This stuff is starting to piss me off. Consumer debt and the Federal deficit are at all time highs. The savings rate is negative, and businesses are shedding jobs like a cat sheds hair because people aren't buying. People can't afford their mortgages, and banks are only willing to compromise once the family home is in forclosure. And yet, the best solution Republicans, and far too many Democrats, can conceive is more supply-side tax cuts. And nobody wants to take a serious look at the problems on the demand-side, because that means facing up to some ugly truths about our own moral prejudices and the social consequences of modern post-industrial economics.
Even President Obama, with his claim that "business is the engine of the economy" is falling prey to this old way of thinking. Make it easier for businesses to extract every last dime of profit, they think, and the goods and services they provide will be cheaper (because more plentiful) the people they will employ will be paid better (because there's more money to pay them with) and the people who's jobs have been lost due to modernization and increased productivity will be free to come up with new economic activities, innovating new types of products and new services, employing ever more people and contributing even more to a utopian society of plenty.
The problem is, it's complete bullshit. Businesses aren't leaders, they're followers, chasing the dollars in their potential consumer's pockets, while trying to lose as few of their own dollars as possible. Without strict regulation and oversight, they devolve into outright fraud and theft. And there is such a thing as being too productive.
And in fact, it is the astonishingly high productivity of post-industrial economies that has led us to what appears to me to be a dilemma. To see this dilemma, you have to understand what it means to be "too productive." An economy is too productive when it can produce far more than the goods and services demanded by a society without having to employ every capable worker. This leads to persistent unemployment, which places downward pressure on wages. For every business owner who decides, out of the goodness of his or her heart, to pay their employees more because they can afford to, there will be five more that simply pocket the extra cash. But as long as the only source of resources people can use to consume come from jobs, this is unsustainable.
What's the evidence that our economy is too productive? Stagnant and declining wages for the past quarter century is a big tip. Ever increasing productivity coupled with longer working hours for those who remain employed and deteriorating working conditions are another. Even more are a declining savings rate and ever increasing consumer debt. But perhaps the greatest clue is the fact that the greatest condition afflicting our poor is obesity, a disease of having too much.
I won't pretend to know the solution to this problem, nor do I advocate a return to subsistence agrarianism, not least, since this would involve a large number of my fellow citizens being eliminated from the equation. And while we might be able to turn this economy around in the near term by retooling our infrastructure, and putting some effort into breaking away from our oil dependency, and don't get me wrong, these are noble and necessary activities, these problems will eventually recur, so long as we insist that the resources for consumption come primarily from the wages labor can capture, in other words, so long as we insist that everybody who can must earn their own keep within the narrow confines of "earning" defined by the job market.