After 6 months of reading it on and off, I finally finished the book Che Guevara: A Revolutionary Life. I've always wanted to learn more about him, and at 750 pages, I definitely learned more about him and Cuban revolution than I ever did before.
One thought that stays with me is the idea that eventually capitalism might end. Maybe our brand of capitalism is not sustainable. Maybe it needs to be changed. Now before you sit there and call me a brain-washed, socialist bastard, just hold on a second. I think we're all trained from day one here in the United States to say that capitalism is the best thing since sliced bread and everything else will fail. That really neglects the situation for all the people in the developing nations around the world. Because especially today, we are wealthy at their expense. So while we sit here and watch our football, go to our malls, and spend money we don't have, there are millions are people who really don't have anything.
This brings me back to 2 summers ago when I went to Mexico, Guatemala, and Belize. One day at breakfast there was a Christian group (about 20 deep) that were having breakfast at a table near me. They had come to this country to visit and were saying their various prayers. I just couldn't help but ask myself, do they ever wonder how they ended up in the United States and most people live in poverty and have a daily struggle. How do you reconcile that with the idea of a "loving God"? I just can't erase that memory from my mind.
There's this huge gap that we have created between the developed and developing nations of the world. The question I keep asking myself is: will our technological prowess eventually end scarcity of most essential items?
I'm not saying this is going to happen tomorrow or 1 year from or even 10 years now. I'm saying in the distant future, will everyone be able to have essentially what they need? We will be so efficient and advanced in everything to the point where we are abundant with the necessities for living life. To me, at that point capitalism doesn't really make sense. In capitalism, you need a steady stream of new products. People need to buy things over and over to keep the economy going. For example, look at our "recession". The savings rate went from .5% to 4.5% and we've had a complete shit show in the economy. HELLO. People are actually saving money and not spending it on crap. But, that's the thing. For capitalism to work, you need people spending money. When we don't, the whole thing goes completely to hell. When you got those stimulus checks from G-Dub, he didn't want you putting them into the bank. He wanted you to spend it and keep yourself in this cycle of debt that is all-too common in our country. He doesn't want you to save money in a recession, especially with 70% of our economy being consumer spending-- see Paradox of Thrift.
My question is, will we ever be so efficient and advanced that we don't need to buy any more crap? Will we have everything that we need? But if that were to happen, not many people would have jobs. Capitalism just wouldn't work.
Thoughts?
Showing posts with label economy. Show all posts
Showing posts with label economy. Show all posts
10.24.2009
1.08.2009
On The US Economy & Recessions
Recession is defined as "the state of the economy in decline" or "a widespread decline in the GDP and employment and trade lasting from six months to a year" or "a period of reduced economic activity."
If you watch the news for any amount of time these days in America, it tells us over and over that our economy is in trouble. We have had bank bailouts, auto bailouts, Obama calling for swift economic action in his new administration, and hell...we have even had calls for porn bailouts.
Since we are in such "dire trouble", everyone wants a free handout these days. If not, then the economy could perish...right?
The current rationale is that since we are in a recession -- a period of economic decline -- we need things to help stimulate the economy. The US has gone through many other declines in its economy in its history, so we must take swift action to get it back on track.
But this has got me thinking...why are we in a recession? What is driving this decline in our economy? According to a speech by George Bush, consumer spending drives 70% of the U.S. economy. Think about that for a second. All the crap that you and I buy -- food, clothing, TVs, iPods, furniture, houses, etc. -- all that stuff drives almost 3/4 of the economy. So, if regular people like you and me don't spend our money, then the economy stalls.
Another thing is that people in the U.S. are notoriously poor savers. This article from 2006 put the personal savings rate at -.5%. At that time, the total consumer debt was at $2.161 trillion dollars. That is not a lot of savings and even more debt. Historically, people have tended to rack up lots of credit card charges to fund the purchases of all the stuff that drives the US economy. Because as we've seen, the savings rate from two years ago was negative, so people have tended to spend just about even dime that they have.
Here is the point that I've been leading to: what is the difference between a "recession" and the decision by Americans to decrease their spending and increase the amount of money they save? Think about that for a second. Consumer spending is 3/4 of the economy, so if people stop spending and start saving, then there is going to be a big impact.
Let's do some rough calculations.
Currently there are an estimated 153 million people in the U.S. workforce. The GDP for the U.S. in 2007 was an estimated $14 trillion dollars. If each person in the workforce saved an average of $10/day for a year, that would come out to about $559 billion over a year. Finally in dividing $559 billion by $14 trillion, you end up about 4%. So if everyone in the workforce saved an average of $10/day, that would result in a 4% reduction in GDP. That's pretty sizable considering the economy has grown at a rate of 2-4% per year over the last decade.
All I'm trying to point out is that when Americans (if they ever do) start saving, it's going to cause a lot of problems for the economy. Then, we will have future administrations send us our "stimulus" checks to held encourage us spend money. But if we save instead of spend that money, it will have no benefit in the short-term in trying to help the economy recover. Maybe we have too many people in our country. Our previous growth has been financed by consumer debt that can't last forever. If we start saving, what will happen?
If you watch the news for any amount of time these days in America, it tells us over and over that our economy is in trouble. We have had bank bailouts, auto bailouts, Obama calling for swift economic action in his new administration, and hell...we have even had calls for porn bailouts.
Since we are in such "dire trouble", everyone wants a free handout these days. If not, then the economy could perish...right?
The current rationale is that since we are in a recession -- a period of economic decline -- we need things to help stimulate the economy. The US has gone through many other declines in its economy in its history, so we must take swift action to get it back on track.
But this has got me thinking...why are we in a recession? What is driving this decline in our economy? According to a speech by George Bush, consumer spending drives 70% of the U.S. economy. Think about that for a second. All the crap that you and I buy -- food, clothing, TVs, iPods, furniture, houses, etc. -- all that stuff drives almost 3/4 of the economy. So, if regular people like you and me don't spend our money, then the economy stalls.
Another thing is that people in the U.S. are notoriously poor savers. This article from 2006 put the personal savings rate at -.5%. At that time, the total consumer debt was at $2.161 trillion dollars. That is not a lot of savings and even more debt. Historically, people have tended to rack up lots of credit card charges to fund the purchases of all the stuff that drives the US economy. Because as we've seen, the savings rate from two years ago was negative, so people have tended to spend just about even dime that they have.
Here is the point that I've been leading to: what is the difference between a "recession" and the decision by Americans to decrease their spending and increase the amount of money they save? Think about that for a second. Consumer spending is 3/4 of the economy, so if people stop spending and start saving, then there is going to be a big impact.
Let's do some rough calculations.
Currently there are an estimated 153 million people in the U.S. workforce. The GDP for the U.S. in 2007 was an estimated $14 trillion dollars. If each person in the workforce saved an average of $10/day for a year, that would come out to about $559 billion over a year. Finally in dividing $559 billion by $14 trillion, you end up about 4%. So if everyone in the workforce saved an average of $10/day, that would result in a 4% reduction in GDP. That's pretty sizable considering the economy has grown at a rate of 2-4% per year over the last decade.
All I'm trying to point out is that when Americans (if they ever do) start saving, it's going to cause a lot of problems for the economy. Then, we will have future administrations send us our "stimulus" checks to held encourage us spend money. But if we save instead of spend that money, it will have no benefit in the short-term in trying to help the economy recover. Maybe we have too many people in our country. Our previous growth has been financed by consumer debt that can't last forever. If we start saving, what will happen?
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