A good piece today gets at one of my worries about the U.S. economy's ability to avoid long-term decline. That is the failure of Americans to spend less than what they earn, i.e. save.
The hook is that some Americans are actually waiting to have the money before they spend it! This is news only because we haven't been doing this. "In 1984, Americans were still saving more than one-tenth of their income, according to the government. A decade later, the rate was down by half. Now, the savings rate is slightly negative, suggesting that on average Americans spend more than their disposable income."
The article suggests that there's going to be a cultural shift against having debt-fueled stuff.
"In homes now saturated with debt, conspicuous consumption and creative financing have come to seem a sign of excess not unlike that of a suntan in an age of skin cancer." See the quotations from people trying to get over their low-grade envy of the Cadillac next door.
But there are a couple of problems. One is that the economy depends on overspending. And people overspend not just because they like Cadillacs, but because they don't make enough money. Individual wages for the bottom 80 percent have barely budged for 35 years.
Given our low-cost low-wage economy, will employer be able to imagine how to raise wages so that people can save?
PS: See also a nice column last month by David Leonhardt on the direct conflict between spending on social development and spending on the war in Iraq.