Americans have an insatiable appetite for consumer goods. Our ravenous consumerism has created a wholesale culture of debt. Indeed, to finance our unfettered national buying frenzy even our healthy economic output has had difficulty keeping up—as have our banks, our lending institutions, and our investment brokers. As a result we have had to borrow from foreign sources on an increasingly stunning scale.
Consider this: every year since the turn of the millennium, we have been forced to borrow between half a trillion and a trillion dollars; last year, the infusion of foreign cash required to close the gap between American incomes and consumption totaled more than $850 billion or nearly seven percent of the nation’s entire gross domestic product; the quantity of goods and services that Americans consumed last year in excess of what we produced was close to the entire annual output of Brazil (the world’s tenth largest economy); our investment balance with the rest of the world has now tipped to a deficit for the first time since World War Two.
In the current issue of the Harvard Magazine Jonathan Shaw provides a sobering look at what it may mean for us now that we are a debtor nation swiftly heading deeper into debt.
3 comments:
The idea that our culture and economy are on the decline has become so apparent to me now that I'm living outside the ethnocentric perspective of the USA. A South African friend who is now a Canadian citizen was just sharing with me how he took all of his investments out of anything related to the United States. This blog post explained his reasons to the letter. That shook me up, and I realized that I was a long way from the original understanding I had just one year ago. One year ago, I didn't want to give up my USA-based mutual fund to put it in banking here in Canada. Now, I'm not so sure.
I didn't realize what a consumerism mentality I had until moving here and having to adapt to a much simpler lifestyle. And to be honest, I wouldn't trade my tv-less, make everything myself, patch up ancient cars, shop at Mennonite thrift stores life for the suburban luxury I used to live. I'm much happier these days, and I don't mind at all being oblivious to the latest in fashion or driving a car that was made the year I got out of high school. It's actually quite freeing.
Dr. Grant,
Pardon my denseness, I am confused. It seems you are mixing categories. Are you referring to the U.S. trade deficit, the U.S. budget deficit, which increases the U.S. national debt, or to a citizen's personal debt by this essay against consumerism? They are 3 very different things. Are you complaining about our buying more cheap foreign goods rather than lower quality and more expensive American goods? Consumerism is the freedom to make these choices economically, good bad or indifferent. The exploding government spending and debt that is underwritten by foreign banks and governments,and the large ownership of large amount of American currency abroad are real dangers for our nation that individuals will have morre trouble addressing.
Celt: The economy is not so neatly compartmentalized as some of us might think. Yes, government spending is a blight and a grave danger. But, it is not our only danger. The essay in the Harvard Magazine, not written by me, argues that the looming trade deficit, fueled by voracious consumerism that poses a grave threat right now. We buy more than we produce. That's what the article is about.
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