s/o Negative economic expectations and the "Tinkerbell economy"

[Sara R]

Negative expectations have a way of becoming reality; the lower the masses expect it to go, the lower it'll go.

 

I hear this kind of thinking all the time, and it always annoys me. Concentrating solely on the psychological aspects on the economy ignores the realities behind that psychology. The way you fix the psychology is by paying attention to the reality and taking steps to prepare and fix it. You don't fix the psychology by blind faith.

 

Sharon Astyk, the author of the blog Casaubon's Book, said it better than I can. She posted this in May of last year, as the downturn was getting started:

 

We have a Tinkerbell economy - in Peter Pan we’re told that every time you say “I don’t believe in fairies†one drops dead. The same is effectively true of our present economy - every time someone actually admits that they don’t think the magical wish-fulfillment fantasy that is our market system can fix it, a little piece falls down dead. So it is important that the media and public figures say, as loudly as possible, “I do believe in market fairies. I do believe in market fairies†so as to drown out any doubts we might have, caused, say, by the actual evidence that we’re getting poorer.

 

But all of this, sad and horrible as it is, is merely the prelude. . . .

 

The truth is that as long as the voices keep saying so loudly that everything will be all right, most Americans have no idea that they need to make fundamental changes - we’re being told this is just a downturn, and that if we all believe in market fairies hard enough, we can keep it from being bad. . . .

 

The fact is, just saying you believe in fairies doesn’t make Tinkerbell appear at the bottom of your garden. And as unpleasant as it is to hear the bad news, unless people know that it is going to get worse, they won’t start using what resources they have left in a coherent way - instead of starting gardens and dumping cars and relying on carpools and public transport, moving towards the more stable informal economy, they will try, as long as they can, to maintain their basic lifestyle. And that only brings about a greater disaster. But only a big pile of fairy corpses will be visible enough to make this clear.

 

I’m dropping market fairies as fast as I can. Because I don’t believe.

[hornblower]

Thanks for posting that.

I got a laugh out of the tinkerbell economy & I enjoyed browsing through the rest of her blog.

[SapphireStitch]

Thank you for posting this! Along the same lines, here's a link to a video on PBS's website. This is a commercial that's playing in Finland that likens the Depression to an animal. People are "feeding" it by cutting back on spending, and when they finally decide to go out and spend money, the animal shrivels up and dies and they are all happy again.

 

Are those of us who are living frugally ruining the economy? If so, maybe the economy needs to be "ruined" and brought back down to a realistic size. But that would hurt a lot of people, and I don't want to see that happen either...

 

http://www.pbs.org/newshour/businessdesk/2009/02/web-extra-finlands-unusual-tak.html

[kokotg]

I went to grad school with Sharon!

[kokotg]

And, yeah. A few months ago there was a story on NPR in which they were asking some economists to consider whether perpetual economic "growth" was really possible. As if it had never even occurred to anyone before recently that it might not be.

[Guest Virginia Dawn]

Thank you for posting this! Along the same lines, here's a link to a video on PBS's website. This is a commercial that's playing in Finland that likens the Depression to an animal. People are "feeding" it by cutting back on spending, and when they finally decide to go out and spend money, the animal shrivels up and dies and they are all happy again.

 

Are those of us who are living frugally ruining the economy? If so, maybe the economy needs to be "ruined" and brought back down to a realistic size. But that would hurt a lot of people, and I don't want to see that happen either...

 

http://www.pbs.org/newshour/businessdesk/2009/02/web-extra-finlands-unusual-tak.html

 

That would make sense only if everyone had the *choice* whether or not to cut back and live frugally or go out and spend money.

[Margaret in GA]

Thank you for posting this! Along the same lines, here's a link to a video on PBS's website. This is a commercial that's playing in Finland that likens the Depression to an animal. People are "feeding" it by cutting back on spending, and when they finally decide to go out and spend money, the animal shrivels up and dies and they are all happy again.

 

Are those of us who are living frugally ruining the economy? If so, maybe the economy needs to be "ruined" and brought back down to a realistic size. But that would hurt a lot of people, and I don't want to see that happen either...

 

http://www.pbs.org/newshour/businessdesk/2009/02/web-extra-finlands-unusual-tak.html

 

 

I think the economy does need a "reset" (new buzzword these days). If you have been spending more than you make then yes, you should stop spending money. If you were joyfully shopping without breaking your budget and have suddenly stopped because of a perception created by media then yes, you are ruining our economy. That's my opinion. We may not like it, but our economy is based on buying things from people. The alternative is to have a truly primitive agrarian society in which we purchase nothing. Don't think that's going to happen any time soon.

 

Margaret

[Jane in NC]

Sharon Astyk, the author of the blog Casaubon's Book, said it better than I can.

 

What a fascinating blog. Thank you for posting the link.

 

Jane

[hornblower]

There's a new book out in Canada called Managing Without Growth - Slower by Design, Not Disaster

 

The author is an economist and a professor in environmental studies.

 

"Peter Victor challenges the priority that rich countries continue to give to economic growth as an over-arching objective of economic policy. The challenge is based on a critical analysis of the literature on environmental and resource limits to growth, on the disconnect between higher incomes and happiness, and on the failure of economic growth to meet other key economic, social and environmental policy objectives."

 

more about the book, interviews and speeches

http://www.managingwithoutgrowth.com/Media_Interviews.html

 

I think it's a very timely concept & getting a fair bit of coverage up here. I've heard him interviewed but haven't seen the book yet; apparently it's an academic work, and wasn't intended for the general public though it's crossing over.....

[farmgirlinwv]

That would make sense only if everyone had the *choice* whether or not to cut back and live frugally or go out and spend money.

 

First, thanks for posting this!

 

Second, who has taken away your choice? Do you not choose to buy new clothes instead of used? Do you not choose where you live? Do you not choose what car to drive? Do you not choose whether or not to have internet/cable ect? I'm sure you see where I'm going. How has your right to choose been usurped?

 

Lisa

[Colleen]

Yes, in another thread I said:

 

Negative expectations have a way of becoming reality; the lower the masses expect it to go, the lower it'll go.

 

Now you've commented:

 

 

I hear this kind of thinking all the time, and it always annoys me. Concentrating solely on the psychological aspects on the economy ignores the realities behind that psychology.

 

You're both misinterpreting and misrepresenting my earlier remark. The fact that I touched upon the psychological aspects of the economy in a fifteen second response on an online forum doesn't mean that's my sole focus. It doesn't mean I'm ignoring the realities behind that psychology.

 

As I said in a follow-up, I'm a realist through and through. I also have degrees in economics. I'm not merely wandering around with my head in the clouds, ignorant of the plethora of factors that influence the rise and fall of the economy. In our current situation, people have good reason to be concerned. They also have good reason not to get carried away by the sky-is-falling theme that most media sources are so gleefully conveying. Drama may be good for the news; not so much for the economy.

[farmgirlinwv]

It doesn't feel like I had much of a choice if I'm renting a cheap house in a dangerous neighborhood, drive a cheap crappy car, and wear clothing that is falling apart.

 

It must be a nice feeling to truly choose those things.

 

Yes, I do choose to have internet. It is one of the few little luxuries I have.

 

 

I wasn't trying to be snarky. I really didn't know what you meant. You're saying you CAN'T choose to live more frugally than you already do because you're already living as frugally as possible. Right?

[Sara R]

I apologize, Colleen. My beef is with the general idea, not with you specifically. You made it clear in the other thread that you didn't think that psychology was the primary thing affecting the economy.

[Kimberly in IN]

I think the economy does need a "reset" (new buzzword these days). If you have been spending more than you make then yes, you should stop spending money. If you were joyfully shopping without breaking your budget and have suddenly stopped because of a perception created by media then yes, you are ruining our economy. That's my opinion. We may not like it, but our economy is based on buying things from people.

Margaret

 

I understand that statement objectively, but I have such a big problem actually applying this to my own life. So far, so good, dh is still employed, nothing on the horizon suggests he rightsized out of a job, BUT ... you just don't know. Who knows what next week will bring. So, I have adopted a much more frugal lifestyle for now. Certainly, others have adopted a drastically more frugal style that we have, but we have definitely cut back. We had been living w/in our means before, just much more so now.

 

How do you not begin to prepare for the worst? By the way, dh does not share my negative thoughts. However, I can't get out of the mindset of it may all change tomorrow, be prepared. Just my own vent and own personal dilemma. I applaud those that can see the picture differently.

[Sara R]

If you were joyfully shopping without breaking your budget and have suddenly stopped because of a perception created by media then yes, you are ruining our economy. That's my opinion. We may not like it, but our economy is based on buying things from people.

 

This is according to Keynesian economics. Saving is bad and spending is good. Austrian economics is different. According to them, the wealth of nations is just like the wealth of households, but on a larger scale. If you spend everything you make, you become poor. Of course everyone has to spend something. Wealth is built through production (income) and savings.

 

If no one saved money, no one would be able to borrow money, because saved money is used for investment. In fact, our country has had a low-to-negative savings rate for about 10 years now, right? Because we have collectively spent too much, we don't have domestic money for investment, and we have to use foreign money. This puts our economy at risk. Savings is important to our economy.

[Margaret in GA]

This is according to Keynesian economics. Saving is bad and spending is good. Austrian economics is different. According to them, the wealth of nations is just like the wealth of households, but on a larger scale. If you spend everything you make, you become poor. Of course everyone has to spend something. Wealth is built through production (income) and savings.

 

If no one saved money, no one would be able to borrow money, because saved money is used for investment. In fact, our country has had a low-to-negative savings rate for about 10 years now, right? Because we have collectively spent too much, we don't have domestic money for investment, and we have to use foreign money. This puts our economy at risk. Savings is important to our economy.

 

 

Yeah, but if you read what I wrote I'm saying that you shouldn't stop saving... we should have been doing that all along, for sure. I said we should spend *within our means*. We can't just stop spending entirely and expect that it won't affect our own jobs at some point.

 

Margaret

[Guest Virginia Dawn]

First, thanks for posting this!

 

Second, who has taken away your choice? Do you not choose to buy new clothes instead of used? Do you not choose where you live? Do you not choose what car to drive? Do you not choose whether or not to have internet/cable ect? I'm sure you see where I'm going. How has your right to choose been usurped?

 

Lisa

 

I don't understand your point.

 

My point was that so many people don't have any choice because they have to live a certain way, because of lack of finances, whether they want to or not.

 

So many can not choose where to live, what car to drive, new clothes to wear. So many have limited choices, not always of their own making.

[SapphireStitch]

I don't understand your point.

 

My point was that so many people don't have any choice because they have to live a certain way, because of lack of finances, whether they want to or not.

 

So many can not choose where to live, what car to drive, new clothes to wear. So many have limited choices, not always of their own making.

 

Yeah, that's what I meant when I said it would hurt a lot of people if the economy was "ruined". We see that happening already as more and more people lose jobs.

 

I go back and forth between thinking that our family will be better able to adjust than some because we already live frugally...because we HAVE TO...and panicking and wondering where we will cut back if we have to. When some financial guru talks about people having to give up luxuries they usually mention things we're never had, they're simply not there to give up.

 

I may be getting away from the point of the thread, though...

 

But when I hear commentators say that the country has to do this and has to do that, in order to boost the banks so they can give credit because our country runs on credit...well, then I start thinking "Why?" Why does it have to run on credit, why couldn't we go back to a cash economy?

 

Econ 101 was a LONG time ago...:tongue_smilie:

[Sebastian (a lady)]

I think the economy does need a "reset" (new buzzword these days). If you have been spending more than you make then yes, you should stop spending money. If you were joyfully shopping without breaking your budget and have suddenly stopped because of a perception created by media then yes, you are ruining our economy. That's my opinion. We may not like it, but our economy is based on buying things from people. The alternative is to have a truly primitive agrarian society in which we purchase nothing. Don't think that's going to happen any time soon.

 

Margaret

 

Unfortunately, the economy is based on buying many many things that are quite unnecessary. How many things in the average department store are needs and how many are wants?

But I think you are setting up a false dicotomy with buying everything in sight on one hand and going back to self-subsistence farming on the other hand. I don't see that as the situation we're in.

Yes, our economy is based on using money to buy things rather than barter. It is based on having people specialize and get relative efficiency and therefore be able to make products less expensive all around.

That doesn't obligate me to buy unnecessary stuff just to prop up the makers of unnecessary stuff any more than I should go and invest in a horse and carriage business so that they don't get put out of business by the rise of cars.

[mcconnellboys]

Well, LOL, I'm not sure that pretending to be Scarlett and insisting that we'll "Think about it Tomorrow" will continue to work into the future unless, like Scarlett, we're really actually doing something to move ourselves forward at the same time.

[Colleen]

There's a new book out in Canada called Managing Without Growth - Slower by Design, Not Disaster

 

The author is an economist and a professor in environmental studies.

 

Sounds interesting, thanks for mentioning this. If I could do it all over again, I'd combine my econ background with environmental studies. Maybe I can force one of my boys to go that route and thereby live vicariously.;)

[farmgirlinwv]

I don't understand your point.

 

My point was that so many people don't have any choice because they have to live a certain way, because of lack of finances, whether they want to or not.

 

So many can not choose where to live, what car to drive, new clothes to wear. So many have limited choices, not always of their own making.

 

I was not thinking of people who were already doing all the things I listed like buying used, living in a less expensive home/apt. ect. I don't understand your point. Why are your limited choices not of your own making? Where each of us is right now is the result of the choices we've made.

[Guest Virginia Dawn]

I was not thinking of people who were already doing all the things I listed like buying used, living in a less expensive home/apt. ect. I don't understand your point. Why are your limited choices not of your own making? Where each of us is right now is the result of the choices we've made.

 

Do you not believe in circumstances beyond your control? Unexpected major illness, layoffs, a spouse leaving, an upside down mortgage that you would have had no problem paying until the bubble burst, the decrease of your purchasing power because of inflation, a disabled spouse or child, death in the family, etc, etc.

 

Do you not believe that anyone is born with limited choices because of their culture, health, or family background?

[cathmom]

Do you not believe in circumstances beyond your control? Unexpected major illness, layoffs, a spouse leaving, an upside down mortgage that you would have had no problem paying until the bubble burst, the decrease of your purchasing power because of inflation, a disabled spouse or child, death in the family, etc, etc.

 

Do you not believe that anyone is born with limited choices because of their culture, health, or family background?

 

If not, you need to read Outliers!

[Hillary in KS]

Do you not believe in circumstances beyond your control? Unexpected major illness, layoffs, a spouse leaving, an upside down mortgage that you would have had no problem paying until the bubble burst, the decrease of your purchasing power because of inflation, a disabled spouse or child, death in the family, etc, etc.

 

Do you not believe that anyone is born with limited choices because of their culture, health, or family background?

 

I don't pretend to know what farmgirl's point was. I think she was asking what traps you in your circumstances, if it is something other than results of choices you have made?

 

Even in the unpredictable circumstances that Virginia Dawn listed, you still have a choice as to how you will handle them. Even if you had a rough start as a child, you still have choices in your life. Your childhood does not doom you forever.

 

Think of all the people who were born into rough circumstances (poverty, single parent, abusive parent, abandoned by parents, etc.) , and yet chose to reach beyond them:

 

1. Abraham Lincoln

2. Gerald Ford

3. Bill Clinton

4. Barack Obama

5. Jon Huntsman

 

Those are just a few that I pulled off the top of my head.

 

Our family was very poor growing up. But we were never trapped. Dad made some difficult choices in order to have what we needed. I had lived in 10 different cities by the time I was 11, moving often so that Dad could find work.

 

Dh lost his job the day after Christmas last year. No warning. Nothing. Thankfully, he was hired someplace else 5 months later. We had to move to a location that, honestly, none of us wanted. But we chose to move in order to get the job. When talking with recruiters, MANY of them had said they had job openings, but most people didn't want to move in order to take them. They chose to remain unemployed in order to live in the city in which they do. Fine. Their choice. But don't complain about how you're forced to be there.

 

Dh is in a position to hire people, but has a difficult time finding good workers in a less than glamorous industry. (Meat products plant.) It's a messy job. It's smelly. But it pays well. And yet, there are unemployed people in that tiny town who choose not to apply because of the "ick" factors.

 

Dh recently had to fire a man who, after 3 months of warnings and performance improvement plans, still "could not" come to work on time. He chose not to get up early enough to get to work, and therefore eventually lost his job.

 

My brother and his wife have always struggled financially. They would say they are held back by "the man." That they can't get ahead no matter what. However, I see a man who chose to blow off high school (barely graduated) despite the warnings and assistance from adults in his life, and then chose not to go to college (despite my parents offering to pay). He works a very physical job because that's the only sort of job that will hire him without any education. (Again, no education was his choice.) He finally spent 6 years getting an accounting degree, but chooses not to work in that field because he wants to stay home with his children during the day. His wife has a good job, but together they choose to spend much of their money on expensive clothes, electronic equipment, gaming systems, and trips to Vegas. They see themselves as held down and trapped. I see their circumstances as the results of the choices they have made.

 

 

I do think that people are at times held back because of circumstances, but others are where they are because of their choices. I don't think living hand to mouth is a "bad" thing. I've done it for many, many years. Would I love to be one of the wealthy one percent? Sure! But I refuse to whine and moan and blame my situation on fate, extenuous circumstances, or other people. I choose to make the best of my lot in life. I choose not to give in to envy.

 

Now having posted all that, PLEASE do not project this onto your unique situation. I'm speaking in generalities, based upon my own life experience. I am not lecturing any one poster on their lifestyle or pointing fingers at anyone. I am merely trying to elaborate on the point that I *think* farmgirl might be trying to make.

 

If you are reading this and thinking, "I had NO say in this. I am where I am entirely because of someone/something else. I will never be able to escape this circumstance," then I think farmgirl is asking, "If it's not the result of one of your choices that has you where you are, then what is it? What has held you in this place against your will?" Not snarky- just asking for an explanation.

[farmgirlinwv]

Do you not believe in circumstances beyond your control? Unexpected major illness, layoffs, a spouse leaving, an upside down mortgage that you would have had no problem paying until the bubble burst, the decrease of your purchasing power because of inflation, a disabled spouse or child, death in the family, etc, etc.

 

Do you not believe that anyone is born with limited choices because of their culture, health, or family background?

 

I don't pretend to know what farmgirl's point was. I think she was asking what traps you in your circumstances, if it is something other than results of choices you have made?

 

Even in the unpredictable circumstances that Virginia Dawn listed, you still have a choice as to how you will handle them. Even if you had a rough start as a child, you still have choices in your life. Your childhood does not doom you forever.

 

Think of all the people who were born into rough circumstances (poverty, single parent, abusive parent, abandoned by parents, etc.) , and yet chose to reach beyond them:

 

1. Abraham Lincoln

2. Gerald Ford

3. Bill Clinton

4. Barack Obama

5. Jon Huntsman

 

Those are just a few that I pulled off the top of my head.

 

Our family was very poor growing up. But we were never trapped. Dad made some difficult choices in order to have what we needed. I had lived in 10 different cities by the time I was 11, moving often so that Dad could find work.

 

Dh lost his job the day after Christmas last year. No warning. Nothing. Thankfully, he was hired someplace else 5 months later. We had to move to a location that, honestly, none of us wanted. But we chose to move in order to get the job. When talking with recruiters, MANY of them had said they had job openings, but most people didn't want to move in order to take them. They chose to remain unemployed in order to live in the city in which they do. Fine. Their choice. But don't complain about how you're forced to be there.

 

Dh is in a position to hire people, but has a difficult time finding good workers in a less than glamorous industry. (Meat products plant.) It's a messy job. It's smelly. But it pays well. And yet, there are unemployed people in that tiny town who choose not to apply because of the "ick" factors.

 

Dh recently had to fire a man who, after 3 months of warnings and performance improvement plans, still "could not" come to work on time. He chose not to get up early enough to get to work, and therefore eventually lost his job.

 

My brother and his wife have always struggled financially. They would say they are held back by "the man." That they can't get ahead no matter what. However, I see a man who chose to blow off high school (barely graduated) despite the warnings and assistance from adults in his life, and then chose not to go to college (despite my parents offering to pay). He works a very physical job because that's the only sort of job that will hire him without any education. (Again, no education was his choice.) He finally spent 6 years getting an accounting degree, but chooses not to work in that field because he wants to stay home with his children during the day. His wife has a good job, but together they choose to spend much of their money on expensive clothes, electronic equipment, gaming systems, and trips to Vegas. They see themselves as held down and trapped. I see their circumstances as the results of the choices they have made.

 

 

I do think that people are at times held back because of circumstances, but others are where they are because of their choices. I don't think living hand to mouth is a "bad" thing. I've done it for many, many years. Would I love to be one of the wealthy one percent? Sure! But I refuse to whine and moan and blame my situation on fate, extenuous circumstances, or other people. I choose to make the best of my lot in life. I choose not to give in to envy.

 

Now having posted all that, PLEASE do not project this onto your unique situation. I'm speaking in generalities, based upon my own life experience. I am not lecturing any one poster on their lifestyle or pointing fingers at anyone. I am merely trying to elaborate on the point that I *think* farmgirl might be trying to make.

 

If you are reading this and thinking, "I had NO say in this. I am where I am entirely because of someone/something else. I will never be able to escape this circumstance," then I think farmgirl is asking, "If it's not the result of one of your choices that has you where you are, then what is it? What has held you in this place against your will?" Not snarky- just asking for an explanation.

 

Hillary has done a great job posting to what I was referring. Nothing is fair. It never has been and never will be. Let's also take note that it is not the govt's job to make life fair.

 

I grew up very poor. We had an outhouse til 1985! My dad was disabled. I know what other people had and we didn't. What does fair have to do with it? I hate this mentality that has taken over America. If someone else has it, so should I. My mentality is...if you want it work and get it. If you can't or won't, get over it. Obviously people do not choose mental illnesses. My dd has learning disabilities. I wish we had $$ to get different tx's and help for her. We can't and I accept that. I'm not entitled to that. People use excuses all the time for what they can't do. Some people truely can't. That's their life. Take it up w/ God. The overwhelming majority of people do have a say, a CHOICE, in what they do. It's the little CHOICES that add up. It's an attitude of poor me, why should I try? Everything's stacked against me. Where there's a will there's a way. History is riddled w/ examples of people overcoming the odds. That's what our society needs. Overcomers. I know they're out there, but all you see is people wanting to do less and get more. We wonder what's happening to America! I don't. Dh and I have noticed it for years. People want to be entertained. People feel entitled to what their neighbor has. We're not. We live on a limited income. That's our life and the result of our choices. Could I complain about how life's not fair? Sure. So could people who's dc are born w/ cancer or people who live in other oppressive countries, or people born blind or people born into abusive families...you can go on and on. We are the result of our choices. Some of us have more limited choices. Our family is one of those. BUT we still have choices.

 

This is something I feel very strongly about. I think this mentality is leading our country done a very dangerous path. We're not going to agree. I'm not a well-off person looking down on poor people. I'm a person from a very poor family. I have a child w/ LD's. We live a very simple lifestyle due to our income. We make the best of it. We are happy. We DO NOT expect our lives to be like everyone else's. Some people have it better and some have it worse. We make a CHOICE to be content w/ what we have. My dh makes a CHOICE to work 60 hrs a week to try to stay afloat in this economy. We CHOOSE not to run up debt even though we could. I CHOOSE to stay home and hs our dd when I could send her to ps and go make $$. I could CHOOSE to be bitter about the horrible experiences of my childhood or how I have so much less than those around me. However, I CHOOSE to see the good. I have a place out of the cold. I have a family I love. We aren't in the hospital. Dh is able to work. I have the freedom to hs my dd to help her w/ her LD's. We have food to eat and clothes to wear. There are lots of things we don't have. I CHOOSE to be happy w/ what we do.

 

This is getting too long. Anyway, I hope you can see my point. I see yours only I respectfully disagree. You can CHOOSE to respectfully disagree w/ me. It really doesn't matter because I think people w/ your mindset are in the majority.

 

I am in no way upset w/ anything posted here. These are my thoughts and opinions. That's what forums are intended to do.

 

Lisa

[Guest Virginia Dawn]

"This is a commercial that's playing in Finland that likens the Depression to an animal. People are "feeding" it by cutting back on spending, and when they finally decide to go out and spend money, the animal shrivels up and dies and they are all happy again."

 

This is the statment that I originally said does not make sense unless everyone has the choice whether or not to live frugally.

 

I said nothing about entitlement, contentment, or fairness. I was merely observing that it is a fact that there is a great number of people who can't just decide to stop feeding a depression and go out and start spending money. Their choices are limited, not because of temperament or attitude, but because of life circumstances.

 

Just as a disabled person is naturally limited to things he is physically or mentally capable of doing. Sure we "rise above our circumstances." But even then, things out of our own control may limit how far we can rise, or how long we can stay where we want to be. How we handle disappointments or setbacks is a totally different issue.

[Margaret in GA]

Unfortunately, the economy is based on buying many many things that are quite unnecessary. How many things in the average department store are needs and how many are wants?

But I think you are setting up a false dicotomy with buying everything in sight on one hand and going back to self-subsistence farming on the other hand. I don't see that as the situation we're in.

Yes, our economy is based on using money to buy things rather than barter. It is based on having people specialize and get relative efficiency and therefore be able to make products less expensive all around.

That doesn't obligate me to buy unnecessary stuff just to prop up the makers of unnecessary stuff any more than I should go and invest in a horse and carriage business so that they don't get put out of business by the rise of cars.

 

OK. First let me say that I'm not pro-consumerism. I'm just playing the devils advocate here. But, let me ask exactly what is "unnecessary stuff"? Is a car unnecessary? Is clothing unnecessary? Is a book unnecessary? Our economy (for better or worse) is based on the buying and selling of unecessary stuff. Do we have too much retail space and restaurants right now? Yes. Do we need to reset the economy and close some of these down? Yes. Do we all need to stop eating at restaurants and shopping at independent stores and start buying used clothing and books? No way. For one thing: buying USED means that someone at some point bought that new. You cannot buy used if people stop shopping. ;)

 

Margaret

[Sara R]

OK. First let me say that I'm not pro-consumerism. I'm just playing the devils advocate here.

 

Noted. :) I will argue against the idea presented (and those who agree with it).

 

But, let me ask exactly what is "unnecessary stuff"? Is a car unnecessary? Is clothing unnecessary? Is a book unnecessary? Our economy (for better or worse) is based on the buying and selling of unecessary stuff.

 

My point is that, even people stopped unnecessary or marginally necessary items, it would still be good for the economy, but in a different way. Not spending means saving. If you save the money in a bank, or invest it through a firm, that money is available for the bank to lend. That is good for the economy. This whole credit crunch is caused by money not being available to lend. People stopped being willing to lend money because the investments were no longer perceived as safe, because, well, they weren't.

 

Spending too much on things without enough value is what got us into this mess. Doing more of the same isn't going to get us out.

[Sara R]

And unfortunately the negative expectations are hurting people. My husband works for a company that oddly is doing fairly well. The company needs to hire people because they need the people. They won't hire people though because they are uncertain and afraid.

 

I'm very sorry about how the economy has affected your family. It is shocking how quickly things have changed.

 

(I'm kind of a big picture person [iNTJ :lol:], who finds it fascinating how all of the pieces of the puzzle fit together. Sometimes that makes me appear callous. I don't mean to be.)

 

With that said--

 

The question isn't whether or not the company needs the people. The question is whether or not they have the money to pay them, both now and in the future. That isn't caused necessarily by negative thinking, but by money in the bank (and whether or not it can be expected to stay there and retain its purchasing power), and by the behavior of customers who may also be losing jobs, money, or purchasing power.

 

 

 

I DO see it as the governments responsibility in that case to do SOMETHING. Do we want to see a bunch of people homeless? I don't want to be homeless.

 

No one wants anyone to be homeless. I think everyone can agree on that.

 

We are treading awfully close to political territory with talk of "the government," so I'll be careful. Nothing below should be construed to mean that I favored one presidential candidate over the other. ;)

 

The question is whether or not the government really has the power to cure the problem. If the government was sitting on big piles of money, then they could maybe do something about it. But they aren't. Our national debt (including Social Security and Medicare obligations) was already a disaster waiting to happen before any of this mess started. Here is a video about it from May 2007: David Walker (then the head of the Governmental Accountability Office, the non-partisan Government Accountant) on 60 Minutes. Our country has added trillions to that number since then. Borrowing or printing even more money to attempt to solve the problem will only make matters worse in the long run.

[plimsoll]

This is according to Keynesian economics. Saving is bad and spending is good. Austrian economics is different. According to them, the wealth of nations is just like the wealth of households, but on a larger scale. If you spend everything you make, you become poor. Of course everyone has to spend something. Wealth is built through production (income) and savings.

 

This a great succinct summary. Thanks!