By Ruth Conniff | Black Friday is only a day away, and it doesn’t look good for retailers. A front-page story in The New York Times, “To Buy Children’s Gifts, Mothers Do Without,” describes a trend away from shopping responsible for an 18.2 percent drop in women’s clothing sales from a year ago. People are curbing the Christmas binge, buying less, forgoing gifts, and generally avoiding the bottomless pit of consumerism that drives our economy.
That might be good for those of us who care to withdraw voluntarily from the rat race at the mall. Buy Nothing Day also happens to be the Friday after Thanksgiving–a day of nonshopping organized to spread the word that, as Adbusters –http://www.adbusters.org/campaigns/bnd–puts it, “There’s only one way to avoid the collapse of this human experiment of ours on Planet Earth: we have to consume less.”
But it is also a sign of the dire shape of our economy.
Here is the conundrum of the financial meltdown: we are all living in a world fueled by unsustainable spending. Every day there are new stories about the hubris of the last few decades of financial boom. A long profile of Fed chair Ben Bernanke in The New Yorker describes how he and other disciples of Alan Greenspan refused to see the housing bubble even as economists like Dean Baker were warning of an imminent mortgage market collapse. Michael Lewis has spent years documenting corruption and stupidity on Wall Street. In a current piece on portfolio. com, he sums up the reasons for Wall Street’s collapse, in highly readable prose: “To this day, the willingness of a Wall Street investment bank to pay me hundreds of thousands of dollars to dispense investment advice to grownups remains a mystery to me. I was 24 years old, with no experience of, or particular interest in, guessing which stocks and bonds would rise and which would fall. The essential function of Wall Street is to allocate capital–to decide who should get it and who should not. Believe me when I tell you that I hadn’t the first clue. I’d never taken an accounting course, never run a business, never even had savings of my own to manage. I stumbled into a job at Salomon Brothers in 1985 and stumbled out much richer three years later, and even though I wrote a book about the experience, the whole thing still strikes me as preposterous.”
Much of the last several decades on Wall Street looks preposterous now. But the bankers and their cronies in Washington, including Greenspan, were convinced that the housing boom, lax credit, and oceans of easy money would never dry up.
Unfortunately, some of the intellectual architects of unfettered recklessness and speculation are getting key jobs in the Obama Administration.
As Bill Greider puts it in The Nation, “A year ago, when Barack Obama said it was time to turn the page . . . I, for one, failed to foresee Obama would turn the page backward. . . . Virtually all of his leading appointments are restoring the Clinton presidency, only without Mr. Bill. In some important ways, Obama’s selections seem designed to sustain the failing policies of George W. Bush.”
The economic crisis calls for massive, bold action, not pouring money into firms that now have the temerity to pay out the taxpayer-financed bailout money as dividends, which is what they are doing. Tim Geithner and Larry Summers, who helped create the lax regulatory environment that led to this crisis, as well as the bailouts that followed, can’t be counted on.
The problem confronting Obama and, one hopes, the more thoughtful and less tainted members of his economic team, is how to address the crisis in a way that helps the people at the bottom of the great pyramid scheme of our economy, rather than just wasting more money on bailouts for the mismanagers at the top.
Meanwhile, even if there is a certain amount of understandable schadenfreude for the Wall Street titans and auto company execs who are taking a beating from members of Congress and the public, they are pulling a lot of innocent people with them on their way down.
I was struck by two recent stories in The New York Times. One, a business section article of several days ago, quoted a leading labor economist on how the UAW would have a hard time justifying its generous retirement and benefits packages for laid off autoworkers in the current economic crisis. The other, a front-page piece in the National section on Michigan, described a state so hard hit by the auto industry’s woes that “desperation” has spread to every sector of the economy. Some 20 percent of Michigan residents now rely on some form of public assistance.
The logical outcome of the economist’s argument seems to be that even more people should be on the dole in Michigan.
Just as unemployment benefits dry up for millions of laid off workers, the UAW is taking a beating for its support for the auto industry bailout and the perceived fat-cat status of union members (not management CEOs who flew to Washington on private jets, mind you, but the line workers who continued to get health care and retirement pay after being laid off).
There is a danger that the worse off people are, the easier it is to stir up resentment toward the unions and members who benefit from basic security won by the labor movement. The collapse of manufacturing and the mismanagement and shortsightedness of the auto industry have driven Michigan into the ground. The rampant greed and speculation on Wall Street have destroyed the housing market and left us with a lot of poor people facing home foreclosures. To make matters worse, a race-to-the-bottom mentality — that if some people are suffering, no one should have job security or health care benefits– is toxic. If that sort of sentiment, often stoked by the right, grows, it will only make the rest of the country look more like Michigan.
There’s a lot to think about while you are not out shopping on Friday. How do we build a more sustainable, humane, and just economy? And how do we push an Administration loaded with the architects of the current disaster to do the right thing?