Paying The Piper-Part Three-Drowning In Debt

It's obvious the economy is not growing fast enough to bring down unemployment significantly. In this modern age where we expect things to happen in seconds, if not fractions of a second, by the click of our "mouse," the slowly recovering economy has us exasperated. For regular readers, remember, I told you, we didn't get into this mess quickly and we won't get out of it quickly. No question about it, the federal deficit would improve a great deal if more people were working, but we now face a situation predicted to some extent by the "true" conservatives of times past, as opposed to the "phony" conservatives of more recent decades, who used one side of their mouths to spout conservative slogans to get votes, and the other side of their mouths to vote "YES," or at least to offer support, for a lot of spending with no way to pay for it. Saying "read my lips...no new taxes" may sound good in an election campaign, but it is irresponsible to govern that way, and the man who uttered those famous words, George Bush, Senior, had the courage to abandon nonsense when he heard it, even though he was the man who said them.* The courage of his convictions (he raised taxes) cost him a second term, but he deserves credit for his policy and it helped the country during the 1990s, by eventually helping to balance the federal budget (along with Clinton policy and the Republican Congress).**

Anyway, have we learned anything from our near death experience of the last few years? (I'd better be careful saying that, since we've come out of the coma, but we're still in intensive care.) Do we want to hit the "RESET" button and try to build an economy based on real production and things that really create national wealth, or do we want to keep trying to make the fast buck, live for today, and say "the hell with tomorrow?" If we hit the button, it won't be easy, and it certainly won't be painless, but at present, I don't see how we can continue as we have for decades.

The politicians of both political parties helped create this mess, and I'm sure they really didn't mean for things to turn out this way, and I really do mean that, even for the ones I disagree with so much. Not only did they use the national credit card to run up government debt (and keep themselves in office, and for you "conservatives," that includes Reagan!), they often encouraged us to pull out our own plastic and buy anything and everything our little hearts wanted; after all, this was America, and we could have the things people in other lands couldn't afford. It turns out, we couldn't afford many of them either. We came to believe that we needed every new little gadget that came out or every new cable channel for our home entertainment. While we partied on and splurged on such things, the rest of the world wasn't standing still, or sitting still watching cable TV (ah, excuse me while I change channels....okay, I'm back). The very heart of the country, our industrial base, was eroding, and with the help of the "free marketers" and "free traders," who knows how many jobs went overseas? And they weren't only manufacturing jobs that went elsewhere, but even service jobs. Have you tried calling your internet service provider for help with a problem? If so, chances are you reached a customer service person overseas, not in America.

As to our collective (all of us put together) private debts (mortgages, credit cards, auto loans, etc), not government debt, which is a separate issue, in the post World War Two era we owed about 25% of our total annual income (again, collectively, that is). The last figures I saw, which were for 2007, showed that we now collectively owe nearly 150% of our annual income. Put simply, that means, on a personal basis, if you make a hundred bucks, you owe a hundred and fifty bucks in debt. Now, no question, many loans are spread out over many years, but it just shows how much we've put on the cuff. Credit has gotten into our national psyche and it's not good. Just credit card debt alone is staggering, with ( 2007 numbers) almost every household owing between $10,500 and $11,000 (total credit card debt divided by total households).

There seems to be a good sign, however, as Americans have lessened credit card use in the last couple of years (although I'm sure some of that is also due to the state of the economy) and Americans are paying down debt, and actually trying to save some money.** This will undoubtedly keep the economy on the slow side, and like drug addicts, we are going to have to be weaned off of private credit to pump up the economy, as that's what's been keeping us going for several decades now, CREDIT, both private and government.**** (A Word History is below the notes)

*During the fight for the Republican presidential nomination in 1980, George Bush called Ronald Reagan's economic proposals "voodoo economics," saying further that if Reagan were elected and his plans put into effect, that we'd be in "deep voodoo!"

** I don't want to laud any of these people too much (Bush, Sr., Clinton or Republicans), because they turned around and did a lot of economic damage to the country in other ways. (See other articles in this series, "Paying The Piper")

*** Statistics can be deceiving at times, and while we're told that Americans are saving more, I have a suspicion that much of that number is from the wealthiest Americans, not Elmer and Louise down the street, although I'm sure some average Americans are saving too, but so many are just getting by, if that.

**** We're undoubtedly going to have to run government deficits for quite some time, and again, both parties are essentially advocating this, but in different ways. The Democrats have wanted to stimulate the economy by a mixture of tax cuts and "spending" on various projects (too spread out in time, in my opinion), and Republicans want tax cuts. Republicans have bashed the current Dems for deficits, as if tax cuts don't cause deficits; they do, and conveniently forgetting their own budgetary irresponsibility prior to Obama's election.

WORD HISTORY:
Debt-This word goes back to the Indo European root "ghabh/ghebh," which meant "give or receive." One of Old Latin's offshoots (after a fairly complicated process that I won't get into) was the noun "debitum," which meant "that which is owed," which then was passed on to Old French (a Latin-based language) as "dete," and later "dette." English got the word from French as "dette" in the 1200s, but under the influence of the Latin spelling, with a "b," of related words, such as "debit," gradually changed the spelling, although the "b" is silent.