25 May 08 - 09:49Why do we spend more than we earn?
Recently, there have been pieces discussing the fact that the debt to income ratio in the US is the highest its ever been. Why?
- Stagnant wages in real dollars (since the 70s)
- Union busting
- No living wage
- The decline of the dollar's value due to inflation or exchange rates
- Race to the bottom due to the Globalization of Capital
- A careless consumerist culture, which leads to a negative savings rate
Much has been said about these, but there's one more that doesn't receive as much attention: the despondency-fueled end-times "party" behavior. It
goes something like this: if you feel like everything could end tomorrow, you'd better enjoy yourself now. Many things cause the despondency. Lack of affordable health care means one accident or illness could bankrupt you and put you out on the street. Lack of affordable higher education (especially for adults who don't have anyone to pay their rent for them) means less or no opportunities for advancement. Tattered social safety nets mean that you could be one job loss from ruin. Plus all the ones indicated in the list above. Your dollar could be worthless tomorrow. We could get into a large-scale war with a number of countries. The prices of basic necessities (food, energy, shelter), beyond health and education, are skyrocketing. With the quick and easy availability of information on tragedies across the globe, it becomes easy to imagine that you could be a victim next. It's a kind of crack up boom behavior, but fueled by more than hyperinflation. It's fueled by the realization that party could stop tomorrow or in an hour. Why not spend it all? Why bother saving if it could all be taken away with one storm, one earthquake, one layoff, or one order by a belligerent government? In this way, the out of control spending starts to become understandable, even rational. How does a government and society deal with a people who've realized that the world isn't a wonderful place and the future may not have the vaunted (and often promised) prosperity?
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