Monday, November 24, 2008

Apparently Economic Crash is Our Fault--Stupid Consumers!

OK, this is, I think, a pretty good indicator of one of the few actual problems facing America (and humanity, really) today.  So, this dude called Thomas Homer-Dixon is some sort of interdisciplinary whiz-man and he wrote this opinion piece for TheGlobeAndMail.com called "Deflation's Big Game" and it describes the suddenly infamous "deflation" as "it's own cause" or as "a self-fulfilling prophecy," depending on which part of the paragraph you're reading.  Oh and he also says that the word deflation is "...the economists' dread word, and in the past week it has leapt from a
dusty back corner of their lexicon to the front pages of our newspapers."

Color me naive, but I always thought inflation was a bad thing.  I'm old enough to remember the 1970s and how inflation was a huge problem.  You probably know what inflation is--it's when our currency inflates like a balloon, but the value of the dollar goes down.  It's sort of like a reverse psychology thing.  The amount of dollars it takes to buy a carton of milk inflates--it takes more money to buy that milk than it did years before.  How does this devaluing happen?  It happens because money is added to the existing supply through loans.  Put simply, the more of something you have, the less that something is worth.


Now, I'm just a guy with a blog, right?  I went to film school and grew up reading too many comics, so maybe I need to go to MIT, like Mr. Homer-Dixon did, before I'll properly work all this out, but if inflation--a devaluing of our dollars--is bad (duh, of course it is) wouldn't deflation--one assumes, the opposite of inflation--be a good thing?  Logically deflation would mean the shrinking of the number of dollars you need to buy that milk.  Yet, to economists, THD says, deflation is a bad thing.


Well, maybe THD defines "deflation" differently than I do--let's see--here's his explanation for the "D" word:


Deflation refers to a sustained drop in prices caused by falling
economic demand - a situation where unemployment of both people and
capital soars and where the standard monetary tools that policy-makers
use in response, such as interest rate cuts, stop working.

Huh, seems he's not linking "deflation" with "inflation" at all.  Or, if he is, he's doing it in such a backhanded way as to mislead us into thinking the two aren't connected. 


But let's break that definition down--he says deflation refers to a drop in prices caused by falling demand.  So, people stop buying and prices drop to compensate.  See, due to the law of supply and demand, if demand goes down, the price must go down as well to encourage buying and the moving of product. 


This is literally the inversion of how I defined "deflation" above.  What's happening is the price of milk drops and allows that George Washington dollar coin to buy more of the white stuff.

But what Homer-Dixon is essentially saying is that a drop in prices is bad for our economy.


Lower prices is bad?  Maybe Homer-Dixon believes that, but only Homer Simpson would mindlessly trust that to be true when common sense says otherwise.  While THD doesn't come out and say as much in his piece, the entire article is framed from the point of view that the system is good and worthy and that there's nothing wrong with it.


In fact, by pointing at consumers buying less as the cause of deflation, he's basically saying it's all our fault.

What's worse about Thomas Homer-Dixon's piece is that it suggests that we all need to get together and spend more money to help the over-all system back on its feet.  He describes a story of a couple of idiot hunters, each unable to kill a deer on their own--they simply must work together to bag this deer--but if one bails and chases after a rabbit, both of them are going to miss out on the deer.


The question I have is, why can't they just walk out of the forest and go to the nearby supermarket?  Why can't each farmer become a vegetarian and backyard-grow their own food for themselves?  Why fall for this idea that they must hunt deer and feast mightily on its flesh?


Because if we don't accept this story, and the story that it's really our fault, the alternative option is that the system isn't perfect and may even be (GASP!) a bad system.

This is the kind of brainwashing I'm really getting tired of getting from the media.  Sure, this is an opinion piece, but he never says that in the article.  THD also fails to mention the possibility of alternatives.  Like the idiots in Washington who say universal health care would be socialism or communism, this guy isn't preaching to the converted--he is the converted.  The problem is that the conversion is literal.  Homer-Dixon (at least in this one piece) represents the single-minded pod-people-esque mindset that the free market economic system is a pure and divine system that would work just fine if we meddling kids would just behave like sheeple and did what we were told.


This system is collapsing.  Greed was allowed to run rampant and no one wants to take responsibility for it. 

What Homer-Dixon has done is spin the story on it's head--like the movie Star Wars being described as a tragic story of a father who finally comes in contact with his long lost son, only to discover he's fallen in with the insurgent crowd and eventually blows up his dad's place of work, murdering hundreds of thousands of people.  Thomas Homer-Dixon spins the tale of a system that is versatile, but delicate--a Porsche, if you will.  A gorgeous, fast car capable of reaching incredible speeds, delivering immense pleasure to the driver and pretty good looks to people on the sidewalk--but it's clearly the pedestrian's fault for getting hit by one. 


Remember, the very idea of an economic system exists so that humanity can better function--if there are going to be sacrifices, they should be on the part of the economic system that sacrifices for humanity, not the other way around. 


We're getting into a very scary place, as a species of people.  Some of us humans seem to think that institutions and belief systems are more important than human lives.  People's lives are being ruined in this country thanks to our economic system.  In other countries people have died because of it. 


This is not the time to be a "team player" for the system.  Question authority.  Question everything you are told because almost any "expert" is part of the system that is so desperately flawed.  They will defend it, sometimes unknowingly.  We have to be smarter than that.  As humans, we can, and must know when to, adapt to changing conditions--systems are great and important, even.  However, when they stop working we should not be loyal to them just because they work for some.  The free market system may be viable again with proper regulation.  But blaming the consumers is like blaming that pedestrian crossing the street just as the Porsche was zooming down it. 


The rich folks are at the wheel, the rest of us are walking.  Couldn't we find a compromise?  Maybe we could all take the bus?


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