Why Economic Growth in the United States Cannot Happen

By Joaquin posted by Michael Collins

So, you cut back on your lifestyle; performed a so un-Greek personal austerity reset but your credit card balance is still creeping up; or perhaps you are slowly burning through your savings; or you are at the end of the line; abandon ship. Whatever, you have a lot of company out there. (Image)

Why is it so hard to make ends meet these days? The days of living high on the credit hog are over and we all have to get small but in the end, we still have to make ends meet; we have to pay for food, pay for utilities, buy gas, etc. How to make that work?

We all bought a lot of stuff during those days of easy credit. Debt driven demand drove up the value of lots of things. Homes increased in value so much that they became a kind of income harvested through a home equity line of credit. Autos got big and powerful again making them unaffordable to buy and operate now that we have to live within our means. Cell phones replaced land lines and cost a lot more; especially when everyone in the family has to have one. Maybe you have a home that you cannot sell and you are stuck living 20 miles or more from your workplace and your car is fast reaching the point when you will need a new one just to get to work.

We are all waiting, waiting for the economic reset so that things are valued in a way that makes sense to people's lives and salaries but it won't happen because it can't happen. The assumption made by economists is that we structured our lives around having credit available and we need to restructure; but that is not enough, our society has also structured itself around what freewheeling credit bought us and that we cannot afford anymore. Unsellable homes built far away from work places requiring unaffordable transportation to get to work where a pay cut is more likely than a pay raise. Our society has to restructure itself if we are to make the adjustments needed to live in the reality of today's economy.

Perhaps you noticed that food is getting more expensive even as everyone worries about deflation. The same economists are trying to drive inflation up because it means no deflation. Mr. Bernanke is fueling up his helicopter just now for a new round of "quantitative easing"; Ben is going to guarantee that there is no reset; that homes remain over priced and that our lives cannot get on to whatever it is they are supposed to be. The powers that govern cannot or do not have the will to restructure the economy and our society but expect us to restructure our lives just the same.

Time for some answers

It is time to ask some questions and get some answers. Who was doing the thinking when the government started giving corporate America incentives to offshore our best highest paying jobs to India and China? The deflation of wages due to offshoring is exactly the kind of dynamic that is crushing the American middle class. Who was doing the thinking when American agriculture was outsourced to Mexico with the help of NAFTA? Who sold NAFTA as free trade instead of what it is, a corporate land grab south of the border? What interests of American farmers in such a thing? How is it that higher education is now only affordable for the very rich? How is it that our public education system has sunk to the point where schools are in some cases limited to four days a week? How is it that with one of the worst and most unaffordable healthcare systems that we get health care reform giving us still the worst and most unaffordable healthcare system?

My family Doctor has over a million dollars in student loans to payoff; he currently works as an indentured servant for healthcare insurance companies. It is happening to all of us; our debts are turning us all into indentured servants of the banksters. I went to a public University where Tuition cost $1200 a year. In forty years that cost for the same public University in 2009 was $27,000 a year a 2250% increase! Inflation since then was 417%. Why then doesn't it cost just $5,000 a year to go to my old school? The answer is student loans; the ability to pay high tuition inflated tuition prices to a ridiculous extent; more than five times than it should be. With freewheeling credit anyone can become an indentured servant; why wouldn't corporate America want that? Now, what will happen if the Universities have to reduce their tuition? Do you think my old school; the University of California is going to reduce its tuition in light of the state's financial condition? Not going to happen.

The United States has closed its manned rocket program. In a few months, after retiring the shuttles, the U.S. will no longer have the capability of taking people to or from the International Space Station. The country that put people on the moon can't fly anymore. There is only a hope that private industry will somehow find its way into orbit but meanwhile the Russians do it for us. They are laughing, they won the space race after all. The United States is going backwards, a regression that will become permanent if something isn't done about it. (Image)

Without government stimulus money, I happen to know that the county responsible for the rural road that I live on won't be able to repave it. It will eventually turn to gravel and potholes impassable by anything without four wheel drive, four hooves, or fat bike tires; perhaps an old Model A Ford could do it but not the neighbor's Prius. This is the fate of America, a regression to a time very much like the late forties if we are lucky.

From The Agonist



Now What?

The bottom line is we did not get a cost effective way to clean up the financial system, in spite of the many expert level recommendations and a great example, Sweden, on how to do so.

We did not get any reforms on trade policy. We cannot even get confrontation on China's currency manipulation.

Our educational system went from an ethical, Academic study to yet another institution which makes products, that being graduates.

They ripped asunder retirement, replaced pensions with gambling on the stock market through 401ks.

And we got an ineffective Stimulus, which sent money offshore to foreign companies and even to China, scattershot, no direct jobs program.

Lest we forget two very expensive wars as if America can afford to be the global police.

Going to space is just a symbol. Being able to drive across a bridge and fear it will fall down is our new reality. We live near levies, playing Russian roulette with the possibility they will break. Even worse, state and local governments are escalating privatization. It's all the same conclusion, we're heading to a Banana Republic.

Now we have faux paus movements, generated by cable noise which are glorified promotions of corporate lobbyists interests. We even have cable noise fake "issues", even "issue du jour", while the theft of our nation goes unreported.

Meanwhile the real people, the U.S. middle class, when it comes to us, this government can only consider enabling yet another short sighted corporate lobbyist agenda which tries to suck even more money from our pockets.

Nice rant

I share your pain.

Unfortunately, the pain isn't quite sufficiently apparent for the overall American population to rise up and cast down the banksters.

We can only it happens without a Mussolini, Hitler, Lenin, or Mao - or that conditions will have to deteriorate to that severe a level for real "Change We Can Believe In" to happen.

Well said..

Unfortunately it will take a lot more pain before people are motivated to stand up and do what is necessary to turn this country around. We are victims of our own successes. We have become fat, lazy, and complacent. We know the country and its future are being sold out by banksters and corrupt politicians, and yet as long as we are comfortable for the time being, we allow the insanity to continue. When the s-h-t-f, we will deserve it.

i agree

Have you ever watched Robocop? Especially Robocop 2? OCP, the mega-corporation owns the police because the city (detroit) is so helplessly in debt to, yes, OCP, that the city has had to sell off it's assets to OCP just to keep the lights on while OCP wants to tear the city down and build it's corporate city on top "old detroit".
That's where we are heading man. Corporations will be the new gov'ts. As the white-haired chief executive of OCP (also an elderly white man) says "anyone can own stock in OCP, it's the new form of democracy".

join the army

In 1969 I joined the army, realizing too late that it was a bad idea.
Now that my income has fallen, I qualify for free medical at the VA, so now I'm so glad that I joined the army. I got a free pair of glasses, they don't fit really as good as the $800 pair that I used to have, but free is free, so I'll live with it. I defaulted on six credit cards last year. So now I don't have to worry about living on credit anymore. Life is getting better all the time...


By the way, to go from 1,200

By the way, to go from 1,200 to 27,000 in 40 years means 8.1% inflation because
1200 * 1.081^40 = about 27000