Nov 16, 2008 - 04:05:23 CST
I’m going to write about the economy today, so here’s my McCainism. I don’t know much about economics. But I know what I see and read. We’re in real trouble this time. America’s economy is like a strong but flabby boxer who has taken a severe blow to the head and looks like he may go down at any moment, but with any luck might just make it to the bell. We’re teetering. What if we go down?The American automobile industry is on the ropes. It probably needs to be allowed to die, or forced to undergo some really severe reorganization. That’s not likely to happen, partly because even in its haunted and stunted form, the car industry is still a key sector of the American economy and the multiplier effect would have devastating consequences not just in Detroit, but across the whole continent. Given our national obsession with the automobile, the utter centrality of the automobile to America’s sense of itself, we are unlikely to let the industry collapse. But if you cannot produce for a profit something that virtually every American cannot live without, something is terribly wrong.
The airlines are really in a desperate state now, losing money hand over fist. On any given day, about half of them seem to be in Chapter 11. Since 9/11, flying has been a pretty miserable business anyway — Greyhound buses in the sky, I like to say — but the bankruptcy of the industry has added all sorts of new degradations and discomforts. The services on airplanes appear to have reached their statistical minimum, but stay tuned. We are now paying for our ticket, paying for our bags, paying for aisle seats, paying for food.
We cannot let the American airline system collapse because it carries more than two million passengers per day, and keeps aloft a large percentage of our economy. Ticket prices need to go up, but then people will fly less.
Over the past two months, Wall Street has lost 40 percent of its value and the global financial elite has stood by helplessly as $16.3 trillion of wealth has simply evaporated, $4 trillion in the United States alone. The American people have lost more than $2 trillion in their retirement accounts over the last year — those Americans who actually have retirement accounts, that is — and only a portion of it will ever be recouped. That’s money the American people won’t spend now, which means, somewhere down the road, empty stores in the malls, layoffs, downsizings, credit crunches and who knows what more?
Every day now it is Freddie Mac, Fannie Mae, AIG, Washington Mutual, Wakovia, and on and on and on until my eyes glaze over. When the pundits and the national politicians assert that this is the worst economic crisis since the 1930s, I fall into perplexity, because so far there are no soup lines, and the Joads have not thrown everything they could on the truck and set out for Route 66 and California.
I have a good friend in Chicago who is a stockbroker and investment counselor. We talked about all of this for a couple of hours the other day. He’s been managing people’s money for 40 years, in good times and bad, and he has done a great deal of reading and thinking about economics. He’s had the worst autumn of his professional life. He loses sleep at night worrying about his clients, who are watching their dreams of retirement (and much more) dissolve and there’s no end in sight. He looks haggard. He believes things are going to get a lot worse — and he did not add the rest: “before they get better.”
The U.S. government is throwing money it doesn’t have at what it regards as key industries to try to stop the hemorrhaging. It feels to me like the parable of the boy and the dike, except that there are now leaks everywhere, and I have the uneasy feeling that the whole dike is unstable, like the flood walls in New Orleans, and that a tsunami of economic disaster is not longer unthinkable.
That’s the rub. All of my life, as a post-New Deal American, I have assumed that we have built so many protections and self-corrections into our economic system that another Great Depression is impossible. Maybe it is. Still, the economy is teetering, punch-drunk, trying to stagger on, putting on a show of strength, because confidence — we all know — is the basis of a healthy economy.
So far, North Dakota has been mostly spared. I say that as if I knew what I am talking about, but I bet there are thousands, perhaps tens of thousands, of good, hard-working, North Dakotans who are straining as never before to pay their bills, to keep their houses, to make car payments, to fill the car with gas. Overall, however, North Dakota has a fortunate cushion. We have the farm bill, good commodity prices and some intense energy activity. At a time when the national housing industry is having its worst downturn in 30 years, subdivisions are still being scraped out of the Dakota prairie. The unemployment rate in North Dakota is under 3 percent.
I moved home three years ago in part because something in my consciousness, below the radar, told me we are headed for trouble, and when the trouble comes, I want to be in North Dakota and not elsewhere. I read a series of books, beginning with James Kunstler’s “The Long Emergency: Surviving the Converging Catastrophes of the Twenty-First Century,” that made me feel that the glorious period of unprecedented prosperity, mobility and material happiness that followed World War II, may not be sustainable, at least not if we want to call ourselves a democracy in any meaningful sense.
Here’s the problem for me and for millions of others. My generation has never known want. We have lived on the froth of staggering prosperity and access, surfing through life as if it could only get better and better and better, and we have absolutely no psychological capacity, so far as I can tell, to face a grimmer world. Second, spoiled and mollycoddled as we have been, we have never bothered to learn any real survival skills. Our grandparents didn’t exactly enjoy the Depression years, but they had excellent skill sets — sewing, gardening, canning, carpentry, neighboring and squeezing the most out of a dime.
I’ve got nothing!
In a world of real poverty, I’m either going to starve or face a long, hard apprenticeship in basic living skills. Imagine the endless whine of the baby boomer in a Great 21st Century Depression. My mother has declared, with some emphasis, that I cannot move in with her.
Here’s my immediate concern. Economists used to say that when America sneezes, Europe catches a cold. My read of Great Plains history suggests — I hope I am wrong — that when the national economy falters, a couple of years later North Dakota has an economic stroke.
I’m going to line my garage wall with cans of baked beans. And learn to sew. And call my mother more often.
(Clay Jenkinson is the director of the Dakota Institute. He is also the Theodore Roosevelt scholar-in-residence at Dickinson State University. He lives in Bismarck. Contact Clay at Jeffysage@aol.com.)
Geoff wrote on Nov 19, 2008 8:09 AM:
http://mjperry.blogspot.com/2007/07/uaw-pricing-themselves-out-of-market.html "
Dale wrote on Nov 17, 2008 6:07 PM:
JoeJohnson wrote on Nov 17, 2008 2:33 PM:
1.) 1 in every 14 jobs in the US is in some way involved with the US auto industry
2.) If GM and Chrysler are allowed to die, most of those jobs will disappear. Along with that, the money this economy desperately needs to keep functioning. "
Edward wrote on Nov 17, 2008 8:59 AM:
There is a lesson to be learned. You stated; " I have assumed that we have built so many protections and self-corrections into our economic system that another Great Depression is impossible." As can be seen today, those protections were not properly structured or maintained. The only solution government can find for a problem is to throw mass quantities of money at it, which never solves the underlying problem.
Well, maybe now things can be different . Now that we have a Obamanation. "
jimbo wrote on Nov 16, 2008 11:07 PM:
Matt wrote on Nov 16, 2008 8:00 PM:
SAm wrote on Nov 16, 2008 4:39 PM:
robert myhre wrote on Nov 16, 2008 1:16 PM:
It's about time that you realize that ALL cannot be solved by Washington! Had you
grown up in the 1930's ~~ when it took a dime to buy a hamburger or a ticket to the
Saturday Matinee ~~~ you would have realized that our country has been in trouble
for a long time ~~~ and Nancy Pelosi & Harry Reid and their cohorts have led us
into todays morass!! No, I am not a registered Republican ~~~ but I believe in our
elected representatives WORKING FOR US ~~~ NOT JUST TO GET REELECTED!! "
jea wrote on Nov 16, 2008 12:06 PM:
Once a teacher wrote on Nov 16, 2008 10:56 AM:
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