Follow the economic and financial news and you’ll hear a significant number of economic terms to describe this economic environment after the Financial Crisis of 2007: Great Recession; Depression; Jobless Recovery; Deflation; Inflation; Stagflation. A post at Jesse’s Crossroads Cafe notes a recent column by Paul Krugman and while I understand that Krugman is at heart an academic, I marvel at how the terminology and wording obscures the truth of where we as Americans are at. The economists can argue all that they want about what they perceive from the evidence, like three blind men feeling an elephant and pronouncing it as one thing or another. But the terminology can’t obscure the fact that the elephant in the American Room today is a great reversion from the past sixty years of American economic dominance to a society of greater, choking debt, constrained resources and fewer opportunities for our young people.
Continuing to cloud the circumstances with the same economic terms implies that what we’re undergoing is cyclical and that with just the right magic combination of interest rate cuts/rises, monetary supply targets and maybe, just maybe budgetary choices, we can once again regain our footing and right our ship. The simple reality that we have to grasp is that this is a true reversion to a previous level of standard of living and one that’s most reminiscent of our great-grandparents. There is no return to what we remember as the glory days, whether we deem them as the 1960s, 1970s, 1980s or even 1990s.
Part of what I do – simply part of what makes me tick – is to pay attention to what’s going on the world around me and the real-life economic data just reflects that old line and the hits just keep on coming. If you’ve got any notion of what’s happening in the real world, you know that more Americans are going on food stamps than ever before and that jobs with livable wages and benefits are fewer and farther between. But there were two recent reports that caught my attention. The first was that the median American family wealth declined by more than a third between 2003 and 2013. The idea that the median family lost more than a full third in one decade is stunning and given that more and more jobs created are part-time and/or without the benefits with which we’re familiar, it’s well-nigh impossible to see how this is going to be reversed and that level of wealth reclaimed. The second report was that the amount of student debt carried by young adult graduates was impacting their long-term financial health, as high school graduates with no debt had a higher net worth than college graduates with debt. The system is now terminally booby-trapped as American society propounds the necessity of a college degree, yet the attainment of that degree leaves the graduate so indebted that their long-term financial health is crippled. In a new environment in which the individual and family are going to have to pay greater attention than before to their own well-being, this is a set-up for failure.
There is so much that parents are supposed to do for their children – feed, house, love, discipline, raise – but the core goal of parenthood is not to raise a happy child, it is to raise a child who will be able to make his or her way in the world as a moral and productive adult. But parents have to understand that what’s happening is not your previously-typical ebb and flow recession; these are serious structural changes to the economy that will necessarily flow into so many other facets of our lives – food and cooking, housing, education, medicine, child-rearing. If we do not move beyond the economics jargon and wrap our heads around what’s actually occurring, then we won’t be able to adjust accordingly and more importantly, we will be raising our children to live in an outmoded world for which they’ll be ill-prepared to function as the goal – moral and productive adults.
The model with which we were raised ourselves is gone. Dead. Finished. It’s time to recognize the reversion and move on accordingly.