So Many Things, So Little Prosperity

A couple of years ago, I was invited to the house-warming party of a friend and former colleague.  As I drove into the neighborhood, I noticed many cars parked along the streets, and in fact had to park some distance from her house.  In the course of the usual small talk of greetings, I mentioned that there must be a lot of parties going on in the neighborhood, what with all the vehicles parked on the streets.  “Oh,” she said, “those are all my neighbors’ cars.  They can’t get their cars in their garages because they’re full of stuff.”  She described how, whenever neighbors left their garage doors open, she could see household things piled up right to the door.  She mentioned that many families in the neighborhood were having trouble making their mortgage payments.

This struck me as emblematic of the current economic situation in the United States.  While it is all too true that much of the blame for our recession belongs to Wall Street, some of the blame must be assigned to Main Street as well.  I don’t know how many of my friend’s neighbors bought the stuff in their garages with money obtained from second mortgages or lines of credit on the now long-gone equity in their homes, or with maxed-out credit cards.  But I do know that across the United States people resorted to such measures in order to maintain consumption habits that their wages and salaries could no longer sustain.  It is these consumption habits that led to an historically low rate of savings and high rate of household debt.  Consequently, we had houses so full of things that we had to store the overflow in our garages (and attics and basements).

Click here to read the full article.  You may also wish to read “The Way Forward,” a recent report by the New America Foundation, analyzing the current economic situation and proposing a program for a long-term solution to the problem.

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