Huh

I was just reading an article from First Things on the mess that is the American economy at present. I didn’t understand much of what Mr Goldman said, but the part I thought I understood went something like this: the American economy only functions correctly when there are a lot of young people borrowing a lot of money at interest from a lot of older people.

The family did not do well when the Republicans were in power. It needed to grow, and instead it shrunk. Until 1970, in fact as well as in popular culture, the normative American household was the two-parent nuclear family. When Ronald Reagan took office, the number of such households had fallen from over half to just over two-fifths. The number is now down to less than a third.

As the world’s experience is showing, this is bad economics. If America does not reverse the decline of the nuclear family, its economy will decline as well. Many palliatives are available, to be sure, that would improve matters in the interim: fiscal stimulus for entrepreneurship, and a higher proportion of skilled immigrants, for example. Reuven Brenner and I have presented these solutions in a series of essays for First Things during the past year.

This works out best when there are a lot of two parent families with children, he says. The first part of that assertion is something I’ve always found to be the great perplexity of a non-technical understanding of economics. Intuition suggests something like this: each person is part of a very complex society wherein she relies upon a number of things that have been produced by other people — a house, water, gas, clothing, food, an oven in which to cook the food, dishes to serve the food, books, lights, electricity, a car — all sorts of different things. Most of us use more of these things than are quite necessary, but they have some appeal or other, else we wouldn’t bother having them. Well, there are those other things we neither like nor need (like the recently discovered mushroom brush in my grandmother’s cabinet, for instance), but I hope that doesn’t make up the majority of the things we own. So then our workplaces are divided up so that one group of people might make a lot of dishes and another a great many blankets, and so on, and complicated trading via money and markets ensues in a way I can’t even begin to understand. Intuition suggests that the optimal state for things to be in is one where each (or at least most) people could have a modest collection of those things most needed or best liked, and would make or do or otherwise contribute to other things that other people need or like. Then, I suppose, the economy would grow in proportion to the population. But I guess needs and productivity aren’t well balanced, because perhaps it wouldn’t take all the people in, say, America, to produce and sell and otherwise contribute towards all the things everyone would need or even like to have. Because machines and whatnot are very efficient, and Americans are often very efficient. But then what happens? I’m unclear about that part. People don’t just sit about and contemplate metaphysics all day. Or at least most of us don’t. There may be a wider space for information, art, and technology, but there’s still only so much we can watch, read, hear, or use in that way. So what then? Mr Goldman seems to be saying that we need to have more families with children who are buying more stuff, and I guess, but that’s both odd, and not something anyone can do anything about (I mean anyone could — one could have a child — but it would be one’s own child, for altogether different reasons, like love). *is confused*

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3 thoughts on “Huh

  1. I am not sure I agree with anything He said. Though it is interesting to ask the question of how changing Demographics affects the economy.

    I think our main economic problem is we have massive corruption to deal with. Until we address that and become an honest people we will have economic problems.

  2. I have not read the blog post you linked to, but I did read his article that he wrote in the published journal.
    http://www.firstthings.com/article/2009/05/demographics–depression-1243457089

    I if the two track at all the same concept, then I think that your summary is pretty close to my own understanding of his article. I had a simpler take, however, that Demographics drives economics, and he demonstrated it by showing that when the demographic bottom fell out, it was a matter of time for the economic bottom to fall out–which it did.

    My own view is that the demographics ought to be right for their own sake, and let the economic chips fall where they may. I could not reduce it to a formulaic idea that in order to make

  3. …in order to make THIS economy work, we need to make the demographics right. That, to me, flips the whole thing on its head.

    As for the “greed” problem. I also think that’s mapped in the demographics. Selfishness, generally, is more characteristic of the kinds of marriage and family choices being made–stay single longer, marriage as merely a mutual admiration society, throw in a kid for kicks, then look forward to a retirement where I can further my exciting experiences…
    Not much in here about living a noble life, never mind holiness. The latter would support singles or families in quite a different way, which would effect the economy in terms of demand. We would demand fewer, but better things, and resist the “new” and “wow.” In the perfect world, purchases and borrowing would be done with wisdom. But now I’m painting my utopia, the point of which is that the demographics are an effect of culture, which in my opinion, is the real, and very complicated driver of every society.

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