Tuesday, December 02, 2008

On Our Black Magic Economy

Here is the opening paragraph in Wikipedia's entry under "Economics:"

"Current economic models developed out of the broader field of political economy in the late 19th century, owing to a desire to use an empirical approach more akin to the physical sciences.[2] A definition that captures much of modern economics is that of Lionel Robbins in a 1932 essay: "the science which studies human behavior as a relationship between ends and scarce means which have alternative uses."[3] Scarcity means that available resources are insufficient to satisfy all wants and needs. Absent scarcity and alternative uses of available resources, there is no economic problem. The subject thus defined involves the study of choices as they are affected by incentives and resources."

Okay…I am not a stupid woman. Perhaps I'm less educated than I would like to be, but I think my intelligence level is right up there. And I have no idea what any of that means. A couple of weeks ago, my landlord rather sheepishly confessed that he has a degree in Economics. "Geez, Brian," I groaned, "That's like having a degree in witchcraft."

From all that I can gather, I've come to the conclusion that economics is an infuriating concept which no one really understands, and upon which no two people seem to agree, yet it governs the relative ease or challenge of my daily existence. It can dictate whether I have a roof over my head, food to eat, and decent medical care when I need it, yet it is so ethereal that I have as much personal control over it as I do over spirits on The Other Side. There are words, like incantations, that only a privileged few are allowed to speak, and even those chosen few are loathe to utter them. Words like "recession," "slow-down," "correction," and the most powerful of all—the "Beetlejuice" of the economic lexicon—"depression."

Somewhere along the line, the decision was made that the best way to rebuild the economy after the September 11th terrorist attacks was to hand the whole smoking mess to the richest of the rich, promise a stream of unlimited profits pouring into their treasure chests, turn the other way and let them have at it. It was so vital that the United States be able to stand up, dust itself off and say to the world, "Ha-ha, didn't hurt!" that we sold our souls to the devil. And the economic witch doctors to whom we turned have conjured and chanted and eye-of-newt-ed us to the top-heavy, over-inflated monster that is even now falling down around our heads.

"Black Friday" is the aptly named holiday upon which we celebrate the apex of our greed-based economy. The traditional game of this holiday involves retailers dangling irresistibly priced carrots in front of frenzied customers, who must then jump through demoralizing hoops—like lining up in the middle of the night in the rain outside the local Wal-Mart. This is the reward we get for carrying the nation's economy on our backs, year-round, by dutifully streaming to the stores and trading a hefty portion of our income for the latest technology, newest toy, or flashiest bling. What is wrong with this picture?

In the past weeks, the demise of our black magic economic model has been the star of the global stage. The entire world has watched as our booming gaseous blimp of an economy has lumbered toward the same end as the Hindenberg. And it is to be hoped that any country in its right mind, rather than queuing up behind us to subscribe to the same system (and help bail our burning butts out of our flaming ship), will run screaming in the opposite direction. I have no idea what healthy national economies are supposed be based upon. But it's pretty obvious, for a whole host of reasons, that rampant consumerism isn't it. For the past seven years, we've built an economy based largely on lending large amounts of money that did not really exist to people and entities that were not likely to be able to pay it back. How can that not fail, in the end?

It seems to me that a healthy economy must first and foremost be a moral economy. There needs to be equal opportunity for all members of society regardless of race, sex, ethnicity, religion; fair wages for fair labor; an equal chance for any business—large or small—to succeed. There needs to be access to superior education, and the best health care must be considered an inalienable right. There needs to be a sense that enough is enough, and too much is never a good thing. There needs to be a sense of stewardship, of protection of the earth and its resources. There needs to be a spirit of service, of the necessity of doing things that help other people, and not just looking out for number one. In short, there needs to be a means to responsible sustainable growth, rather than rampant irresponsible expansion.

Change is always difficult. It is too easy to get into the middle of something that you come to realize is wrong, but you don't know how to get yourself out of it. Perhaps the Universe is doing us a favor with this economic crisis. It is giving us the opportunity to start over. Let us hope it isn't too late. Let us hope that the people taking over the reins now will be bright enough and far-sighted enough to build something meaningful and substantial that will carry us well into this century, and beyond.

Cross-posted at Women On...


Remo said...

Wow, I had a whole bunch of stuff to write but I tripped over a loose metaphor and bonked my head. LOL

1. Our "money" is worthless and is valued for it's intrinsic worth only. Ohhhh, the D-O-L-L-A-R... Rubbish. Our dollar hasn't represented anything since...

2. We left the gold standard. Gold has value. Gold is scarce. The price of gold is easily definable by measureable costs of production vs. demand.

3. No one saves anymore. Our grandparents saved, our parents saved, and we just spendspendspend like fat little piggies.

Restore the economy by outlawing credit except for purchases of more than 200% of individual per capita income. Limit the LIBOR. Remove Social Security from the General Fund and restore its status as a TRUST.

I'm Remo and I should be your President. LOL

alphawoman said...

Lisa, you sound like a socialist...lol!! I agree with Remo (good lord I can believe I wrote that!!) especially about subsequent generations after the Depression Era have not saved. (and if we did, look at our 401 k's!!) And to add insult, if you do save in a tradiditonal manner (CD's, Savings Bonds etc.) the paltry interest amounts are enough to make you scream!

You know all I remember about my economics classes? Guns or butter and elastic and non-elastic economy and supply and demand...lol! dry boring stuff and our cavalier attitude towards understanding the basics have resulted in this mess.

Do you remember the day when the Big Three made cars that we had to have? Like the Duster, the Road Runner, 'Cuda, 409 etc. etc. etc. Of course we were much younger then and prone to wanting a car that went fast and looked good! That's what I think has happened to the car industry. Who gets the hots over a SUV?

Lisa :-] said...


It's true that no one saves anymore. But in the olden days, when you did save, you had a realistic expectation of being able to save enough money to buy something before you died. You could actually SAVE enough money to buy a car without taking out a loan...or you could SAVE enough money to come up with a 20% down payment to get a traditional mortgage on a house. Around these parts, that would mean I would have to SAVE $40,000 just to buy a modestly priced, habitable home. And maybe I could do that, but with real estate prices inflating at the rate they are, by the time I had the 40 grand, I would need 60.

With the crappy interest rates available to those who DO save (my first passbook account when I was a kid paid 5 1/4% interest) why bother? In order to get any kind of decent interest rate at all, you have to put the money where you can't use it for at least six months.

I'm sure it's no accident that saving money is no longer an attractive or even viable option.

Cynthia said...

Do you know how much it bugs me to agree politically with Remo? You are right that savings are no longer able to be what they were for previous generations. I think one of the key words in your excellent entry is stewardship. That seems to be the lost concept in economics (as well as so many other important areas of life).

Tressa Bailey said...

Oh Gawd....Lisa Me too...agreeing with Remo that is. Not that I don't think that everyone should be given the OPPORTUNITY to succeed.... but a lot of people are just plain lazy. If I work harder than the next person I expect and think I deserve a recompense higher and better than they get. I agree that basic and necessary health care should be a right...but there have to be limits. People are small minded and selfish. There really is a ghetto mentality out there. I know I live in the ghetto. Socialism is not the answer.