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Friday, December 06, 2013

Responsibility To Spend

In a survey conducted by Harris Interactive for CashNetUSA, 57 percent of the 2,014 Americans polled indicated that healing the economy through spending is not their responsibility. This group included 1,833 individuals who are currently working and receiving a paycheck. At 53 percent, households sized five or more feel more responsibility than any other group polled. Men ages 18 to 34 come in second with 50 percent acknowledging economic accountability.

The survey also discovered that over the course of the last year, six out of every 10 American workers have seen either no change or a decline in the amount of each paycheck. This breaks down to 37 percent who have seen no change, and 24 percent whose pay has decreased.

This general sense of financial insecurity has led to many Americans altering their spending habits since August, with as many as 44 percent spending less on food and eating out, and 38 percent deferring purchases on technology products.

“As consumer confidence is rattled again, it is taking a toll on Americans’ spending habits,” says Megan Staton, CashNetUSA’s director of marketing. “They are making these cutbacks to manage their personal finances through this uncertainty, with less interest in what their personal role might be in helping to fuel the economic recovery. That’s no surprise when half of Americans are living paycheck to paycheck, and one in four says their paycheck has declined.” ...
This should come as no surprise.
And the workers are quite right in their attitude, "quite right" here meaning "acting as self-interested entities engaged in classical theory economics."

It was my understanding of Keynes that the self-interested refusal to spend money, or "good money after bad", is one of the mechanisms which are expected to occur in such times of economic distress, and are one of the main contributors to the increasing severity of the problem.
The correct response was massive government spending, Massive. Hoover spent money; he did not sit on his hands and say "balance the budget". But FDR spent massively, and World War II led to undheard of government debt levels.

Paul Krugman has already said that we are getting ready to pay the piper for our lack of massive response to the Great Recession.

For my part, I have never held such a view as it was my responsibility to spend to help the nation's economy. It is not based in any economic theory, rather it is my miserliness.
I still use a cellphone, not a smart phone, and I buy my minutes. I refuse to commit to ongoing monthly payments; I have enough of those.
I admire greatly Saint Augustine, who prayed, "Let me be good, but not just yet," or maybe "...good, but not too good right now."
I shake my hoary head when a star goes supernova, and smile at my own Messier catalog of faint stars that are miserly of their light, and hide their slendor behind an anorectic treacly sweetness.

And fuel economy was always of prime importance for me, even when back in the tech boom time of 2000 (before the tech bubble burst) when looking for a new car, I startled a salesman at Russ Milne Ford by asking about fuel economy. He said no one ever asked about it any more. That surprised me, but soon everything came back to historical averages.


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