I haven’t yet read Alan Greenspan’s new book, “The Map and the Territory,” but the reviews seems to suggest “nobody” saw the economic catastrophe of 2008 coming. My own observations tell me that most people are utterly bewildered at the slowness of the so-called recovery.
In the past, we’ve had recessions and they’ve been followed by recoveries. We just had to grit our teeth and wait for times to get better.
Well, we’ve been gritting our teeth for half a decade now, and it hasn’t gotten us much more than dental bills that we cannot afford to pay. Where is the recovery?
I am not an economist, but I had been telling people for years before the Great Recession hit that I thought we’d have another Great Depression. Call it a recession or depression or whatever you want — from my vantage point, we were living in a way that did not, to me, look at all sustainable. I wasn’t surprised, except I actually thought it would be worse. Many years ago I got an email from a former colleague who said, “I wish I’d heeded more closely all your theorizing about how this was the coming of the next Great Depression!”
The economy looks a little different to people who are living in the lower strata of society. Those of us who have been living on less than what the Greenspans of this world probably spend on their vacations never thought things were clicking along all that merrily long before 2008.
Some of us looked around and saw an awful lot of young adults who had done what society told them to do — get good grades, go to college — and yet could not find a job that paid well enough to launch them into adulthood. Worse, plenty of these young people were not only working a job no better than what they could have gotten without going to college, but now they were working as a cashier or waitress and paying several hundred dollars a month in student debt.
We could see a lot of people who at first glance seemed like they were doing OK, but whose cellphone and laptop were bankrolled by their parents, and whose professional wardrobes were what they got for Christmas every year. These are the people who don’t look poor, but who are eating a peanut butter sandwich at their desk every day because even fast food is too expensive.
We could see a lot of young people still living with their parents, because they didn’t make enough to pay rent, let alone buy a place.
We could see a lot of people who only escaped visible poverty because their boomer parents still had good jobs, big houses, and pensions to look forward to. The way the world works now, those who don’t have boomer parents to subsidize their lifestyles are in trouble indeed.
Page 2 of 3 - How many non-governmental employees do you know who have any pension at all? People are scolded if they do not contribute to the 401(k)s that are the modern substitute for pensions. But I’ve honestly begun to wonder why I bother to put money into mine. For people who understand they will never be able to retire, why should they be saving for retirement at all? Would people who know they will need to work until they die, or until they are too feeble, be better off using the money to reduce some of the financial pressure affecting their lives now?
We tried having it both ways, and, shockingly, it didn’t work. We wanted to make high wages but we wanted cheap food, goods and services, and business delivered by paying very low wages or by just outsourcing jobs overseas. Guess what? Your cheap doodad means a job that either doesn’t exist in this country or that pays crappy wages. Should we be surprised that this house of cards came down when the ill winds of 2008 began to blow? Should we be surprised, after decades of bleeding the middle class, that its veins are dry?
The middle class tried to cope with falling wages over the last few decades first by sending women out to work and by having smaller families. Some people reasonably deduced that with stagnant wages but soaring home values they could live better by tapping into their home equity. We know where that got us. As a last resort, some simply ran up their credit card bills. The middle class is now out of options.
I feel compassion for people who realize they will probably struggle to ever enter the middle class their parents always took for granted. I also feel compassion for the generation to come, who will mostly not have well-off parents to fall back on. Then what?
The United States as we know it cannot survive without its middle class. Young people need to be making enough money to buy houses, fill them with furniture and kids, and spend some money. They are our real job creators, and we’ve hobbled them.
We could pass policies to turn it around, but the things we would need to do as far as restructuring corporate and personal income taxes and increasing government spending are exactly the opposite of what the more strident voices out there are screaming for, because they don’t understand that a government budget is not analogous to a household budget. We all mostly want to get to the same place, but we’re hell-bent on going the wrong direction.
Don’t like this so-called recovery? Better get used to it. I don’t see it getting any better.
I see it getting worse.
Page 3 of 3 - Michelle Teheux may be reached at firstname.lastname@example.org. The views expressed in this column are not necessarily those of the newspaper.