Here’s the dilemma for our economy: the more we save and pay down our debts the more we are perpetuating this recession. Indeed, it certainly appears as if this new-found embrace of simple living values among Americans is wreaking havoc from Wall Street to Main Street:
“Economists call it the "paradox of thrift." What's good for individuals — spending less, saving more — is bad for the economy when everyone does it…Like a teeter-totter, when the savings rate rises, spending falls. The latter accounts for about 70 percent of economic activity. When consumers refuse to spend, companies cut back, layoffs rise, people pinch pennies even more and the recession deepens.”
“You are familiar with Zen koans like "What is the sound of one hand clapping?". They are designed to open up consciousness with paradoxical or impossible questions. Well here's one: Can we have an economy that is not so dependent on rampant consumer spending?
After 9/11, Bush's solution was to exhort consumers to spend more as the way to propel ourselves out of the downturn. Today we are hearing similar advice.
Problem is, people are saving (or at least not spending, which I don't think is quite the same thing) rather than spending.”
I don’t know about you, but I’m not about to apologize for cutting my spending, paying off my debts and living within my means. There is something incredibly perverse about a “governmental-financial-industrial complex” that actively encourages you to spend money you don’t have for the sake of the national/collective good.
Now, I acknowledge that we live in a consumer-based economy, one that feeds on spending, accessible credit and a continuous hunger for better, faster, cheaper products. But a consumer-based economy is not the only model to follow. Who knows…maybe this economic meltdown will force us to reassess our incentives and restructure our economic priorities. Maybe, in the end, a good collective kick in the ass will be a catalyst for changing everything for the better.