I am not an economist, nor do I play one on TV, but I am a student of human behavior and would like to offer that perspective on our current economic crisis. It boils down to one word: Largesse.
I’m not sure that is the right word, and it may be telling that even my prodigious vocabulary is lacking when applied to economic matters. Does anyone really know what is going on? Can anyone really describe it in layman’s terms?
The “largesse” I’m talking about is the simple human trait of not caring about things that are plentiful. If oil and gas are cheap, then who cares what the mileage of automobiles is? If the nation just acquired a bunch of land in the mid-west, then why not just give it away to whatever citizen will farm it? If your pocket is heavy with change, then it’s not a big deal to give some to that beggar? There are downsides: if fish are plentiful we net them to extinction, if trees are plentiful we clear-cut them to oblivion.
Guilt plays a roll in largesse. If a boss is making a bucket of money, he or she will be more inclined to pay their secretary more money. I bet you can find a correlation between secretary salaries and those of their bosses. Same basic job, but much different salary based on that of their boss. The social culture the Pacific Northwest was upended when Microsoft grew into a behemoth and showered secretaries, receptionists, and other lower-rung employees with millions in stock options. They didn’t have to, but largesse dictated they do something.
Since the end of WWII, America has enjoyed decades of largesse. The rest of the world was a wreck. We were the only game in town – the center of finance, agriculture, manufacturing, and science. The principle of largesse (and union organizing) drove wages up, and the middle class enjoyed a quality of life unheard of in human history. There is a competitive aspect to largess and when one business sector is raking in the loot, others wonder why they aren’t getting theirs. I believe this has played a roll in why doctors have raised their fees in recent decades to keep pace with other professionals.
On a national level, our Federal Government has practiced largesse on a scale that will shock future historians. We became accustomed to having things done in a top-quality manner…no expense spared. One example: after the recent earthquake in Haiti, bodies were disposed of in mass graves, but in America after 9-11 or Katrina, expensive DNA tests were performed at taxpayer expense on every recovered bone fragment so that it might be returned to relatives for burial. It was a sensitive thing to do, but can we afford sensitive anymore?
A couple generations of Americans have grown up assuming this largesse lifestyle is standard procedure. We are the First World, after all. So it is a cultural as well as economic shock to realize our way of doing things may be unsustainable. The prosperity we enjoined through the 50s, 60s, and 70s no longer exists. We are no longer the manufacturing center of the world. Asia is. Even our dominance in science and technology is threatened by Japan, Korea, and India. Over the last couple decades, our economy was propped up by the financial industry, the tech boom, and the real estate boom. These foundations of sand have all crumbled and the well-spring of largesse that trickled through our economy has been shut off.
Economists say our massive marketplace can’t turn on a dime, but it sure did in 2008 when Americans from Juneau to Jersey decided, as though by some cellular osmosis, to stop buying. Individuals and families can understand the need to tighten belts, but can our government? Will entrenched interests – military, agriculture, banking – understand that the largesse they have thrived on for generations must now come to an end? What government leader will take the political hit and be the one to say the party is over?