Letters from Linden
by JACK LINDEN
Americans need a reality check. We are faced with an economic downturn that may be the real situation for years to come. We may have to try to solve the problem of an eight or nine, perhaps even 10 percent rate of unemployment. That possibility may be heresy to talk about, but it is time someone begins the discussion. We need to be proactive about that possibility.
There are many reasons for the economic downturn (recession), but we need to fault ourselves as much as anyone or anything. It was we, the American consumer, who spent for bigger and better things that brought about the economy we now have.
While we were spending, manufacturers continued to manufacture based on our own speculation.
Currently, the pundits are discussing the economy based upon housing. “Until the housing markets recover, we will not get out of this economic crisis,” they say. One of the problems with the current economy is that the housing availability was built upon the idea of bigger and better. People began to invest in their house as a commodity, with the idea that the value of the house would continue to rise. No longer was it necessary, so the thinking went, to buy a “fixer-upper,” sell it and buy something that seemed to be the “last house we will ever buy.”
As a result, builders built to “future” demand. Rather than buying a few lots and building when a sale was in the works, they bought acres and built houses in an assembly line fashon. As a result, you now have entire developments sitting idle, unoccupied. You even have curbs with no paved streets when the developer realized that the homes weren’t going to sell. The housing bubble burst and like any balloon, you can’t put it together again.
Some of us remember the days when you went to a car dealer to buy a car. That dealer may have had one or two models sitting in the showroom and you picked from those few models. But, you did not drive off in your shiney new car. You ordered a car; specifying what extras you wanted or could afford. They were called options and it was your choice. Look what we have now.
On a recent trip to the Gulf Coast, driving through small towns with populations in the hundreds, not the thousands, it is amazing to see the number of new cars sitting in the sales lots. It seemed that in some of the towns, there were more cars on the lots than there were people in the towns. Why? Part is the hyper advertising we see, but some is our desire for instant gratification. We are not willing to wait a month or six weeks for a new car, we want it now.
Just these two factors should give us pause in our thinking about the economy. The housing and the automobile industries alone can cause economic promise or depression. We have too many houses and we have too many new cars. With the individual reluctance to buy because of the new cautiousness of Americans, the housing and automobile industries are bound to slow down. Perhaps people are now realizing they do not have to have the model of home or automobile that is one step up.
Perhaps we are learning that everyone can’t have everything they want. “Better is not always necessary” and “desire is not want” may become, if not already, the reality in the minds of Americans.
Yes, this reality may be striking home but there are other realities we will have to face. If we are cutting back in our speculation, what are we going to do with the people who are now unemployed because we have quit? High unemployment may become a reality as well. No one is speaking to that scenario but we need to. It will not be easy, either economically or psychologically, but we are going to have to face it. The sooner the better.
