Harold Meyerson writes an op-ed in todays NYT about how the USA is now a nation of consumers. Seventy percent of our GNP is due to consuming goods rather than producing them. He points out that this is not always the way it was.
In the four decades following World War II, our largest employer was General Motors; for the past decade, it’s been Wal-Mart. GM followed in the footsteps of Henry Ford, who by 1913 had concluded that he needed to pay his workers enough that they could afford to buy a new Ford. Wal-Mart, by contrast, pays its workers so little that they are compelled to shop at Wal-Mart.
To point out the validity of Meyerson’s argument the current answer to economic problems in the USA is to give tax money back to the taxpayers in hopes they will consume even more.
Meyerson goes on to write:
Today, 20 years after we decided not to have an industrial policy, we have an industrial base that employs an ever-smaller number of Americans. What has kept us afloat during the current decade hasn’t been our productive capacity but the inflation of our assets — the rising value of our homes, against which we’ve borrowed to purchase the things we could not afford out of our stagnant paychecks. To the extent that the United States had a macro-economic strategy, it was Shop Till You Drop.
So we’ve shopped. And now we’ve dropped.