Sunday, November 16, 2008
You can’t accuse me of being a conservative. What is a conservative? Someone who is wrong again and again and again yet keeps believing in the value of his or her analysis. On economic questions, I have been wrong again and again and again. But instead of trying to get myself appointed secretary of Treasury as if I were a conservative, I quit making economic predictions a long time ago. At least short term economic predictions.
Time frame is the key. Time and time again I’ve been burned on the short term predictions. For example, Ronald Reagan is running gargantuan budget deficits which means hyperinflation is about to take off so therefore I should obviously use as much credit as possible, no matter the interest rates, because soon the dollar will be so worthless we’ll be using them for toilet paper. Wrong.
Which brings me to today’s topic. The economic crisis. Everyone agrees that in order for us to be prosperous, we must be voracious consumers who spend more and more, exponentially, forever.
Well excuse me. This plan simply cannot work, not in the long term. It is essentially a pyramid scheme: a non-sustainable business model in which approximately 88% of all people will lose, if not more.
The question is not if it will collapse, but when it will collapse. People simply cannot continue to buy a bunch of useless, or at best unnecessary crap until the end of time. Eventually they will have enough. How many Ipods do you really need. Five? Okay, but that’s not enough. No number will ever be enough.
Or the cost to produce crap will become too high. Resources are not infinite. The population continues to grow. A realistic plan to mine the moons of Jupiter is nowhere on the horizon.
But does this economic crisis signal the end is upon us? I very much doubt it. Remember way back in the mists of time, as long ago as June, oil was $135 a barrel and we were doomed to $5 per gallon of gas until prices would go even higher. Yet now the price has been more than halved. Does this mean that we will have cheap oil forever? No. But it demonstrates that predicting the short term economic results of unsustainable economic models is hopeless.
So go ahead, buy an SUV and a 128 inch flat screen teevee with surround sound and invest in GE and GM and you’d better eat out a lot, too. It’s your patriotic duty and who’s to say that you’ll be burned when the insane consumer economy crashes and burns as it inevitably will. It might not be this year, maybe not even this generation or the next. Before you die, you may have a big screen teevee the size of a wall and a wall the size of a billboard in a house the size of a castle, if not in the backs seat of your SUV.
Or maybe not. I don’t know. I’m not making any short term economic predictions, not in public anyway. But there is a shiny new camera I’ve been eyeing, and the old Mac is ready for an upgrade, and I don’t feel like cooking or doing the dishes, and the kids need new toys, and games and I’m bored and just don’t know what to do with myself but shop shop, buy buy, buy.
Posted by chuckling at 6:33 AM