Tuesday, June 03, 2008

There's a Draft in Here

This is the mucked-up initial draft of my most recent article in The American Conservative. I'm assuming it's okay to post it here, seeing as the print issue is ancient by today's hyper-paced blog-influenced standards:

Rebates and Cheap Dates

To walk in money through the night crowd, protected by money, lulled by money, dulled by money, the crowd itself a money, the breath money, no least single object anywhere that is not money, money, money everywhere and still not enough, and then no money, or a little money or less money or more money, but money, always money, and if you have money or you don't have money it is the money that counts and money makes money, but what makes money make money?
- Henry Miller, Tropic of Capricorn

At the end of January President Bush and Congress passed their economic stimulus plan, the central component of which is a scheme by which the US government will borrow and distribute a minimum of 110 billion dollars to low- and middle-income taxpayers, essentially to replenish a fraction of the money still being sucked into the vortex created by the sinking housing market. On April 25 the first wave of these payments went out, four days ahead of schedule; by the end of June some 13 million Americans will receive checks of as much as 1200 dollars. China, still expanding as fast as the US economy is contracting, holds (over our collective head, you might say) over $1 trillion in assets denominated in our faltering currency, $330 billion of that in U.S. Treasury notes.

The stimulus plan will also attempt to pump some monetary air directly back into the housing bubble, increasing limits on government backed loans, $633,500 for FHA and $729,750 for government sponsored entities such as Fanny Mae and Freddie Mac, relieving those hardy souls sticking it out near the top of the housing bubble with the option of saving hundreds per month by refinancing their jumbo loans.

So habitual has deficit spending become that even the knowledgeable seem to have forgotten that if you’re in the red a dollar spent is a dollar borrowed, and it’s a dubious economic rationale for a “stimulus” program that sinks you further in debt and reinforces the very habits that put you there. There is an obvious political rationale, and at least one respected old hand of media punditry helped out with an enthusiastic column praising the bipartisan hustle of our legislature that the less astute might have confused for quick desperation.

As after 9/11, the economy is faltering and confidence is shaken, and the people are urged to shop. Pitching in, Wal-Mart is offering to cash rebate checks for free, if you have the unfortunate habit of cashing your checks at Wal-Mart. Uncle Sam wants you. To be a wastrel. (Picture his top-hat unsteadily perched on the tawny conch-shell that shades Donald Trump’s grimly debauched pout).

Once growth became both the means and the end of our de-industrializing economy (now something akin to a perpetual-motion machine) and as the quantification of the net effect on growth of various human actions became, if not a passion the closest approximation of one an economist’s heart can muster, it was only a matter of time before profligacy became civic virtue. We haven't yet designated frugality vice, but the implication is certainly there.

But it’s the economy we’ve created, not the economy that has created us. Frugality is a form of modesty, after all, and modesty was the first of the old order dispatched by the sexual revolution. Commerce, equally impatient with this inconvenient former virtue, was the guillotine. Vanity reaps the spoils, and is much more at home in the present order. It’s only fitting, seeing as it’s ultimately vanity that put us here. It is understandable therefore that the individual citizen takes no significant shame in maxing out his credit cards and borrowing against his home at the first opportunity, and that he takes little more shame in bankruptcy. He follows the State‘s lead in going into perpetual debt, and the State follows his.

If the State has become a “nanny” it isn’t a very good one, reinforcing our worst habits, and reinforcing them most in those of us who can afford it least. Even in redistributing wealth downward, the government’s plan does the less prosperous half of population the humiliating disservice of singling it out in its peculiar promotion of vice. One could go all day cataloguing the curious inversions of order in our topsy-turvy new world.

Ignorance, or failing that complicity in the economic farce, is also encouraged in the people; the citizen is “given” a “rebate”, drawn from an insolvent treasury, borrowed in part from him, in part from abroad (it‘s not accurate to say primarily from China, as Japan still holds more of our debt, for the moment; yes, China is the second biggest claim on US debt). It is a gimmick embedded in the gimmick that is the tax “refund.”

But to the extent we consider our actions we are frankly and openly accepting the longer term cost of our economic voodoo, incanting away to keep the inflationary zombie animated and moving, making as if it‘s alive. Most habitually expect the next boom to get us out of the hock we are in today with no appreciable level of pain. And the tax rebate is, above all, a plan for avoiding pain, in other words responsibility, no matter how urgent the warning that pain conveys and how overdue its proper corrective.

Government financed make-work once involved building things; the products of FDR's depression-era initiatives stand as monuments in defiance of their well-documented lack of economic justification. Entire ecosystems were encased in concrete, regions wired with electricity, rivers dammed, bridges built, and all at the surly, stubborn pace of government work. Such grand programs are now out of the question (unless they divert obscene sums into the defense industry), but not because we’ve adopted the conservative virtues of solvency and limited government.

Saving your money and living with your means are now anti-social acts. Economic growth, regardless of its composition or their effects (indeed, concern for the non-economic effects of policy is morally disreputable in current political discourse) trumps all other concerns. No longer content to stay home militarily, making things and balancing our books, we have developed an economy to which thrift and modesty are detrimental, waste and excess beneficial. It’s a perpetual boom mentality attempting to manifest a perpetual boom, through power of will. But until that happens, we're essentially borrowing money simply to spend it, as our production continually lags our appetite. Our diligent government stands ready to print as many dollars as it will take for as long as it takes. How much longer foreign governments will be willing to do their part by absorbing our excess, is anyone's guess.