Tuesday, November 13, 2007

middle class crunch

I’ve made a fabulous discovery and, from now on, will be reporting frequent finds based on it.

I’m a big time listener of National Public Radio and generally never make the distinction between one segment hosted by any particular individual (unless it’s Terry Gross – she’s always so, I don’t know, smooth, sharp and completely prepared) over another.

However, as I was driving my kids to school this morning, an American Public Media’s Marketplace segment--Priced out of the American Dream--came on and grabbed my attention. Really, I let my van idle for a couple more minutes--while employing a puny ploy of shifting and re-shifting piles of bags that I frequently haul into work each day--in order to listen the conclusion of that program.

I’m glad I idled.

The host, Doug Kritzner, was interviewing Harvard Professor Elizabeth Warren—an academic associated with economics, personal spending and personal debt. She basically said that the America we now know and the standard of living we hold dear will cease to exist in the not-so-distant future.

“We’ve built this latest economic boom on borrowed money” she reported. “Consumers … have managed to stay afloat by using their credit cards and by taking out home-equity lines of credit.”

Ouch. This doesn’t sound good.

And by every account our consumption has gone up – way up. It has tripled in the last 20 years.

[One interesting note: American consumers are responsible for two thirds of the Gross National Product. That’s a hell of a lot of stuff we feel the need to have.]

“Have Americans been over-consuming?” inquired host Doug. “Surely a good chunk of that is discretionary spending”.

[You know … blowing their wad on big ticket items such as monstrous McMansions, gas-guzzling SUVs, expensive vacations and (to pick on a dear blogging pal) flat-screen Plasma TVs.]

No, reports Professor Warren, Americans are simply trying to keep a lid on those troublesome “fixed expenses” – mortgages, health insurance, car payments (in order to get to work—because it takes more than one income to makes ends meet), child care (because it takes more than one income to make ends meet) and, most importantly, taxes.

[Yeah taxes!! Goodness knows we can’t fund a gazillion-dollar war without them! *smile*]

And the scariest part is that a typical American family carries about two-months’ worth of income in credit card debt.

Ohhh ouch baby!

And because of all these money stresses and other financial aggravations, it’s quite possible that some people will delay getting married (or opt out altogether), and start families later (or opt out altogether) to avoid the above mentioned issues. And very soon some people may begin to employ that tried and true tightening-belt strategy and stop buying so much stuff for a while (or maybe forever) to lessen the above mentioned issues.

And because of such reactionary monetary thinking, many experts foresee an ugly set of consequences for our supply and demand type of economy.

Save and don’t spend = bad GNP. Spend and spend some more = obscene National Debt.

Either way, we’re all kinda screwed.

$$wishes: win “the big one”, invest wisely, and become a sage philanthropist
$$sins: Christmas is coming … I feel the sick urge to consume out of traditional necessity
$$goals: Christmas is coming … I want to start employing different and meaningful strategies of giving


Jeni said...

Back in the early 90's when I was in college, one line frequently spouted was that 90 percent of the wealth in this country is held by 10 percent of the people. And, I betcha those numbers are different now -more like 95 percent of the wealth controlled by 5 percent of the people.
You're right on both counts -save/don't spend or spend and spend -either way -screwed!

Dave said...

I did not buy that TV. I may well not buy that TV. I do dearly want that TV.

molly gras said...

Jeni -
95% for 5% ... it's just so damned wrong. And what do they buy? Useless, obnoxious, status-toting crap!

Maybe it is a blessing to be truly middle class ... you can't buy so much crap.

Dave -
Buy the TV -- you're an American, it'll "make you happy"!

But you can't -- that practical upbringing has you in knots, don't it :)

Posolxstvo said...

Dave --

Given that you're damned if you do and damned if you don't, maybe you should, since at least that way you'll have a really crisp picture on your way to hell.