So said Ben Bernanke today. I’m not so sure. I’ve been following Umair Haque’s Edge Economy blog for some time now, and it always challenges me to look at things from another angle. Today (emphasis his):
“Here’s a short economic history of the USA, 1988-2008: Americans were fat, lazy, greedy consumers who lived beyond their means. Right? Wrong. That narrative can be read in many places, but it’s as false as a liar loan. The economics reveal a very different truth. Most Americans took on significant amounts of debt not just because they wanted to, but because they had to. The math is as cold, brutal, and simple. Wages have been stagnant for thirty years.”
Well, I think we collectively were also fat, lazy, greedy consumers in many ways, but still the man has a point. Back in the 70s, a middle-class family could live on one person’s income. Now? Well, they still can I guess, but it’s very, very challenging.
I sometimes get down on myself about my spending habits pre-kids/recession (both hit us at the exact same time). But then I look around our house and think: really, we weren’t that bad. My computer screen came out of a dumpster. I’ve never bought a TV or a gaming system. We’ve never had cable, or more than one car. We did manage one overseas trip, but most of our other traveling involved camping in the good ole MN.
So as of today I’ve decided to stop wasting time wishing I had saved more and spent less before 2007. Onward!
Check out the rest of his post, which lays out his call for an “M-Shaped Recovery” — I believe M stands for meaningful. The comments are really good on this one, too — many of his readers disagree strongly with him and it makes a great debate. There are MANY different ways to look at this.