View Full Version : Is an economic downturn really a bad thing?
So I was browsing BBC news and came accross this (http://news.bbc.co.uk/2/hi/business/7750465.stm) article.
"US consumer spending fell by 1% in October, the largest decline since September 2001, in a further sign of the deepening economic downturn."
The article makes out that consumer spending falling is actually a bad thing. But why the fuck? Surely people buying less and wasting less is a good thing and should actually be congratulated. With current economic logic; that spending more and more is a good thing, and that we should aim to infinitely increase our GDP, we're just going to spend our way into destruction.
Of course I know that spending is linked to jobs, but I'm pretty sure that if the consumer culture dies down, and that people stop spending like maniacs, that goods which are being sold will be more expensive and of greater quality. More expensive goods means that people will be paid more per item so nothing will actually change apart from the rate of consumption.
Another thing I was wondering is with regards to this:
"Consumer spending, which makes up about two-thirds of economic activity in the US, had risen 0.3% in September"
If consumer spending makes up two thirds of the US economy, then what an earth is the rest of it made up of?
I get the impression that in the global scheme of things, the strongest 'economy' is the country which produces and wastes the most resources, and being the strongest economy means you have an advantageous position on the global stage with power and exchange rates, etc; that all nations are lead into believing that they must have strong economies so they can appear important, and nobody wants to say 'fuck you' to the leading corporations and businesses and cut down on consumption because it'd be global suicide: a nation's given currency would plummet, your presence would pretty be non-existant on the global stage, and you'd be unable to blanket your population with plastic.
Wasting resources does not make an economy strong.
Government Spending, Exports and Corporate spending.
And sure it is bad, people want things. That is why consumer culture exists or course capitalism also helps but really capitalism only exists because of these wants we have. People always want things so why not have a system that works on it it is reliable, to an extent. If you want consumer culture to end you will have to change a lot of people rather than the system first. Unless you want to force people into it.
As everything in the economy is linked to consumer spending if it goes down. Prices either increase to make up for it which then leads to less spending again and so on. Or companies have to cut costs, whether by reducing quality, or output. Output can rarely be cut without job losses. This leads to further drops in consumer spending, this will then repeat until an equilibrium point is met or everything is screwed. However it normally reaches the equilibrium the economy will then start to improve again. But this is the problem everything is linked to spending and small problems can escalate into big ones if they are not fixed and you can never know for sure where this problems will fall.
Why shouldn't we aim to increase our wealth? If we suceed how will it lead us to destruction?
ReclaimPublicSpace
2008-11-26, 19:29
The economic downturn is bittersweet. Bitter, because obviously thousands of Americans are losing their jobs or their homes, and more are losing their pension or retirement funds. Sweet, because, well, we'll stop buying so much crap, fueling unethical corporations, creating massive amounts of waste, and wasting massive amounts of what we buy. Best case scenario: The ultimate decline of "consumer culture" and the rise of American culture.
vazilizaitsev89
2008-11-27, 03:17
yea...its kinda bad. The 2/3 of the US economy rests on consumer spending. if that falls, that means less output, which means less jobs and it just spirals out of control. And no, a company will NOT jack up prices because demand is low. That would only further cut the demand of said product
dal7timgar
2008-11-30, 16:16
yea...its kinda bad. The 2/3 of the US economy rests on consumer spending. if that falls, that means less output, which means less jobs and it just spirals out of control. And no, a company will NOT jack up prices because demand is low. That would only further cut the demand of said product
The trouble with statistics is that they often don't provide enough detail. If a 1% decline really means 200,000 lost jobs and no telling when more will be created that might mean 5% in two years. I agree that consumerism has mostly been stupid but no one has suggested mandatory accounting for everyone for the last 30 years.
No one is telling us what we have lost in depreciation on crappy cars for the last 30 years. If 75% of Americans had their homes payed for today and didn't have to pay mortgages a 1% decline in GDP might not matter much. How many college freshman are being sent credit cards and don't know what net worth is?
DT
My Name is The Lord
2008-11-30, 18:56
Yes, it is a bad thing you fucking idiots. If and when it regresses you are going to regret making this topic; unfortunately you will not be able to come back and lick your wounds and apologize to the community as Jeff Hunter will no longer be able to run this website. What a great fucking idea! An economic downturn! Do you really want to go back to the days of living off a pasture? Do you not miss the times when consumer goods were actually reasonably priced?
KikoSanchez
2008-11-30, 21:42
Yes, it is a bad thing you fucking idiots. If and when it regresses you are going to regret making this topic; unfortunately you will not be able to come back and lick your wounds and apologize to the community as Jeff Hunter will no longer be able to run this website. What a great fucking idea! An economic downturn! Do you really want to go back to the days of living off a pasture? Do you not miss the times when consumer goods were actually reasonably priced?
I think what OP meant is that a downturn and loss of easy credit humbles people and makes them realize they can't continue their economically destructive ways. The average american is in $10,000 debt...so we obviously aren't making good decisions and are, overall, throwing tons of money toward lenders instead of saving like we should be doing. It also reminds people they don't live in a fairy tale land where they can just go shop, shop, shop all the time, because they are "the chosen ones" to who nothing bad will ever come. There is no doubt the way Americans handle their own finances is astounding at times. Don't believe me? Go talk to people in LA, it's ridiculous how irresponsible they are. Hopefully there will be a savings revolution and philosophical movement away from the continuous cycle of credit and debt.
My Name is The Lord
2008-11-30, 21:55
Credit debt is essential for the survival of this nation (USA) and the maintenance of it's ruling throne as there would be no supply if everyone lived within their means which would mean less capital and therefore little import/great export which would reverse how the world works today. It keeps people on their toes, if everyone lived as we did in the 1890's, the luxuries we enjoy today would disappear. We would become China. What would be good for this nation is if it's leaders would adopt the mindset of those such as DerDrache, you cannot fight fire by being a pussy. We ought to be taking control of Saudi Arabia/that entire region of the world right now.
alooha from hell
2008-12-01, 14:33
Credit debt is essential for the survival of this nation (USA) and the maintenance of it's ruling throne as there would be no supply if everyone lived within their means which would mean less capital and therefore little import/great export which would reverse how the world works today. It keeps people on their toes, if everyone lived as we did in the 1890's, the luxuries we enjoy today would disappear. We would become China. What would be good for this nation is if it's leaders would adopt the mindset of those such as DerDrache, you cannot fight fire by being a pussy. We ought to be taking control of Saudi Arabia/that entire region of the world right now.yes and then we will force them to take out a loan for a brand new house and a new boat. :rolleyes:
Nerd Fangs
2008-12-01, 16:24
The economic downturn is bittersweet. Bitter, because obviously thousands of Americans are losing their jobs or their homes, and more are losing their pension or retirement funds. Sweet, because, well, we'll stop buying so much crap, fueling unethical corporations, creating massive amounts of waste, and wasting massive amounts of what we buy. Best case scenario: The ultimate decline of "consumer culture" and the rise of American culture.
This is dumb on so many levels.
Nietzche
2008-12-01, 21:44
well, from that i got only the bitter side of it. since when did ethical have anything to do with consumption of goods/services?
Credit debt is essential for the survival of this nation (USA) and the maintenance of it's ruling throne as there would be no supply if everyone lived within their means which would mean less capital and therefore little import/great export which would reverse how the world works today. It keeps people on their toes, if everyone lived as we did in the 1890's, the luxuries we enjoy today would disappear. We would become China. What would be good for this nation is if it's leaders would adopt the mindset of those such as DerDrache, you cannot fight fire by being a pussy. We ought to be taking control of Saudi Arabia/that entire region of the world right now.
I'm not following you around or anything,
But for a guy who tried to tell me I should reject my vain material desires, you seem to be willing to give anything for your opulent lifestyle; you'll pay any cost, so long as you aren't paying in money. I suppose yesterday when I said your mindset is what allows tyranny to exist, I was an idiot in assuming you were against it. So you actually support enslaving parts of the world to maniacal military rule, if it will save your flawed lifestyle based on materialism?
In traveling the world, fucking it up as they go, America has already pissed people off (Durr). Dragging the rest of the world down with them in an economic meltdown will just mean those in your country who make it out alive can't look forward to any help from anyone else after all is said and done. Which means your lovely neighbor is fucked, because Canada sure as hell doesn't have a government with the balls to do anything on their own. Which, means I am fucked if I'm still around then! Oh well:)
As for the system, I was just thinking of a terrible parallel universe where McCain is in power. The only thing he didn't do, was essentially unwittingly quote Hoover being an idiot right before the depression.
"The fundamentals of our economy are strong."
Suuuuure are. But they aren't invulnerable, because here we are. Again. Same crisis, different problem.
I think what OP meant is that a downturn and loss of easy credit humbles people and makes them realize they can't continue their economically destructive ways. The average american is in $10,000 debt...so we obviously aren't making good decisions and are, overall, throwing tons of money toward lenders instead of saving like we should be doing. It also reminds people they don't live in a fairy tale land where they can just go shop, shop, shop all the time, because they are "the chosen ones" to who nothing bad will ever come. There is no doubt the way Americans handle their own finances is astounding at times. Don't believe me? Go talk to people in LA, it's ridiculous how irresponsible they are. Hopefully there will be a savings revolution and philosophical movement away from the continuous cycle of credit and debt.
Couldn't agree more wholeheartedly with that final sentence.
In the most desperate of times come some of the most desperately needed people, ideas, and movements. But also in these times come people, ideas, and movements that try to go in the precisely opposite direction...
Hopefully this will be one of the first times in our history that individuals have the power to make the correct choice the first time. Information is the most wide spread it has ever been, the test of whether it's truly made us any more intelligent is to come.
My Name is The Lord
2008-12-02, 03:18
I'm not following you around or anything,
But for a guy who tried to tell me I should reject my vain material desires, you seem to be willing to give anything for your opulent lifestyle; you'll pay any cost, so long as you aren't paying in money. I suppose yesterday when I said your mindset is what allows tyranny to exist, I was an idiot in assuming you were against it. So you actually support enslaving parts of the world to maniacal military rule, if it will save your flawed lifestyle based on materialism?
I never once said you should reject materialism nor did I ever say it was a bad thing; perhaps if you were not so preoccupied with playing doctor/psychologist and attempting to tell me what my own thought processes are you would have took note of that. I think it's unfortunate that man has to be materialistic, shitty, violent to survive but that's how it is. And yes I am supportive of "maniacal" exploitation of other nations not apt to compete with us, as by both position and genetics they are fit to be just that. I also support everyone else paying for our shit as well. And on a lighter note I would like to add that ya'll niggas posted up in a troll thread.
I never once said you should reject materialism nor did I ever say it was a bad thing; perhaps if you were not so preoccupied with playing doctor/psychologist and attempting to tell me what my own thought processes are you would have took note of that. I think it's unfortunate that man has to be materialistic, shitty, violent to survive but that's how it is. And yes I am supportive of "maniacal" exploitation of other nations not apt to compete with us, as by both position and genetics they are fit to be just that. I also support everyone else paying for our shit as well. And on a lighter note I would like to add that ya'll niggas posted up in a troll thread.
It is unfortunate that you and so many other humans, because of their vain and narcissistic desires to exist forever and exploit and enjoy that which is material are frightened by reality.
You really are a terrible liar.
And you're the last one to see through it.
I won't derail this thread further.
My Name is The Lord
2008-12-02, 08:22
Man it's no wonder you always think you catch so many contradictions, you cannot even comprehend what I am saying.
I think it's unfortunate that man has to be materialistic, shitty, violent to survive but that's how it is.
Give reading a try sometime, perhaps it would work better for you if you did it aloud. Just because I believe it is unfortunate, does not mean I believe we should reject it; it is reality. Once again, quote me once in the history of my registration here where I said man should reject his M.O. Oh and on another note; please never procreate.
yea...its kinda bad. The 2/3 of the US economy rests on consumer spending. if that falls, that means less output, which means less jobs and it just spirals out of control. And no, a company will NOT jack up prices because demand is low. That would only further cut the demand of said product
What I was trying to get at is hopefully this whole economic downturn will cause people to think more carefully about what they're spending. Instead of being a whole array of useless shit, less money will make people make more rational decisions: buying items of higher quality which last for a long time, instead of numerous items which are destined to be thrown away. In order for this to happen though, we really need to try and get rid of these huge stores and depots which churn out bollocks made in China for cheap. We need to revisit our past and welcome back local stores with handmade products. It worked perfectly ok before, and I see no reason as for why it can't work again. Big stores are so efficient, that thousands of jobs are lost in the process; people feel alienated at work, and profits aren't necasserily pumped back into local communities: jobs, morale and local funds are ESSENTIAL to survive this financial crisis. The ones at the top of big companies cannot micromanage every little piece of the world, we need a return to personal responsibility: more smaller businesses.
Think furniture, before this whole credit boom, people would hand down furniture through generations and a given piece would last years upon years. But now, people are redecorating their houses constantly. It's the same with clothes aswell.
Also, instead of given huge amounts of money to banks and whatnot to bail them out, the government should be focusing on temporarily regulating the media, so people aren't pressurised into wanting to keep up with their neighbours. Giving money to banks is basically fuelling more and more debt. How the fuck can you fight this problem by throwing even more money away? It's absolutely bullshit and is corruption at the highest fucking level: the banks simply are so powerful they want to save their own backs. Banks are the cornerstone of capitalism, if they've failed, then they should accept their own rules and say it's market failure. Fucking hypocrits.
The trouble with statistics is that they often don't provide enough detail. If a 1% decline really means 200,000 lost jobs and no telling when more will be created that might mean 5% in two years. I agree that consumerism has mostly been stupid but no one has suggested mandatory accounting for everyone for the last 30 years.
No one is telling us what we have lost in depreciation on crappy cars for the last 30 years. If 75% of Americans had their homes payed for today and didn't have to pay mortgages a 1% decline in GDP might not matter much. How many college freshman are being sent credit cards and don't know what net worth is?
DT
It's absolutely amazing how we are taught fucking religious education in schools, but not things like accounting, basic law, interview skills, the electoral system, etc. How the fuck can society work when children don't really know for sure how society is meant to work?
ChickenOfDoom
2008-12-04, 22:52
Nope, it's a good thing. We as a society need to stop using all our resources for the economic system; those resources (most significantly, time) need to be given back to the individual as much as possible. The more that happens, the more real freedom we have. Much of the work we do is physically unnecessary for our survival; what we really need is more part time jobs and lower food/housing prices, which a recession will work towards accomplishing.
And all this money the government is throwing at the situation is nothing but an attempt to prevent that. Our real gdp needs to stay low, our long run supply needs to decrease. The sooner people understand that the better.
madmentos
2008-12-04, 23:50
PFFT!
dont watch the news, nor tv, only my own thoughts, and music, and People!
If you see a russian bomber dropping one of the U.S's lost WMD's then ill switch it on
In the past, people borrowed themselves into oblivion and now it's biting them in the ass. Which sucks for people here because some haven't even had a chance to establish credit, which is now going to be a lot harder.
goldenleaf
2008-12-09, 12:54
The economic downturn is bittersweet. Bitter, because obviously thousands of Americans are losing their jobs or their homes, and more are losing their pension or retirement funds. Sweet, because, well, we'll stop buying so much crap, fueling unethical corporations, creating massive amounts of waste, and wasting massive amounts of what we buy. Best case scenario: The ultimate decline of "consumer culture" and the rise of American culture.
What know what? I agree with you. Maybe this economic downturn will bring things back to commonsense. The world how it is running is just not logical. We are told what to dress , what to eat , what deodorant to use. Its insanity. I know its bad , that things are worse then ever , people are losing there retirement fund. But the way the world is running it was bound to happen its commonsense.
madmentos
2008-12-10, 21:00
What know what? I agree with you. Maybe this economic downturn will bring things back to commonsense. The world how it is running is just not logical. We are told what to dress , what to eat , what deodorant to use. Its insanity. I know its bad , that things are worse then ever , people are losing there retirement fund. But the way the world is running it was bound to happen its commonsense.
tALKIN SUM SEnSE' :p ;) :D
Thats right! THREE smilies.
An economic downturn means a fall or slowing in growth so yes it is a bad thing. Increasing GDP is the overall goal.
However this should correct itself.
It's not a bad thing for anything, in the long run gains can be made in any period of the business cycle. While the unemployment is a bad thing to face in the short term with retraining it is not a long term problem.
An economic downturn means a fall or slowing in growth so yes it is a bad thing. Increasing GDP is the overall goal.
However this should correct itself.
It's not a bad thing for anything, in the long run gains can be made in any period of the business cycle. While the unemployment is a bad thing to face in the short term with retraining it is not a long term problem.
You rip that straight from an economics textbook?
1) Why is a slowing in growth a bad thing?
2) Why should increasing our GDP be our overall goal?
You expect nations to keep growing and growing and growing forever? The world will fuck itself over in a matter of years. Sustainability and stability should be the goal: zero growth.
Increasing GDP is not the overall goal whatsoever, maintaining a high quality of life for everybody should be. If you wanted to measure the economic power of a nation, it should be measured by the efficiency of the workers, and the efficiency of the system which organises the workers, calculations such as GDP just show us what nations are exploiting others.
You rip that straight from an economics textbook?
1) Why is a slowing in growth a bad thing?
2) Why should increasing our GDP be our overall goal?
You expect nations to keep growing and growing and growing forever? The world will fuck itself over in a matter of years. Sustainability and stability should be the goal: zero growth.
Increasing GDP is not the overall goal whatsoever, maintaining a high quality of life for everybody should be. If you wanted to measure the economic power of a nation, it should be measured by the efficiency of the workers, and the efficiency of the system which organises the workers, calculations such as GDP just show us what nations are exploiting others.
Hopefully this economic slump will change society for the better.
I really hope people don't act dumb as fuck and go to war when things get tighter. But honestly, look at how we went into Iraq to get that oil, just to make the U.S a little richer (I know there are more reasons, but that is a prominent one), think how eager we'll be to go to war just to maintain the status quo...
ChickenOfDoom
2008-12-13, 23:10
An economic downturn means a fall or slowing in growth so yes it is a bad thing. Increasing GDP is the overall goal.
However this should correct itself.
It's not a bad thing for anything, in the long run gains can be made in any period of the business cycle. While the unemployment is a bad thing to face in the short term with retraining it is not a long term problem.
The problem is these things are self perpetuating, so while in theory it might correct itself eventually, certain things aren't dictated by market forces. According to my economics class, the main issue is that the economy can get stuck at a point away from the equilibrium because people are unwilling to immediately accept a lower paying job if they think they can hold out for something better, or invest just because the interest rate goes up.
And so you have a situation where the market does not correct itself for a long period of time and you have a large number of people out of work and no one has any money to buy anything. Like in the great depression. Obviously ten years of producing half as much as your country needs to survive isn't something a government can stand for.
That being said, we need to accept a significantly lower long run aggregate supply point and take back resources that rightfully belong to the individual. We shouldn't be focusing all our efforts on simply supplying everyone with as much stuff as their money can possibly pay for.
Freedom > material wealth
The problem is these things are self perpetuating, so while in theory it might correct itself eventually, certain things aren't dictated by market forces. According to my economics class, the main issue is that the economy can get stuck at a point away from the equilibrium because people are unwilling to immediately accept a lower paying job if they think they can hold out for something better, or invest just because the interest rate goes up.
And so you have a situation where the market does not correct itself for a long period of time and you have a large number of people out of work and no one has any money to buy anything. Like in the great depression. Obviously ten years of producing half as much as your country needs to survive isn't something a government can stand for.
That being said, we need to accept a significantly lower long run aggregate supply point and take back resources that rightfully belong to the individual. We shouldn't be focusing all our efforts on simply supplying everyone with as much stuff as their money can possibly pay for.
Freedom > material wealth
In the long run we're all dead.
It is true wages are sticky downward, however this is where inflation comes to play. Inflation causes real wages to fall over time and so the market adjusts back to "full employment". We aren't facing a great-depression we're facing a recession. This is a major economic argument, how long does this adjustment take and is the difference between taking a fiscal or monetary approach.
What's required is the American markets to begin spending again to restore confidence in the countries in which most investment spending comes from , eg Japan.
In order to prevent another crash there needs to be better quality investment. Rather than another artificial boom such as the housing boom following the dot-com bust.
What I meant was that an economic downturn isn't a bad thing for all parties. There are oportunities and while the effects of high unemployment are very real, this can be corrected and in the long run growth not unemployment should be the aim of the government (FED/Reserve Bank).
You rip that straight from an economics textbook?
1) Why is a slowing in growth a bad thing?
2) Why should increasing our GDP be our overall goal?
You expect nations to keep growing and growing and growing forever? The world will fuck itself over in a matter of years. Sustainability and stability should be the goal: zero growth.
Increasing GDP is not the overall goal whatsoever, maintaining a high quality of life for everybody should be. If you wanted to measure the economic power of a nation, it should be measured by the efficiency of the workers, and the efficiency of the system which organises the workers, calculations such as GDP just show us what nations are exploiting others.
GDP is an indicator of Quality of life. I didn't mean GDP should be sought over and above all else, I meant growth should be the focus not reducing unemployment. "GDP just show us what nations are exploiting others" I don't accept that at all.
You are right efficiency is key to the overall quality of life
Free-trade should be achieved resulting in specialisation and overall efficiency and overall surplus.
"the efficiency of the system which organises the workers" yes structural unemployment should be a key issue.
ChickenOfDoom
2008-12-14, 06:23
In the long run we're all dead.
It is true wages are sticky downward, however this is where inflation comes to play. Inflation causes real wages to fall over time and so the market adjusts back to "full employment". We aren't facing a great-depression we're facing a recession. This is a major economic argument, how long does this adjustment take and is the difference between taking a fiscal or monetary approach.
What's required is the American markets to begin spending again to restore confidence in the countries in which most investment spending comes from , eg Japan.
In order to prevent another crash there needs to be better quality investment. Rather than another artificial boom such as the housing boom following the dot-com bust.
What I meant was that an economic downturn isn't a bad thing for all parties. There are oportunities and while the effects of high unemployment are very real, this can be corrected and in the long run growth not unemployment should be the aim of the government (FED/Reserve Bank).
The only reason it isn't a depression is because the government intervenes. Inflation doesn't happen if no one has a job; ability to pay goes down, demand goes down, prices go down. Our fiscal policy for the past 60 years has been based on modifying the available money supply to manipulate demand to where we want it.
I can't really see how we could avoid doing that, but they need to lower their expectations. There's no use in pulling as much work out of everyone as possible when you don't need to.