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The Ugly Truth: America's Economy is Not Coming Back

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Headlined to None 1/28/09

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By Dave Lindorff

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.
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Dave Lindorff is a founding member of the collectively-owned, journalist-run online newspaper www.thiscantbehappening.net. He is a columnist for Counterpunch, is author of several recent books ("This Can't Be Happening! Resisting the (more...)
 
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special attention:...The administration could star... by Richard Mynick on Wednesday, Jan 28, 2009 at 2:40:03 PM
was the TRUTH. That's number one. Don't ex... by Patrick Lafferty on Wednesday, Jan 28, 2009 at 3:24:29 PM
Depending on the steps taken to deal with the econ... by Steven Leser on Wednesday, Jan 28, 2009 at 3:49:01 PM
Steve,I consider the issue of lack of products vs ... by sometimes blinded on Wednesday, Jan 28, 2009 at 6:44:03 PM
Leser, So you don't think that I am simply tak... by William Whitten on Thursday, Jan 29, 2009 at 1:08:56 AM
I have been researching this for seven years Perry... by William Whitten on Thursday, Jan 29, 2009 at 8:06:46 AM
... anyone that is serious about investigating 9/1... by Mr M on Thursday, Jan 29, 2009 at 8:07:46 AM
Mr. Leser,You are never going to "get it"... by William Whitten on Thursday, Jan 29, 2009 at 12:39:25 AM
As tiresome and boring as it is to constantly deal... by Steven Leser on Thursday, Jan 29, 2009 at 9:45:08 AM
 "unprovable and undisprovable conspirac... by William Whitten on Thursday, Jan 29, 2009 at 9:58:25 AM
farther and farther and farther away from what the... by Steven Leser on Thursday, Jan 29, 2009 at 10:17:28 AM
"That was to keep the comments to this articl... by William Whitten on Thursday, Jan 29, 2009 at 1:04:30 PM
Steven, You're a classic case of someone that ... by Mr M on Thursday, Jan 29, 2009 at 3:18:12 PM
"It doesn't have to be done out of altrui... by reasonableperson on Thursday, Jan 29, 2009 at 1:11:37 AM
... you are arguing against a point I never made. ... by Steven Leser on Thursday, Jan 29, 2009 at 9:48:45 AM
nobody ever seems to be "on target" with... by William Whitten on Thursday, Jan 29, 2009 at 10:05:39 AM
"A point you might consider making to your st... by William Whitten on Thursday, Jan 29, 2009 at 6:52:05 PM
I did not say or imply in any way that your assert... by reasonableperson on Friday, Jan 30, 2009 at 12:31:01 AM
I agree that things must change in our way of thin... by Jeremy Haumann on Wednesday, Jan 28, 2009 at 4:19:03 PM
that it does not come back.Spending money we do no... by steve scheetz on Wednesday, Jan 28, 2009 at 4:28:31 PM
IF your potential customers are well paid to ... by Donald Rankin III on Wednesday, Jan 28, 2009 at 6:16:37 PM
Propping upbanks is truly no answer.  Banks d... by kato krause on Wednesday, Jan 28, 2009 at 4:44:16 PM
"Why the people are always out of the money l... by William Whitten on Thursday, Jan 29, 2009 at 12:20:37 AM
never say never-with a change over to green energy... by TRADESMAN on Wednesday, Jan 28, 2009 at 4:59:25 PM
Sure what you said is correct, but its becoming fa... by John Bessa on Wednesday, Jan 28, 2009 at 5:13:44 PM
The hidden cost of Taxes.... by Gallaher on Wednesday, Jan 28, 2009 at 5:56:29 PM
That is why.... by Steven Leser on Thursday, Jan 29, 2009 at 9:50:39 AM
cheap labor * tax avoidance * global economy * ser... by Patrick Lafferty on Saturday, Jan 31, 2009 at 12:00:47 PM
   I agree. The economy has been hollowe... by Larry McCombs on Wednesday, Jan 28, 2009 at 6:22:02 PM
... poisons, are booming, and with an  explos... by Mr M on Wednesday, Jan 28, 2009 at 7:16:47 PM
I haven't worked since 1978 and that dear fact... by Jason Paz on Wednesday, Jan 28, 2009 at 7:53:23 PM
Has anyone read this yet?   WTF is going... by Munich on Wednesday, Jan 28, 2009 at 7:58:08 PM
Uniting U.S., Canada, Mexico? WTF!... by Munich on Wednesday, Jan 28, 2009 at 8:07:13 PM
"The New World Order is upon us, full of hope... by Mr M on Wednesday, Jan 28, 2009 at 9:11:09 PM
the people looking at the two party system as a go... by Patrick Lafferty on Wednesday, Jan 28, 2009 at 8:11:27 PM
... that are even worse.This is one of those days.... by Mr M on Wednesday, Jan 28, 2009 at 9:17:51 PM
Hi. I tried to find you in  the archives to r... by Theresa Paulfranz on Thursday, Jan 29, 2009 at 8:45:01 AM
Nice work thus far Dave.  Jeff Rense is ... by Munich on Wednesday, Jan 28, 2009 at 9:33:20 PM
"Serf City Here We Come"....LolJust why ... by William Whitten on Thursday, Jan 29, 2009 at 12:04:17 AM
The economy will come back, but not until after we... by Jere Hough on Thursday, Jan 29, 2009 at 12:53:59 AM
gee...you mean no Star Trek era in the making??Wha... by William Whitten on Thursday, Jan 29, 2009 at 1:15:07 AM
The worst case scenario is it comes back on the SD... by Patrick Lafferty on Saturday, Jan 31, 2009 at 12:41:08 PM
Y'all do recall that Bill Clinton was starting... by Perry Logan on Thursday, Jan 29, 2009 at 5:36:34 AM
... don't exist: Bilderberg GroupIlluminatiCon... by Mr M on Thursday, Jan 29, 2009 at 7:57:49 AM
"This is the classic conspiracy belief...but ... by William Whitten on Thursday, Jan 29, 2009 at 8:25:16 AM
... you dont know how boring it is to always hear ... by Steven Leser on Thursday, Jan 29, 2009 at 9:10:55 AM
And you have no idea how boring it is to read fair... by William Whitten on Thursday, Jan 29, 2009 at 9:48:03 AM
Thanks... by Steven Leser on Thursday, Jan 29, 2009 at 9:53:13 AM
...that was REALLY funny!... by William Whitten on Thursday, Jan 29, 2009 at 10:03:37 AM
We could continue to talk about conspiracy theoris... by William Whitten on Sunday, Feb 1, 2009 at 9:52:33 AM
Your soul is good and your mind is quite alive, bu... by Patrick Lafferty on Saturday, Jan 31, 2009 at 3:32:06 PM
Clinton? Not the rosy picture you paint.How about:... by Tippy Canoe on Sunday, Feb 1, 2009 at 7:57:30 AM
http://puddydunne.wordpress.com/2009/02/01/the-x-f... by Patrick Lafferty on Sunday, Feb 1, 2009 at 2:00:10 PM
It is a sheet of ice outside and fairly gloomy. I ... by robert braunstein on Thursday, Jan 29, 2009 at 6:49:03 AM
Obama's proposed stimulus that creates jobs to... by Philip Pease on Thursday, Jan 29, 2009 at 8:33:55 AM
Back in the early 70s I first became aware of the ... by Dennis Kaiser on Thursday, Jan 29, 2009 at 8:54:57 AM
You mention that "the Clinton deregulation of... by Richard Wise on Thursday, Jan 29, 2009 at 9:34:06 AM
He should have, but that would have been just ... by Patrick Lafferty on Saturday, Jan 31, 2009 at 8:45:16 PM
Clinton doesn't look too unhappy about it.... by Tippy Canoe on Sunday, Feb 1, 2009 at 6:44:21 AM
Dave voiced the words I've had on my mind for ... by sommers on Thursday, Jan 29, 2009 at 10:10:45 AM
it is a depressing scenario. 40 years because by t... by Steven Leser on Thursday, Jan 29, 2009 at 10:23:08 AM
Steven,  Your 40 years assumes the system rem... by Jere Hough on Thursday, Jan 29, 2009 at 4:48:56 PM
I think the economy will come back if left alone.&... by Mad Jayhawk on Thursday, Jan 29, 2009 at 4:59:44 PM