Saturday, April 25, 2009

Societal Inertia

As those of you who have been so patiently following my musings know, I have been doing a lot of research lately on statistics about the economy,government, and society over the last however many years I can get data for. And I have finally come to one important conclusion.

The government has a lot less control than most folks think. There are underlying currents in society that have a vastly larger affect than any set of policies or any political party.

Something changed in the behaviour of society in the mid to late 1970's. People started to save less and spend more. Credit went from being a necessary evil to be used only when absolutely needed, to a way to buy conveniences and luxuries.

I would guess this to be a generational change. This was the point at which people who had not lived through the Great Depression began to economically 'outnumber' those who had not.

Government changed also. Government spending, which had been increasing steadily, levelled off. We went from a steady budget surplus to consistent deficits, following just a few years after personal expenditures did the same.

What strikes me about this is that Government followed the public, not the other way around. It is popular to talk about Reagan as the start of this change, but I think that he was a symptom, not a cause.

4 comments:

Pamela D. Hart April 26, 2009 at 8:19 AM  

And now with this major economic mess, we might be back to using credit and either pay it off in full every month or only in major emergencies.(I prefer cash no credit cards) We may start saving more and living within our means again. As I like to call it: Back to Basics. This might turn out to be a good thing, once it's all settled. I'm just curious to see how the Instant Gratification Youth handles all of this!

TRUTH 101 April 27, 2009 at 4:41 PM  

WE achieved a tremendous standard of living through borrowed money. The economic stimulus plan wants to keep the borrowing going. To stop it all of a sudden would do huge damage. We're generations away from fiscal responsibility. I love the irony of that. Fiscal responsibility would be fiscally irresponsible.

TAO April 27, 2009 at 5:09 PM  

It would be nice to believe that we could, from this point onward, become a 'live within your means' society.

Reality is, that our whole society, home prices, cars, and the value of our corporations, along with just about everything else, except wages, are valued based upon the concept of easy credit.

We have basically strangled our economy by overwhelming the consumer with debt and we have no means of unstangling our economy except through re establishing the easy credit days...either that or there will have to be some huge pay increases! :)

OpenMindedRepublican April 28, 2009 at 5:37 AM  

I think a slowly increasing constriction of consumer credit would have the greatest long term benefit for avoiding situations like the one we are in right now.

I do not think it is possible to avoid recessions; all things wax and wane. But it is the debt load that changes a recssion from an inconvenience to a disaster.

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