Monday, August 30, 2010

What Should We Do?

Americans have been saving more the past two years, and spending less.  This hasn't boosted our "economic growth" which, as I understand it, depends on trillions of dollars in growing consumer spending.  Government stimulus has picked up some of the slack, but can't, or shouldn't, indefinitely.

"So what's a good citizen to do?" asks Virginia.  "Bite the bullet and buy Twinkies and Hostess Ho-Hos?"

I don't think so.

Where do we go from here?

(1) Return to spending the way we used to.  This is commonly considered great for the economy but not so good for the environment.

(2) Save and spend wisely.  This is commonly considered not good for the economy and better for the environment.

I hope we're thinking about the contradictions.  Meanwhile, the Treasury Department is sponsoring a forum on housing policy, which may include a rethinking of our attitude toward homeownership  Other departments, such as Commerce and Energy, should force us to rethink our presumptions about the economy and economic growth.

I'd hate to see us slide into a Greater Recession, and am glad to see that the rear end of the stimulus package is getting going on projects to: (1) lower the cost of solar power; (2) reduce the cost of batteries for electric vehicles 50% by 2013; (3) double our renewable energy generation capacity (wind, solar, geothermal); and (4) stop wasting so much energy.  I'd like to think that good growth is possible in ways we haven't yet discovered.

The most important thing I learned in planning school back in the 1970s (Department of City and Regional Planning, University of North Carolina) was that everything is interrelated.  You've probably heard about the "butterfly effect" -- that a small difference in initial conditions may cause large changes in the long term.

"Sounds like apples and oranges to me," says Virginia.

Maybe.  The point is, if we don't look at the big picture in a comprehensive way, each step we take may make more of a difference, and in a different direction, than we expected.  For example, we didn't anticipate that our focus on homeownership might encourage people to over-extend themselves and eventually default on their loans and walk away from their homes.  When the former president asked us to buy cars and trucks after 9/11, some of us didn't realize this bought right into reliance on Middle Eastern oil.

"Buy fresh, buy local" appeals to me for several reasons.  Likewise, "Buy local, support local businesses" and "Grow your own."  Each of these, exercised on a broad scale, has important implications for national, and world, economics.  Should I care?

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