Is the American economy sustainable?

Posted at 7:47 AM on May 22, 2008 by Bob Collins (3 Comments)

Can the American worker compete with developing countries if he/she has to earn $5,000 a year just to pay for to cover farm subsidies, health care for the old and the poor, and the war in Iraq? That's the question today from Harvard's Philip Greenspun, who certainly has a point of view on the subject:

Given that a fairly well educated worker in China can be employed for $5,000 per year, it is tough to understand how the American economy is sustainable unless we believe that our workers are vastly better educated than Chinese workers.

Let's not forget that the working slobs are soon to be taxed another $1 trillion to bail out real estate and mortgage speculators.

Greenspun also refutes this week's New York Times editorial, which called for a mortgage foreclosure prevention plan.

...in many cities today, house-price declines are so severe that potential buyers are staying on the sidelines, fearful of further collapse. The result is declines that are deeper than need be to restore affordability. That's everyone's problem, because as long as house prices continue to fall, the financial system will remain unsettled and the economy will not revive.

Are we staring into the reality that something -- our "standard of living," perhaps? -- has to give? If so, what is it?

Discuss

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Comments (3)

I've been saying all along that slowing consumer spending isn't necessarily a bad thing. We have been gluttonous in our comsumption, and maybe now people will actually learn to do with less and make the things they have last longer. The down side to it is that slower sales will not hurt the top of the company ladders much. The people at the bottom will get hurt (and already are). My hope is that more people on the bottom will end up making, moving, selling, and fixing things that people actually need, rather than the latest useless gadgets and toys. Will this happen? I don't know.

Posted by Alison | May 22, 2008 8:39 AM

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Alison,
While I share your hope of Americans reducing their purchase of needless crap, and get their financials in order, I believe the short answer to your questions is: NO

Posted by Joel | May 22, 2008 10:16 AM

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"Is the American economy sustainable?"

The American economy is designed to continually grow. The medical term for ceaseless, unchecked growth is 'cancer'.

With the hyperbole out of the way, the short answer is 'no'. The American economy is consuming more than it produces. Anything that consumes more than it produces is, by definition, unsustainable.

Posted by bsimon | May 22, 2008 10:57 AM

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