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I completely agree, this is a consumer economy that has been actively killing off consumer power and wondering why growth/demand is over. When a company like N
by drawkbox 11y ago
I completely agree, this is a consumer economy that has been actively killing off consumer power and wondering why growth/demand is over.
When a company like Nabisco closes in Chicago and opens in Mexico for instance, yes the company saves money but Chicago loses millions and possibly billions in consumer power in the community. This is never factored in, loss of consuming power for a community/city.
There has been a slow drain winding down of consumer purchasing capability as you mentioned since the 70's. Eventually you use it all up and everything stagnates.
Wage stagnation has played a huge role, it has gotten much worse since 2000, even people moving up are finding it harder to buy as incomes have fallen while inflation/costs rise dramatically to make up for lack of consumer power [1].
Since 2000, the middle class has been shrinking for a decidedly more alarming reason: Incomes have fallen.
1968 was the peak in purchasing power for lower to middle class. This graph shows a lack of wage increases at the bottom and minimum wage[2]. That has also delayed trickle up wage increases above. This has also caused people to load up on debt to make up for their lack of purchasing power, furthering the problem.
Too much money is locked up in capital and investments that never re-enter the economy. This is bad for the rich and poor, locked up capital stays under lockdown during downturns. Lower and middle class have to spend during downturns. Recessions are worse when so much capital is locked up. This is leading to a 'lost generation' of consumers that can't consume or buy what they need or add to corporate profits from consuming [3].
[1] http://www.nytimes.com/interactive/2015/01/25/upshot/shrinking-middle-class.html http://www.nytimes.com/interactive/2015/01/25/upshot/shrinki...
[2] http://money.cnn.com/interactive/economy/minimum-wage-since-1938/ http://money.cnn.com/interactive/economy/minimum-wage-since-...
[3] https://www.youtube.com/watch?v=oeCfq-9l_b8 https://www.youtube.com/watch?v=oeCfq-9l_b8 (:30 in)
- Animats 11y ago"I completely agree, this is a consumer economy that has been actively killing off consumer power and wondering why growth/demand is over." Thanks. I point out this occasionally. I don't claim to have an solution. But I think I've described the problem correctly. We have insane amounts of productive capacity compared to previous generations but that doesn't push up the standard of living by much. Too much political economic talk starts with a desired solution and tries to justify it. That isn't working. The original article looks at this from a finance perspective. Finance is supposed to be a service function, like water supply. It's not supposed to be in charge. Especially in a capital glut.