Tuesday, July 30, 2013

Who Is Going to Buy the Cars, Henry?

Another facebook discussion, this one about the apparent plan of US business and the federal government to create a permanent recession, leaving most Americans poor or living precarious lives, always on the edge of poverty. I wrote:
The part I don't understand is how one maintains a consumer economy if most people have too little money. However, Keynes said you can stabilize an economy at any level, including endless depression. The question then becomes, can you stabilize a society with endless poverty?
One of my facebook colleagues wrote that the plan was apparently to sell to the Chinese, if Americans could not afford to buy.

I replied:

I did some quick checking on the Internet. The US consumer economy is approximately 11 trillion dollars a year. The Chinese consumer economy is approximately 3 trillion a year. Because there are so many more Chinese, the spending money per person is a lot lower, and a lot of that spending money is going to go (I assume) to food and housing. This may help US agribusiness, but not other US companies. The European Union is currently collapsing, and most of the rest of the world is poor. The US is 25% of the world Gross Domestic Product. Lose that and you lose a lot of buying power.

I don't think most business people and politicians are able to think about economics. This is also true of most economists, who are utterly clueless about how economies work.

So, am I able to think about economics? Well, I am better prepared than economists, because my training is in accounting and science fiction. Accounting is about real money in the real world; and science fiction (at its best) is about extrapolating the present into the future and seeing the possible results of present action. Good science fiction, like good accounting, is rooted in reality.
The economist James Galbraith was recently in Greece. He said one of the things he noticed were all the elderly people going through garbage, looking for something to eat. He also noticed all the empty storefronts. This is the end result of austerity economics.

Greece has some special problems, because it belongs to the European Union and does not have its own currency. But this could happen in any country, if the government decides that spending must be reduced and the social safety net is not needed. Societies are complex and fragile. It isn't that difficult to break one apart.


Blogger Foxessa said...

Like everyone else, they expect to sell to the uber-rich. That is the economy, now that we have the global plutocracy.

Billionaire Mayor Mike told us so too, in response to those who questioned whether it was a good thing for the city of New York to be nothing but a service economy to the plutocracy: "The wealthy provide the jobs that sell to the rich in the stores they go into, the restaurants they eat in, so yes it is good for New York."

In other words, the only jobs out there are servicing the rich, and as in ye olden days, being a servant seldom paid a living wage on which you could buy your own home and raise and educate a family -- which seems to have escaped Mayor Mikey's notice all together.

Welcome to the unfairly distributed wealth of the future -- it's here.

Love, C.

9:46 AM  

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