Archive for the ‘Economy’ Category

Buy everything, buy nothing.

I did my consumer culture duty this weekend and participated in the Black Friday doorbuster craziness. Some friends and I stood in line in front of Old Navy for a midnight opening, all for the glory of a free video game and some cheap pants.

Are consumerism and Americanism the same thing? It feels that way sometimes. I strongly believe that we’re much more than that, but we can forget it so easily, especially when consumerism is presented as the easiest escape from the problems of modern civilization. What is the way out from our spiritual/psychological/patriotic fetish for shopping?

To put it another way: is there still such a thing as anti-consumerism, and is it viable? Did you (or anyone you know) do the Adbusters “buy nothing day” thing this year?

What happened to the movement against Wal-Mart’s practices? I used to get 2-3 emails a week about this or that action to reform Wal-Mart. Now, I hear nothing from groups like Wal-Mart Watch, but I do see a barrage of feel-good Wal-Mart commercials, like the one where they claim that they save the average consumer over $3,000 each year whether they shop at Wal-Mart or not.

I was talking with my Black Friday line buddies the following day about this phenomenon, and we all felt that the battle over Wal-Mart has stalled. It’s like Wal-Mart won a battle in the national media, and they’re no longer the bad guys. Maybe there’s just too much other stuff going on in the world for people to worry about the high cost of low prices, or perhaps it’s our still-wounded economy that makes us unwilling to look a gift horse cheap HDTV in the mouth.

And now we’re getting ready for “Cyber Monday,” where online retailers try to gin up some of that Black Friday magic. (In fact, I just got nearly a half-dozen email reminders for this sale pop up in my inbox while writing this.) So, don’t expect over-the-top consumerism to go out of style any time soon, even in a crappy economy.


And increased consumer spending enough to dig us out of the economic hole we are in? I think not. And besides, we already did the “rally by spending” trick post-9/11 when GWB told us to go shopping for our country (while the richest went shopping for a country, literally). Leveraging ourselves to buy even more stuff didn’t correct the deeper problems of watchdogless industries and deregulated markets out of control.

Maybe we’ll see some attention paid to the dark side of consumerism — globalization, corruption, monopoloy/monopsony, environmental costs, labor costs — when EFCA hits the House floor. I hope so.

On a somewhat-related note, I want to plug the latest post by my fellow A-J blogger Paul Lyle, in which he reminds us of the high cost of credit card debt.

Market or Society: What’s Really Important?

I’ve been reading Dan Ariely lately. He’s the poster child for Behavioral Economics, and his book Predictably Irrational is fascinating (Amazon link).

In late 2008, when Alan Greenspan made the shocking statement that the free market did not behave as expected, I nearly fainted. Since that time, I’ve been interested in what proponents of behavioral economics have to say. So far, I’m finding their methods and conclusions fascinating, and I’ll have more to blog about behavioral economics now and then over the next few weeks.

For now though, I want to examine one of Dr. Ariely’s ideas through a partisan lens.

Try this thought experiment: Say you’re at thanksgiving dinner at your grandparents’ house. The whole family is there: aunts, uncles, cousins and all. You eat a delicious dinner with turkey, stuffing, casseroles — the works. At the end of the dinner, you stand up, take out your wallet/purse, and say, “Grandma and Grandpa, that dinner was delicious. It must have cost a lot to prepare. How much do I owe you? Three hundred? Four hundred?” What would the family’s reaction be? Almost certainly, jaws would drop and eyes would bulge at the highly inappropriate faux pas you just committed.

What is so embarrassing about trying to pay for a family thanksgiving dinner? Essentially, the embarrassment comes from trying to operate under market norms where it is more appropriate to operate under social norms. The important thing was to come together for a meal as a family and share in that fellowship. Bringing up money at a time like that would be like farting in church.

I am convinced that this market norms / social norms switcheroo happens all too often in the political world, and politicians and pundits (usually Republicans, but sometimes Democrats too) have been getting away with such transgressions unchallenged for too long. Without a winning moral argument, they substitute a market argument, even if it’s inappropriate (not to mention false most of the time even in market terms, but that’s a different post).

Health care is a perfect example. The social norms surrounding health care are pretty self-evident, I think. Public health is a public good. It’s good to live in a nation where, you and your fellow citizens will be healthy and have access to the health care they need. Desiring good health for your neighbor is a moral good. These ideas represent the framework in which our health care discussion should be taking place — the framework of social norms.

However, we see market norms setting the terms of the discussion on both sides of the health care issue. Health care is too expensive. Health care is too inefficient. Health care providers should compete to innovate. Cost, efficiency, and competition are important aspects of health care, to be sure — but they are secondary issues compared to having a working health care system nation-wide.

As I mentioned in the comments of my previous post, I think environment/pollution issues suffer from the same market norms vs social norms problem. The financial details are not as important as the big picture — we have to minimize pollution and maximize environmental protection for the good of everyone living on the planet because it’s the right thing to do.

Education is another arena in which we often get bogged down in a market values discussion when social values are more important. It’s more important for us to value education across the board as a nation than it is to send more or less money to this or that school or district. The social norm of valuing education for all is primary, and the market norms of cost and competition among schools are secondary. Yet, thanks to No Child Left Behind and similar legislation, our national dialogue about education has been stuck in a framework of competing students and schools instead of focusing on the public good of an education for all.

I’m not saying we shouldn’t ever talk about market values; someone needed to buy the ingredients for that thanksgiving dinner, after all. However, having the thanksgiving dinner with the whole family present is the key thing. I’m not saying that money isn’t an issue — it’s just not THE issue.

The thing about market norms vs social norms is that once you get started with a discussion under one framework, it’s very difficult to switch out of it and into the other one. In other words, we will lose sight of our big-picture social goals if we let the discussion bog down in this or that economic aspect. We have national priorities that need to be taken care of, and I believe that looking at them primarily through a market worldview tends to put us in the wrong mindset to get them done.

Uncertainty vs Risk

Investors love risk, but they hate uncertainty.

What’s the difference? Risk is whether the stock you bought will go up or down in value. Uncertainty is whether the stock you bought is an actual stock or the financial equivalent of a fish head wrapped in newspaper.

By now we are all familiar with the so-called credit default swaps that let a staggering amount of uncertainty into global markets. That hidden uncertainty got passed around all over the world, including into all kinds of institutions looking for low-risk investments — everything from Norwegian Villages to your mom’s 401K.

“That oughta be illegal!” you say? Well, once upon a time, it was!

The writing for the current financial crisis was on the wall 10 years ago when Glass-Steagall Act (passed in 1933) was repealed.

(Side note to the blame-Clinton crowd: the bill was passed with a veto-proof majority, so he may as well have signed it as he did. Still, I wish he would have opposed it anyway instead of cheerleading it.)

Who was behind the repealing of Glass-Steagall? Sen. Phill Gramm of Texas.

”The world changes, and we have to change with it,” said Senator Phil Gramm of Texas, who wrote the law that will bear his name along with the two other main Republican sponsors, Representative Jim Leach of Iowa and Representative Thomas J. Bliley Jr. of Virginia. ”We have a new century coming, and we have an opportunity to dominate that century the same way we dominated this century. Glass-Steagall, in the midst of the Great Depression, came at a time when the thinking was that the government was the answer. In this era of economic prosperity, we have decided that freedom is the answer.

The freedom that Gramm is talking about is the freedom to sell steaming piles of nothing, cleverly disguised as AAA rated securities, to the tune of many times our own GDP, more than the GDP of the entire world.

Opposing Gramm-Leach-Bliley were one Republican Senator (Richard C. Shelby of Alabama) and seven Democrats (Barbara Boxer of California, Richard H. Bryan of Nevada, Russell D. Feingold of Wisconsin, Tom Harkin of Iowa, Barbara A. Mikulski of Maryland, Byron L. Dorgan of North Dakota, and the late, greate Paul Wellstone of Minnesota).

In the House, 155 Democrats and 207 Republicans voted for the measure, while 51 Democrats, 5 Republicans and 1 independent opposed it (15 members did not vote).

Senators Dorgan and Wellstone were eerily, accurately prescient at the time:

”I think we will look back in 10 years’ time and say we should not have done this but we did because we forgot the lessons of the past, and that that which is true in the 1930’s is true in 2010,” said Senator Byron L. Dorgan, Democrat of North Dakota. ”I wasn’t around during the 1930’s or the debate over Glass-Steagall. But I was here in the early 1980’s when it was decided to allow the expansion of savings and loans. We have now decided in the name of modernization to forget the lessons of the past, of safety and of soundness.”

Senator Paul Wellstone, Democrat of Minnesota, said that Congress had ‘’seemed determined to unlearn the lessons from our past mistakes.”

”Scores of banks failed in the Great Depression as a result of unsound banking practices, and their failure only deepened the crisis,” Mr. Wellstone said. ”Glass-Steagall was intended to protect our financial system by insulating commercial banking from other forms of risk. It was one of several stabilizers designed to keep a similar tragedy from recurring. Now Congress is about to repeal that economic stabilizer without putting any comparable safeguard in its place.

It sounds counter-intuitive, but risk and stability (the embodiment of certainty) go hand in hand. Without stability, people cannot take risks — they are simply fighting to survive in a world of chaos.

I hope the current financial crisis at least results in a return to sane laws in the style of Glass-Steagall. And maybe, just maybe, we’ll learn our lesson from history this time.

Two Events This Week and a Video

Don’t forget that this Tuesday and Wednesday the Ogallala Commons conference about sustainable, regional food planning is taking place:

20th Annual Southern Plains Conference & Soiree
“Eat, Drink, and Be Merry…Re-Building Local Food Systems”

Tuesday - Wednesday, February 24 & 25, 2009
International Cultural Center
at Texas Tech University
4th & Indiana Lubbock, Texas

I hope to attend at least the opening lecture on Tuesday night.

Also, on Wednesday Feb 25 at 7pm, Lubbock Democracy for America will screen “The Power of Song,” a film about the life of folk hero and political activist Pete Seeger. Here are the details:

Type: Social Event
Event Date: Feb 25, 2009
Event Time: 7:00 PM CST (8:00 PM EST)
Venue Name: Lubbock County Democratic Party HQ
Address: 2809A 74th St
City: Lubbock
State: TX
Zip Code: 79414
Phone: 806-749-8683
Hosted by: Lubbock Democracy for America

Lastly, check out this well-made video explanation of the credit crisis that a friend recommended to me:

The Crisis of Credit Visualized from Jonathan Jarvis on Vimeo.

This stick figure presentation still remains my favorite explanation of our current economic mess, but the above video is pretty good too.

Cessna Ad as Metaphor

The above ad is so hilarious to me on so many levels.

First off, the timing. This is probably the worst time to try to sell a corporate jet. Cessna (which, overall, is a great company IMO) is having a very-brave-or-very-foolish moment here that we get to watch.

Second, the audience. I picture a CEO having a bad week, sitting in business class, flipping through his in-flight magazine, when he sees this ad. Maybe he cries a little into his tiny airplane beer.

Third, the language. Let’s have a look:

Timidity didn’t get you this far. Why put it in your business plan now?

Yes, timidity certainly didn’t factor into bringing us to the brink of financial ruin. A breakneck pace of bad investments, bad business decisions, and outright criminal/unethical behavior requires the same brave-but-stupid mindset that created this ad…

In today’s corporate world, pity the poor executive who blinks

…at the panel during the Congressional hearing.

The good news is, in trying times like these, fortune tends to favor those who make bold, decisive moves.

Oh good! This bodes well for our President and the voting public that put him in office.

It’s simply about adjusting, not retreating, starting with a good hard look at your flight department.

Replace “flight department” with “cabinet” and you’ve got another eerily prescient quote. (Good riddance, Senator Gregg!)

Because, in tempestuous times, leaders recognize it’s not about ego. Or artifice. It’s simply about availing yourself of the full range of tools to do your job.

Right on, Cessna ad. In that spirit, it’s time we started using government to solve problems rather than to create them. We will finally tackle the issues of our society rather than paying them lip service while systematically dismantling programs that could help.

Who knew there could be such wisdom from Madison Ave?

Charts Redux

Have a couple more charts before bedtime:

Job Losses in Post-WWII Recessions (# of Jobs)

Job Losses in Post-WWII Recessions (% of Jobs)

Both charts courtesy of calculated risk blog.

These charts reveal a few interesting things:

1) The current recession is among the worst post-WWII recessions.

2) It’s taking more and more time to recover from modern recessions.

3) The 2001 recession was slow to correct, probably because the approach was purely though tax cuts and monkeying with the Fed.

I think the case is pretty clear for government action to promote recovery.

Tired of the Mind Games

The Republican vocabulary regarding the stimulus bill has been ugly, ugly, ugly. They call job creation pork. They call infrastructure investment wasteful spending. In both the House and the Senate, Republicans have introduced amendments calling for tax cuts only — pure fiscal lunacy and a core principle of the ruinous fiscal policy of the last eight years.

In other words, Congressional Republicans are playing mind games to keep our country on the same economic track (the one that goes down) along with the same bankrupt economic theories.

A popular term in the progressive blogosphere comes to mind: “the reality-based community.”

This is the reality we live in:

Job losses are getting out of control. That’s reality. That’s the way it is.

The news over the weekend is that the Senate compromise bill is likely to remove funding for education and new schools (and other direct-to-the-states funding that could save jobs of teachers, firefighters, law enforcement, etc), new Coast Guard ships, and Federal government green initiatives. Pretty much every item getting the axe in the proposed Senate version represents a good opportunity for job creation with the bonus of infrastructure building. I hope that whatever remains will be enough to boost us out of our economic hole.

Also, the size of the recovery bill is obviously not really what bothers Congressional Republicans. After all, many of them supported (and a Republican President signed into law) last year’s stimulus bill (which focused on giving lots of money to large financial institutions). Furthermore, many of the same Republican senators who object to the size of the 2009 recovery bill voted in 2001 for $1.3 trillion worth of Bush tax cuts to fight the recession at that time. Well guess what: a tax cut won’t get anybody a job, and the wealthy target audience of Bush-era tax cuts is more likely to keep the money rather than spend it (an inverse multiplier effect).

At this point we’re witnessing either complete out-of-touch confusion or pure grandstanding on the part of Congressional Republicans, and either way I’m getting sick of it.

Let’s Discuss the American Recovery and Reinvestment Act of 2009

CNN reports that GOP “leaders” released a list of items in the stimulus bill that concern them (the one that all House Republicans voted against last week).

Let’s look at some of the things that GOP “leaders” consider “wasteful spending:”

$1.2 billion for “youth activities,” including youth summer job programs.

Yeah, because job creation isn’t a priority when people are getting laid off left and right. Thanks, GOP.

$850 million for Amtrak.

I have never understood why the GOP hates Amtrak so much. It’s good for every industry to have fast, safe, efficient ways for their employees to get around. Plus, Amtrak jobs are good jobs. I wish we still had passenger train service out here in Lubbock.

$600 million to buy hybrid vehicles for federal employees.

Can’t have the federal government setting a good example for car buyers and the auto industry, now can we?

$6 billion to turn federal buildings into “green” buildings.

Here we have an opportunity to improve our environment and create some great, un-outsource-able jobs. Green buildings are another area where bold leadership can show us the way.

$25 million for tribal alcohol and substance abuse reduction.

If you’ve never read about this issue, get ready to be depressed. It’s about time that we do something about what is truly an epidemic. This money will create jobs that will make a real difference in a places where it’s needed the most.

$500 million for flood reduction projects on the Mississippi River.
$500 million for state and local fire stations.
$650 million for wildland fire management on forest service lands.

Jobs and security? Nope nope nope!

$200 million for public computer centers at community colleges.

Remind you of any Texas Governors that like to cause problems for community college funding?

$125 million for the Washington sewer system.

There’s no way this can be a waste! Those sewers have got to be clogged from eight years of Republican Effluence…

Looks like the GOP is saying a big fat “No, we can’t!” to economic recovery and investment in our infrastructure. If a bill ain’t a no-bid contract or a handout to their rich buddies, I guess it must be a waste in the eyes the GOP.

Thanks to blog reader John F for pointing out the CNN link. If you’d like to search the contents of the American Recovery and Reinvestment Act of 2009, you can search the website for H.R.1 to access the full bill.

November Car Sales

This is what a sad auto industry looks like:

Image Hosted by

Well, sad except for MINI.

I am looking forward to a variety of affordable, environmentally friendly AMERICAN cars. I have a hunch that they will be what bails out our auto industry.

Obama Video Address 11/22/2008

It’s all about job creation between Jan 20, 2009 and Jan 2011: 2.5 million new jobs in 2 years focusing on infrastructure, green energy, and public education. I love it!

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