Make no mistake about it. I will someday pay that debt either through higher taxes or a reduction in services. Now I am no longer in charge of my own financial destiny. The government has taken the credit card out of my wallet, ran up the bill, and handed it back to me. Thanks.
The Solution
I have been losing weight recently. Someone at work asked me what my secret is. Here is what I told her, “I have been exercising a bunch. I ride my bike to work. I do crunches, leg lifts, and other strength exercises at least once, sometimes twice a day. After I do those exercises I go walk for a mile to loosen up. I have also reduced my calorie intake. I eat very little meat. I eat reasonable sized meals made up of mostly fruits and vegetables.”
“Fuck! That’s not a secret. That’s work. Who wants to do that?”
“Well, I never actually said I had a secret. You asked me how I was losing weight. You expected and hoped that I had some secret that you could apply to your own situation that would make weight loss easy for you. You didn’t want to hear that I lost weight through lots of self control, exercise, and diet. You don’t want to hear it, but that’s what worked.”
Why should our accountability be any different with our failed economy? As I said earlier, I have the answer. No one wants to hear it, but I have it. So here goes.
I am aiming lower. I sold one car because it was too expensive to maintain. I sold it and paid off more of my debt. I have reorganized my life to where I work closer to home. I ride a bike to work. It saves me tons of money and makes me healthy. We recycle and re-purpose just about everything we own. We set the thermostat to 78 or 80 during the summer and 60 or 62 in the winter. I think my government should raise my taxes and stop making bailouts for bankers. We should stop invading other countries to turn them into puppet democracies so that we can insure a cheap supply of oil to our morbidly obese and unhealthy economy. We should take all of the money we use to invade people and pay down our debt and try to refine alternate sources of energy such as solar power. We should strive to pay a little bit more for locally produced goods so that we can support our own economy and communities. There are plenty of people living all around us who are not capable of getting a masters degree and working for Google, but they can work 40 hours a week producing goods sold locally and make a living. We should strive to provide healthcare and education for these people because generations down the road will benefit. And if we don’t give them something to do they are going to start robbing us and setting up guillotines in the town square.
I’m not a socialist. I’m a capitalist. But you can’t have capitalism without consumers. If the banks and the government would stop stealing the credit card out of my wallet to run up my bill, I might actually have more money in the future to spend on goods and services to support my economy. The CEO’s of these corporations should think about making $250,000 per year for the next 20 years instead of making $3,000,000 this year and hiding it in tax shelters while they look of another job and another company to ruin. Our economy will sustain a CEO that makes $250,000 per year if there are consumers who can actually afford to buy goods and services. Our economy won’t support a $3,000,000 per year douchebag who turned all of his customers into unemployed debt defaulters.
You can’t lose weight on the “all cake and no exercise diet.” You also can’t build a healthy economy by living beyond your means, borrowing money, lowering taxes, being wasteful and selfish, and basing everything on a fantasy perpetual motion machine.
But I know full well that none of you care. So feel free to vote for the Democrat or Republican of your choice. Keep going to Walmart so you can buy silly plastic shit you don’t need out of a sense of entitlement you don’t deserve. Keep trading in all of your financial security for a one in a million chance at winning the lottery. Keep swallowing that bullshit that the super rich are going to allow things to trickle down to poor little you. By all means let’s keep invading other countries to secure expensive non renewable energy while free sunlight keeps baking the ground we walk on. And let’s all keep going to the grocery store to buy shitty food that was shipped from thousands of miles away. Let’s keep eating it until we become morbidly obese diabetics with vitamin deficiencies. Oh yeah, and lets do all this on credit and run up the tab until the machine seizes and no one will buy anything. Yep…capitalism without consumers…that’ll work.
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