The right-wing think tank American Enterprise Institute doesn’t understand what a balance sheet is. The linked article is another inept attempt to prove that inequality doesn’t really exist. Because, they say, instead of looking at income disparities, we should be looking at consumption. Look, an increasing percentage of poor people have microwaves, dishwashers, computers and printers! And more of them have heating and air-conditioning than at any time in the past! Are there no workhouses for these people? Ok, that last one was mine (actually Dickens’).
Now there’s a word missing from that article, which is astounding in the context of discussing consumption in the year 2012. I actually did a CTRL-F search for it, and it returned “0 of 0”. That’s right, the word DEBT is completely missing from that happy scenario. This is the equivalent of a corporate CFO reporting that the company has €10 million available in the bank, so let’s crack open the champagne, without mentioning that the funds are only available because the bank has given them an overdraft facility.
Almost any graph you look at giving consumer debt figures over the past few decades tells the same story. These are just a couple of them:
Since the 1970s wages have been forced down while productivity has increased. The outcome of this is a huge gap between the purchasing power of consumers and the output of the economy. How is this gap breached, without the economy collapsing in on itself? With debt, of course. Now conservatives will want to tell you that we’re just coveting what rich people have, that income disparities aren’t really an issue. And in a way they’re right. Income disparities are themselves not relevant – they are, however, a good indicator of the real problem, which is the spending power – productivity gap.
Increasing debt levels is what is keeping the Neoliberal system going; in 2008 the system crashed, because it suddenly became evident that there was nothing behind the illusion of wealth. Now, neoliberals are trying to shift the debt burden to governments (“too big to fail” etc), in a desperate attempt to pretend that the wealth is still there, that it hasn’t been destroyed in a debt-fuelled explosion.
And conservatives will continue to blame the wrong people, because there can’t conceivably be anything wrong with the system, can there?