Tuesday, October 2, 2012

Economic bomb shelter

An economic bomb detonated over America in 2008. Exposed and in a panic, we ran to the government. Our elected officials and their apparatchik appointees have done a miserable job, exploding the deficit, redistributing wealth to groups that didn’t earn it, and saddling businesses with evermore imperious regulations.

Now we’re worse off than we were well before the recession. Annual wages have fallen to a 12-year low. Workforce participation has fallen to a 30-year low.

We may have learned too well what it’s like not to be prepared in the event of sustained hardship. Now, if anything, we are underexposed to the fluctuations of the market. We are coveting our earnings and sustaining ourselves financially on the momentum of the past.

An article in the Oct. 1, 2012, edition of the Washington Post confirms this worrying trend.

The total amount in [savings] accounts climbed nearly 5 percent to $6.9 trillion in the spring, the highest level recorded since the Federal Reserve launched its regular reports on the flow of money in the economy in 1945.

Allow me to personalize these statistics. I was out of college barely a year before the world changed in 2008. Thankfully I was gainfully employed, but uncertainty about the future kept me awake some nights. Even though I was personally unaffected, I felt the trauma. As a result I became more conservative with my money. Even as my income rose, I kept saving. This year I was unemployed for 5 months and lived off my savings until I found work. I could have lived off my savings 15 months if I needed to.

Economic decisions are a subset of the many life decisions we make. In post-recession America, young adults are putting off life’s biggest commitments—marriage, starting a family, and buying a home—giving rise to a burgeoning demographic of dislocated singles, characterized by their lack of participation in society besides the marginally economic.

These immense social costs are the untold story amidst headlines heralding economic stagnation. That’s why “College graduates should not have to live out their 20s in their childhood bedrooms, staring up at fading Obama posters and wondering when they can move out and get going with life” was the best line of Paul Ryan’s speech to the RNC.

My savings were my economic bomb shelter. Given time, I could stock it with enough goods to sustain a wife and child. But a house, too? I don’t know.

“Corporate America” is in the same boat, sitting on $2 trillion rather than risk it on new employees or capital investments. Anti-capitalists sneer at the idea of corporations being legally recognized as people, but they overlook the fact that corporations are in fact run by people, who like the rest of us must prioritize and plan for the future.

What is that future? We don’t know. And that’s the problem.

Ascribing economic stagnation to “uncertainty” isn’t good enough. At the root of our anxiety is the fear we no longer have control of our lives.

In the past we understood that making good decisions, informed by our experience and circumstances, would play the biggest role in carrying us towards our life’s goals. That’s not the case anymore. Now, an intrusive and meddling government plays the biggest role in our lives. Because democratic government ipso facto cannot act in any one person’s best interests, no one can trust it.

So we scrape by, stock our shelters, and await the next air raid.


UPDATE (11/17):

A version of this article appears at the Red Pill Report.

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