The American Economy Is Not Coming Back

By Dave Lindorff

31 January, 2009

President Barack Obama and his economic team are being careful to couch all
their talk about economic stimulus programs and bank bailout programs in
warnings that the economic downturn is serious and that it will take
considerable time to bounce back.

I'm reminded of an experience I had with Chinese medicine when I was living
in Shanghai back in 1992. I had come down with a nasty case of the flu while
teaching journalism at Fudan University on a Fulbright Scholar program. A
Chinese colleague suggested I go to the university clinic. When I told him
there wasn't much point since doctors couldn't do much for the flu besides
recommend fluids and bed rest, he said, "That's Western doctors. You could
go to the Chinese medicine doctors at the clinic. They can help you." I
figured, what the hell, and we went. The doctor inquired into the lurid
details of my illness-how my bowel movements looked, the color of the mucus
in my nose, etc. He didn't really examine me physically. Then he prescribed
an incredible number of pills and teas and sent me home with a huge bag of
stuff, and instructions on the regimen for taking them through the course of
each day. I followed the directions dutifully, and my colleague came by each
day to check on my progress. By the fifth day, when I was still running a
fever and feeling terrible, I told him I didn't think the Chinese medicine
was working. He replied confidently, "Chinese medicine takes a long time to
work."

I laughed at this. "Sure," I said. "But the flu only lasts a week or so, and
now, when I get better, you'll say it was the Chinese medicine, right?"

He smiled and agreed. "Yes. You are right."

Obviously the Obama administration recognizes that it needs to keep the
finger of blame for the current economic collapse squarely pointed at the
Bush administration, which is certainly fair in large part (though the
Clinton deregulation of the banking industry played a major part in the
financial crisis and its enthusiastic promotion of globalization began the
massive shift of jobs overseas that has left the nation's productive
capacity hollowed out). But it also seems to recognize that it cannot tell
the bitter truth, which is that our national economy will never "bounce
back" to where it was in 2007.

America, and individual Americans, have been living profligately for years
in an unreal economy, propped up by easy credit which inflated the value of
real estate to incredible levels, and which led people to spend way beyond
their means. Ordinary middle-class working people have been encouraged to
buy obscenely oversized homes at 5% down, or even no down payment. They have
been lured into buying cars the size of trucks, one for each driving-aged
member of the family (in our town, so many high school kids drive to school
that the school ran out of parking spaces and the yellow school buses,
largely empty on their runs, are referred to by the students as the "shame
train," an embarrassment to be seen riding). They've installed individual
back-yard swimming pools, unwilling to share the water with their neighbors
in community pools. Boring faux ethnic restaurant franchises of all kinds
have befouled the landscape, filling up with families too stressed out to
cook, and willing to endure over-salted, over-priced and tasteless cuisine
and tacky plastic décor night after night.

Now this is all crashing down. Property values are in free-fall. Car sales
have fallen off a cliff. Joblessness is soaring (At present, it's
approaching an official rate of 8%, but if the methodology used in 1980,
before the Reagan administration changed it to hide the depth of that era's
deep recession, were applied, it would be 17% today, or one in seven
workers).

Eventually, the economic slide will hit bottom and begin its slow climb
back, as all recessions do, but there will be no return to the days of
$500,000 McMansion developments, three-car garages and a new car every two
or three years for both parents plus a car for each highschooler. Not only
will banks no longer be able to offer such credit to clients. People, having
been burned, will not be willing to borrow so much. Company health care
benefits, pension programs or 401(k) matching programs that were slashed
during this downturn will not be restored when the economy picks up again..

Over the last 20 years, America has degenerated into a nation of consumers,
with 72 percent of Gross Domestic Product (sic) now being accounted for by
consumer spending-most of it going for things that are produced overseas and
shipped here.

That is not an economic model that is sustainable, and it is a model that
has just suffered what is certainly a mortal blow.

What we are now seeing is the beginning of an inevitable downward adjustment
in American living standards to conform with our actual place in the world.
As a nation of consumers, and not producers, with little to offer to the
rest of the world except raw materials, food crops, military hardware and
bad films (none of which industries employ many people), we are headed to a
recovery that will not feel like a recovery at all. Eventually, productive
capacity will be restored, as lowered US wages make it again profitable for
some things to be made here at home again, but like people in the 1930s
looking back at the Roaring 20s of yore, we are going to look back at the
last two decades as some kind of dream.

It would be better if the new administration would be honest about this,
because with honesty, we could have a recovery program that would actually
address the real critical issues facing the country-the decline of our
educational system, the irrationality of official promotion of home
ownership that has led to the proliferation not just of suburbs but of
exurbs, the over-reliance on the automobile for transportation, the
unprecedented waste of resources, the pillaging of the environment, not to
mention the decimation of the retirement system and the creation of a vast
medical-industrial complex that is sucking the life-blood out of families
and businesses alike.

With honesty, we could also confront the other big obstacle to national
recovery-the nation's obsession with militarism and foreign wars. The honest
truth is that the US is technically bankrupt and in a state of chronic
decline, and yet the nation persists in spending a trillion dollars a year
on war and preparations for war, as though America were in mortal danger
from foreign enemies.

The truth is that we are not threatened by Communism, by drug lords, or by
Muslim Jihadists in any serious way. Rather, we have become our own worst
enemy.

The administration could start by telling us all this straight up, but the
problem is, most of us probably don't want to hear it, which explains why
we're not hearing it. It also explains why we're about to blow another
trillion or so dollars on propping up failing banks, funding pointless
highway and bridge construction, and blowing up illiterate peasants in
remote places like Afghanistan and Pakistan.

DAVE LINDORFF is a Philadelphia-based journalist. His latest book is "The
Case for Impeachment" (St. Martin's Press, 2006 and now available in
paperback edition). Lindorff spent five years reporting on China and Hong
Kong for Business Week magazine. His current work is available atwww.thiscantbehappening.net

On Feb 6, 7:36 pm, "al92653" <al92... at (no spam) xyz.com> wrote:
The American Economy Is Not Coming Back

By Dave Lindorff

31 January, 2009

President Barack Obama and his economic team are being
careful to
couch all
their talk about economic stimulus programs and bank
bailout
programs in
warnings that the economic downturn is serious and that
it will take
considerable time to bounce back.

I'm reminded of an experience I had with Chinese
medicine when I
was living
in Shanghai back in 1992. I had come down with a nasty
case of the
flu while
teaching journalism at Fudan University on a Fulbright
Scholar
program. A
Chinese colleague suggested I go to the university
clinic. When I
told him
there wasn't much point since doctors couldn't do much
for the flu
besides
recommend fluids and bed rest, he said, "That's Western
doctors.
You could
go to the Chinese medicine doctors at the clinic. They
can help
you." I
figured, what the hell, and we went. The doctor inquired
into the
lurid
details of my illness-how my bowel movements looked, the
color of
the mucus
in my nose, etc. He didn't really examine me physically.
Then he
prescribed
an incredible number of pills and teas and sent me home
with a huge
bag of
stuff, and instructions on the regimen for taking them
through the
course of
each day. I followed the directions dutifully, and my
colleague
came by each
day to check on my progress. By the fifth day, when I
was still
running a
fever and feeling terrible, I told him I didn't think
the Chinese
medicine
was working. He replied confidently, "Chinese medicine
takes a long
time to
work."

I laughed at this. "Sure," I said. "But the flu only
lasts a week
or so, and
now, when I get better, you'll say it was the Chinese
medicine,
right?"

He smiled and agreed. "Yes. You are right."

Obviously the Obama administration recognizes that it
needs to keep
the
finger of blame for the current economic collapse
squarely pointed
at the
Bush administration, which is certainly fair in large
part (though
the
Clinton deregulation of the banking industry played a
major part in
the
financial crisis and its enthusiastic promotion of
globalization
began the
massive shift of jobs overseas that has left the
nation's productive
capacity hollowed out). But it also seems to recognize
that it
cannot tell
the bitter truth, which is that our national economy
will never
"bounce
back" to where it was in 2007.

America, and individual Americans, have been living
profligately
for years
in an unreal economy, propped up by easy credit which
inflated the
value of
real estate to incredible levels, and which led people
to spend way
beyond
their means. Ordinary middle-class working people have
been
encouraged to
buy obscenely oversized homes at 5% down, or even no
down payment.
They have
been lured into buying cars the size of trucks, one for
each
driving-aged
member of the family (in our town, so many high school
kids drive
to school
that the school ran out of parking spaces and the yellow
school
buses,
largely empty on their runs, are referred to by the
students as the
"shame
train," an embarrassment to be seen riding). They've
installed
individual
back-yard swimming pools, unwilling to share the water
with their
neighbors
in community pools. Boring faux ethnic restaurant
franchises of all
kinds
have befouled the landscape, filling up with families
too stressed
out to
cook, and willing to endure over-salted, over-priced and
tasteless
cuisine
and tacky plastic décor night after night.

Now this is all crashing down. Property values are in
free-fall.
Car sales
have fallen off a cliff. Joblessness is soaring (At
present, it's
approaching an official rate of 8%, but if the
methodology used in
1980,
before the Reagan administration changed it to hide the
depth of
that era's
deep recession, were applied, it would be 17% today, or
one in seven
workers).

Eventually, the economic slide will hit bottom and begin
its slow
climb
back, as all recessions do, but there will be no return
to the days
of $500,000 McMansion developments, three-car garages
and a new car
every two
or three years for both parents plus a car for each
highschooler.
Not only
will banks no longer be able to offer such credit to
clients.
People, having
been burned, will not be willing to borrow so much.
Company health
care
benefits, pension programs or 401(k) matching programs
that were
slashed
during this downturn will not be restored when the
economy picks up
again.

Over the last 20 years, America has degenerated into a
nation of
consumers,
with 72 percent of Gross Domestic Product (sic) now
being accounted
for by
consumer spending-most of it going for things that are
produced
overseas and
shipped here.

That is not an economic model that is sustainable, and
it is a
model that
has just suffered what is certainly a mortal blow.

What we are now seeing is the beginning of an inevitable
downward
adjustment
in American living standards to conform with our actual
place in
the world.
As a nation of consumers, and not producers, with little
to offer
to the
rest of the world except raw materials, food crops,
military
hardware and
bad films (none of which industries employ many people),
we are
headed to a
recovery that will not feel like a recovery at all.
Eventually,
productive
capacity will be restored, as lowered US wages make it
again
profitable for
some things to be made here at home again, but like
people in the
1930s
looking back at the Roaring 20s of yore, we are going to
look back
at the
last two decades as some kind of dream.

It would be better if the new administration would be
honest about
this,
because with honesty, we could have a recovery program
that would
actually
address the real critical issues facing the country-the
decline of
our
educational system, the irrationality of official
promotion of home
ownership that has led to the proliferation not just of
suburbs but
of
exurbs, the over-reliance on the automobile for
transportation, the
unprecedented waste of resources, the pillaging of the
environment,
not to
mention the decimation of the retirement system and the
creation of
a vast medical-industrial complex that is sucking the
life-blood
out of families
and businesses alike.

With honesty, we could also confront the other big
obstacle to
national
recovery-the nation's obsession with militarism and
foreign wars.
The honest
truth is that the US is technically bankrupt and in a
state of
chronic
decline, and yet the nation persists in spending a
trillion dollars
a year
on war and preparations for war, as though America were
in mortal
danger
from foreign enemies.

The truth is that we are not threatened by Communism, by
drug
lords, or by
Muslim Jihadists in any serious way. Rather, we have
become our own
worst
enemy.

The administration could start by telling us all this
straight up,
but the
problem is, most of us probably don't want to hear it,
which
explains why
we're not hearing it. It also explains why we're about
to blow
another
trillion or so dollars on propping up failing banks,
funding
pointless
highway and bridge construction, and blowing up
illiterate peasants
in
remote places like Afghanistan and Pakistan.

DAVE LINDORFF is a Philadelphia-based journalist. His
latest book
is "The
Case for Impeachment" (St. Martin's Press, 2006 and now
available in
paperback edition). Lindorff spent five years reporting
on China
and Hong
Kong for Business Week magazine. His current work is
available
atwww.thiscantbehappening.net

Good article, but... There are a lot of buts in it. You
say we are
in a decline, yet I only read and hear this and do not
expereince it.