You Guys Should Enjoy This- Howard Davidowitz Says Americans Going Downmarket
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ziggy29
Moderator Emeritus
I actually agree with the part about the diminished standard of living -- I saw that article yesterday.
I think we've spent the last 30-35 years denying that the post-WW2 U.S. economic bubble was unsustainable, and was the result of a period of time when the U.S. was the only major undamaged infrastructure in the world, and there was a HUGE demand for U.S. industry to rebuild the world.
For many years after that -- particularly starting in the 1970s when it was apparent the game was changing globally and there was a rise in low-cost foreign competition -- we tried to give people the same deal that the generation working through that era received. Through borrowing, budget deficits and giving new employees less of a deal than their predecessors, we were able to pretend that the deal received by the middle class American worker was permanent and sustainable.
But it wasn't sustainable. Job security. Pensions. Social Security. Wages that outpace inflation. Inflation-adjusted debt per capita (public and private). All of these are creating headwinds for younger generations. Basically, I think at some point maintaining prosperity for today's generations required "borrowing" some of it from future generations.
But the more time went on, whether as an individual, a business or a government, the more we had to borrow from future prosperity to pretend that we could still live the same lifestyle and receive the same benefits waiting for our future. And it became harder and harder -- and costlier -- to keep the house of cards propped up. And I think we're at or near a crossroads now because it's getting to the point where no amount of money (that can be paid back) is capable of sustaining the largesse the American middle class received decades ago.
I think we've spent the last 30-35 years denying that the post-WW2 U.S. economic bubble was unsustainable, and was the result of a period of time when the U.S. was the only major undamaged infrastructure in the world, and there was a HUGE demand for U.S. industry to rebuild the world.
For many years after that -- particularly starting in the 1970s when it was apparent the game was changing globally and there was a rise in low-cost foreign competition -- we tried to give people the same deal that the generation working through that era received. Through borrowing, budget deficits and giving new employees less of a deal than their predecessors, we were able to pretend that the deal received by the middle class American worker was permanent and sustainable.
But it wasn't sustainable. Job security. Pensions. Social Security. Wages that outpace inflation. Inflation-adjusted debt per capita (public and private). All of these are creating headwinds for younger generations. Basically, I think at some point maintaining prosperity for today's generations required "borrowing" some of it from future generations.
But the more time went on, whether as an individual, a business or a government, the more we had to borrow from future prosperity to pretend that we could still live the same lifestyle and receive the same benefits waiting for our future. And it became harder and harder -- and costlier -- to keep the house of cards propped up. And I think we're at or near a crossroads now because it's getting to the point where no amount of money (that can be paid back) is capable of sustaining the largesse the American middle class received decades ago.
youbet
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Couldn't agree more. In fact, I think your observation clearly deserves the "Youbet Understatement of the Day Award." Congratulations!
youbet
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Wow! Another observation to agree with! As a retired manufacturing guy, I think you're spot on. It was inevitable that our offshore sources of manufactured goods and natural resources would only be willing to send them to us in exchange for our "paper shuffling" abilities for so long.
You mean (gasp!) people will have to start living within their means?
OMG! What are they going to do without the daily latte? The new car every three years? The 30-foot boat? The seventeen-room house? Buying lunch instead of brown-bagging it and dinners out three times a week? No more lavish vacations twice a year?
How will the poor dears cope?
OMG! What are they going to do without the daily latte? The new car every three years? The 30-foot boat? The seventeen-room house? Buying lunch instead of brown-bagging it and dinners out three times a week? No more lavish vacations twice a year?
How will the poor dears cope?
youbet
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
I think it means a little more than a reduction in lavish life styles. I think we're talking about the future middle class living like today's lower middle class.
bbbamI
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
bbbamI
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
I've been doing that for years!
You can't appreciate the good without experiencing the bad. Just think how good it's gonna feel...one day.....
Bestwifeever
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What's that old saying, Recession is nature's way of saying you were getting too rich. Stuff that only really rich people used to have was becoming too accessible to all of us. So yeah, the standard of living had swung too far in one direction, and now it will swing back to the other. Except for really rich people.
dex
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
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As I mentioned in another post we saw similar predictions after 9/11 - it didn't happen.
Permanent changes will depend upon the length and depth of this recession.
I don't thing it will change much.
Once the recession is over we will see stories about Americans spending again.
Permanent changes will depend upon the length and depth of this recession.
I don't thing it will change much.
Once the recession is over we will see stories about Americans spending again.
The across-the-board problems make for gloomy times that will hurt many people, especially those who are old enough to have lost a lot and too old to make up for it.
But pardon my tiny rant about these tiny "articles" that seem to be proliferating like wildfire. Genuine news, analysis and insightful opinion is being reduced to random 50-word blog posts that amount to a big "duh!" Phooey!
But pardon my tiny rant about these tiny "articles" that seem to be proliferating like wildfire. Genuine news, analysis and insightful opinion is being reduced to random 50-word blog posts that amount to a big "duh!" Phooey!
Yes, an economy based on manufacturing is comforting--it's easy to see how it works and why it works (creating increased wealth by taking less valuable raw materials + labor = products of greater value). And, I'd be more comfortable if our economy had more of it. But, that's not the only way: Switzerland has been prosperous for hundreds of years, and has done it with a service-based economy. Yes, they were able to do it because of nearby industrial countries, but they did it just the same. Likewise, a surgeon or schoolteacher produces valuable, if intangible, "products."
Lusitan,
I can see no "spoils" from WWII. Wars these days are rarely about acquiring gold and other spoils (well, maybe oil), they are political battles that result in the net destruction of property and lives. I'd dare say the reason the U.S. came out of the war in good shape is that the war never hit our shores (except Hawaii, of course), hence our infrastructure and manufacturing base, etc., came out unscathed and indeed stronger than ever. Even in this, the U.S. experience was singular, and nothing can make up for the lost productivity of thousands upon thousands of young lives.
Back to the original topic, the world will be better off without Hummers, etc., and not every home needs to be an echoing McMansion. Financially and materially, there will be some long-lasting damage. The big question is whether people, especially in America, will move on happily and orient themselves towards community and other non-materialistic ways.
I can see no "spoils" from WWII. Wars these days are rarely about acquiring gold and other spoils (well, maybe oil), they are political battles that result in the net destruction of property and lives. I'd dare say the reason the U.S. came out of the war in good shape is that the war never hit our shores (except Hawaii, of course), hence our infrastructure and manufacturing base, etc., came out unscathed and indeed stronger than ever. Even in this, the U.S. experience was singular, and nothing can make up for the lost productivity of thousands upon thousands of young lives.
Back to the original topic, the world will be better off without Hummers, etc., and not every home needs to be an echoing McMansion. Financially and materially, there will be some long-lasting damage. The big question is whether people, especially in America, will move on happily and orient themselves towards community and other non-materialistic ways.
Haven't been to Switzerland lately, huh? It is a train wreck.
Prosperity through funding both sides of wars and fees on money laundering operations is very profitable. I will give you that.
One thing that gives me some hope is the various movements towards returning to local production, for example food production. The scale may be tiny at the moment, but if it grows it could result in a vastly richer experience for us all.
At the turn of the century there was the "craftsman" movement. It wasn't just a style of furniture or home, it was an entire idealized lifestyle, the value of which is still appreciated today. We need a new such movement. Instead of buying a particle-board table made overseas to the cheapest standards that lasts a year, with thrift we can purchase a table that may cost 10 times more but will be an object of beauty that retains its value and will be passed on to a future generation, made by a local artisan / craftsman who loves his work.
At the turn of the century there was the "craftsman" movement. It wasn't just a style of furniture or home, it was an entire idealized lifestyle, the value of which is still appreciated today. We need a new such movement. Instead of buying a particle-board table made overseas to the cheapest standards that lasts a year, with thrift we can purchase a table that may cost 10 times more but will be an object of beauty that retains its value and will be passed on to a future generation, made by a local artisan / craftsman who loves his work.
ziggy29
Moderator Emeritus
There were plenty of economic post-war spoils, in *some* sense. Yes, they were obviously paid for with a lot of blood and a lot of sacrifices -- so in some sense were "earned" -- but the fact that the U.S. was the only major industrialized nation left standing that wasn't devastated by war is THE major reason, IMO, why there was an unsustainable period -- dare I say "bubble" -- in the post-war economy for a good 25-30 years. The rest of the world needed the U.S. to rebuild it which created an unrivaled prosperity for U.S. businesses and the domestic economy.
IMO it's no accident that unions peaked then -- U.S. business was so strong that it could give the unions better and better deals and still be very profitable. When the pie was growing rapidly, companies could share the pie much more generously. At least until Europe was rebuilt and Japan emerged by about 1970, give or take. At that point U.S. businesses faced new cost pressures they hadn't seen since the war ended.
Yet for decades we pretended not to notice this inconvenient reality, pretending the deal that middle class workers were getting was sustainable, that business could still provide job security, pensions and wages that beat inflation. We pretended Social Security would remain strong. We did these things by borrowing prosperity from the future -- in the form of personal, corporate and governmental borrowing. For a while you can build that house of cards and it will seem sturdy -- but when the house of cards gets bigger, it becomes more unstable and more fragile, requiring ever more borrowing to maintain until it hits the breaking point and nothing can hold it up.
I have no evidence, but I suspect our *real* standard of living -- inflation-adjusted and without including borrowed prosperity -- has mostly been falling for at least 20 years and maybe longer. Only with the addition of debt to "preserve" the standard of living for current generations (and screwing future generations) have we been able to maintain the illusion of increased prosperity through more and more stuff. We'll be better off long-term without all that stuff, but we've taken so much from the future that I don't know that future generations could maintain the same standard of living or have the same retirement expectations even without all the "stuff."
I think the house of cards is reaching a breaking point. It's time to let parts of it fall over, deal with the pain and build a more sustainable economy for future generations; we've taken so much of their future wealth already that I hope we can find a way to allow them to prosper at least somewhat, too. And heck, maybe they'll even find a way to retire despite all the headwinds their ancestors foisted on them.
The headwinds that future generations face include national debt and taxation, true (just as most of us have faced and will continue to face as we age). But we're not just handing them the bad stuff. They will inherit vast wealth in many ways, just the most obvious of which are direct financial inheritances. They will also inherit a country with a vast and powerful infrastructure built by their predecessors.
Which world would you have rather been born into - ours or one free of debt but also free of hospitals and schools and freeways and defense, with shanty town housing, erratic and unsafe food distribution, gangs to take away what little you have including your daughters, and invading hordes over the horizon ready to burn down your "civilization" entirely, etc?
I'll certainly give you that things could be better, but muddling through is generally the best that can be expected. And yes, perhaps there was a certain "golden generation," as I call them, when it seemed (looking back) that everything came together. But looked at more closely, they were just muddling through too.
Which world would you have rather been born into - ours or one free of debt but also free of hospitals and schools and freeways and defense, with shanty town housing, erratic and unsafe food distribution, gangs to take away what little you have including your daughters, and invading hordes over the horizon ready to burn down your "civilization" entirely, etc?
I'll certainly give you that things could be better, but muddling through is generally the best that can be expected. And yes, perhaps there was a certain "golden generation," as I call them, when it seemed (looking back) that everything came together. But looked at more closely, they were just muddling through too.
One person's "idealized movement" is another person's "head-in-the-sand yearning for a yesteryear that never was." There may be a small group of people who want to pay $100 for a pair of hand-crafted shoes, but it's a small group-and mostly they are on communes and don't wear shows in the first place. And, there may be Americans whose lifelong aspiration is to be a cobbler, toiling all day to turn out one pair of shoes. These groups of people are free to seek each other out for their mutual benefit.
There is a "quality curve" that we addressed in a simultaneous thread, and there's value in moving up the curve to the point that each dollar gives the best value. But, there's a limit. I've got some particleboard furniture that has served me well for over 20 years (and it was made from tree by-products plus a lot of nasty chemicals--but not a single tree was felled to make it).
CuppaJoe
Moderator Emeritus
"The party's over. Take off your makeup." Say it ain't so and take another look at Ha Ha's signature line.
Samclem, I did acknowledge that it was an "idealized" lifestyle, but it's quite true that it's still a respected one today. I offered it as an old and perhaps still valid model of how we might escape from the "race to the bottom" that the world seems to be in. That's not putting your head in the sand, it's offering a taste of hope. What's yours?
By the way, in the "race to the bottom" and in "going down-market", even Ikea (I thought they had won the race already) is finding that plastic-laminated particle board is too high-end. A lot of their new furniture is being made out of a strange foamy plastic or hybrid plastic/pulp substance.
I guess I don't know what a "respected lifestyle" is. Stickley furniture and Greene & Greene houses are beautiful. Sarah Susanka and the "small house" "movement" is one I understand and find agreeable.
But, what happened to Gustav Stickley? He couldn't turn a profit by making hand-made furniture of fumed oak. People didn't want to pay what it costs. In general, they still don't. Maybe that will change, but I don't see how.
What's my vision for America's future? We still have many competitive advantages in the world market. Manuafacturing of some items can come back here if our taxes are low and our wage rates come down. In addition, we can design good products even if we don't build them here. Our country has advantages in transportation and capital availability that few countries can match, and most people still speak English, which is a plus. If we stay "lean" as a society (low tax rates, low government-induced drag on business) we can compete in the world market. If we saddle ourselves with regulatory and taxation handicaps, we cannot hope to compete on the world market. I haven't met anyone who thinks our government or populace is presently in the mood for smaller government. So, I'm not optimistic--yet. There will have to be more pain before attitudes adjust, unfortunately.
