Headline: "Unsold Goods Stifle the Economy" - DUH!

Prof.H at Fluxlife

It's the consumer, mislearned one!

Ouch! Did I say that? How about this: Our economic crisis was caused by economists!

Now that I've even given myself a spanking, let me break it down for you.

The scientific study of business and trade, now known as "economics", originated among the merchant class as a means of finding methods to increase profitability. Unfortunately, they were entirely narcissistic. That is, they claimed, and even convinced themselves it true, that they were the center of the economic universe, about which all the rest of the economy revolved.

This narcissistic dogma has lingered, haunted, the study of economics for more than two Centuries since.

That isn't to say that many of us didn't winnow out that dogma many years ago. Unfortunately, it is nearly impossible for anyone to see and grasp their own paradigms from within that paradigm. Consequently, so many economists indoctrinated into the merchant-centric view of economics are greatly impaired beyond that view.

The world is still flat to some.

In this flat, merchant-centric view of economics, consumers are largely taken for granted. Consumer consumption is viewed as largely determined by the actions of businesses - that is, consumers are under the spell of business, and business must be as profitable as possible at all times.

The reality that is beginning to sink into the field, that has been weeping in for a while now, is that consumers are really the engine of any economy - consumers our our economic Sun, about which the rest of us and our economy revolve, and must revolve.

Our current economic crisis arose from many factors. It was a house of cards built on the ill-fated, backwards trickle-down theory of Reaganomics, toppled by sharply rising oil prices (earlier Fluxlife "Cheney..." post), and driven deeply downward by the horrible crush placed upon the most vulnerable consumers (earlier Fluxlife "Real Estate Values" post), exacerbated by misguided "Balanced Budget" ideologies (earlier Fluxlife "California Budget" post).

We put the squeeze on consumers, and we squeezed hard, and we've done them in. In so doing, we've done ourselves in. We may yet be able to fix it, but it is the consumers that we must rescue to do it (see the earlier "Fix the Economy in Six Weeks" post here on Fluxlife). We've always accepted that, by putting on that squeeze, we would do in the most vulnerable, and we accepted that as the price of good, profitable business. We were wrong - dead wrong. Our short-term, narcissistic philosophy is not sustainable in the long term.

We are seeing now the result - we've done in too many American consumers to sustain ourselves, our economy is collapsing, and people are dying. That was always happening, but on a scale small enough for us to dismiss it. We can't do that any more.

Every consumer counts, and the smallest consumers count the most.

Business must learn to bow at the feet of those smallest consumers.

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Janaki said...

Brilliantly observed! And not an easy situation for the market to get out of... The consumer has awakened to realize they don't really need all the convenience that they have been lulled into buying. The shift is happening right here right now to Transition and Sustainability. (I hope)

Lori ann said...

Glad to hear your knee surgery went well, take good care!

Interesting times we're livin in...

x lori

Steve Morozumi said...

Lori ann!, how's it goin'? thanks for the good tidings about my knee surgery.

Steve Morozumi said...

Hey there Prof H! thanks again for another post! i especially like the bit about the merchant class: very interesting!

itcanbe said...

Thanks again Prof H! One of these days, a smart government will arise, and start giving bail outs to the consumers first! I'm not holding my breath, but it would be nice, as well as effective and intelligent!

Prof.H said...

Thanks everyone for you comments.

Oligopolistic economies, or oligopolistic industries within an economy, function very much like monopolies - small consumers become, individually, relatively powerless. One need only look at the financial industry, particularly the credit card segment of that industry, to see this in effect.


calicolyst said...

A good chunk of consumer spending is based around people using credit, which, for long-term consumer confidence, is disastrous.

Mac Callister said...

nag nose bleed ata ako hehe la ako alam sa economy economy

hello just dropping by at your site ewan pano ako nakarating dito,but i enjoyed your site. :-)