I have been thinking a lot recently about the economy. Who hasn’t? But one thing that really caught my eye was when I took a look at the last 50 years of market fluctuations in terms of the Dow and S&P 500. What became clear is that the market had a fairly continuous upward trend through the mid-90′s. At that point the curve got a lot steeper. Now, it has been a long time since the mid-90′s but so far as I can tell that is about where the market has leveled off to. In other words, the bubble burst and has not sent us lunging backwards but rather has reset the over-inflated economy back to its rightful place.
Now just because we are not in a proper recession does not mean things look bright and cheery. Rather, this means the news is a lot worse than is often presented because there is nowhere to “bounce back” to. And even if there was, would we want to return to the profligate ways of an economy propped up by consumer debt and fictional money?
Talking with people in the theatre, there is a lot of fear about what is going to happen. The Magic recently came within a baby’s breath of going under due to its credit obligations tightening in the current economy. Friends around the country have been talking about independent companies, primarily dance, reducing their budgets and fees. Only now does this appear to be spreading to the larger companies as they begin cutting travel budgets for artists and shift to a more locally based talent pool.
In other words, the business model that regional theatre has been operating under for the last 20 or so years is resetting along with the rest of the economy to a pre-bubble level. Because the bubble was so long and drawn out with micro bubbles built in to it, seeing the thing as a simple reset of the system is very difficult. How many can really remember pre-1990′s America? It was a very different place economically, but like it or not, we are there again, or close to it.
I was musing on this last night when I stumbled across this site whose most recent post is titled nothing other than The Great Reset. Their graphic below presents this idea in a rather clear manner.
Because of the growth mindset people keep talking about a recession and that what “needs to be done” is to get consumer spending back up. Rather than looking closely at the data and seeing that it was in fact this very spendthrift mentality that got us into this trouble in the first place, everyone keeps talking about how we need to go back. Saving, once a bedrock of American culture is being derided because of its negative impact on GDP.
But the same group also criticized it because it would help families earning as much as $150,000 a year, who are more likely to save than spend. (Saving, or paying off debt, might make sense for individual households, but what the economy needs most is for people to spend money, helping stores to sell more, factories to produce more and employers to avoid cutting additional jobs.)
But perhaps this is exactly what we need. Perhaps this “great reset” will in fact return American culture to the economically prudent ways that allowed it to become a superpower in the first place. Western expansion and the growth of the American Empire were borne of thrift and enterprise. A return to the false economy of debt and fake money will only ensure the decline of Western civilization.
What would an economy of savers look like? This scenario is outlined in some detail near the end of Your Money or Your Life. Basically, a lot of the flashy conspicuous consumption we indulge in would go away. There would probably be a reduction of the “service economy” in America. At the same time, most people would not worry about where their next meal was coming from or how they would pay rent. A nation of financially literate, financially independent people would give back to society a solid foundation where in only the most extreme and devastating cases would need government assistance.
An economy based on saving would not be concerned with matters like “full employment” or “GDP” because our focus could be on the enjoyment of life as opposed to an escape from the need to work full tilt in order to consume that furthers the need to escape(spend) that brings us back to the need to work harder.
What this would mean to the theatre world is a return to its local roots. The importation of actors, designers, directors and so forth would be radically reduced. Salaries for the top management would come more inline with that of the artists whose work actually appears on stage. In other words, there would be a great reset back to its traditional roots.
Is this an entirely good thing? I don’t know. There are very strong benefits to the current system that allows for a national artistic dialogue to occur on our nation’s stages when we bring these disparate groups of artists together. On the other hand, if the system is based on an unsupportable foundation of deficit spending, it can only be sustained for so long before the market brings it all back in line.
As above, so below. These huge market forces, bigger than any individual, institution or country effect us down to the minutia of individual fiscal planning. We would be wise to step back from even the scale of monthly layoffs and look at the global picture over time to even begin to grasp what is happening in our interdependent economy right now.
I for one am doing my best to thwart the “bounce back” of the economy. Saving as much as I can, and preparing for the long haul of slow and steady economic growth.
the Economic Recession has been pretty hard on us. some of my friends lost their job because of the massive job cuts. i just hope that our economy becomes better in the following years.
i am hoping that the global economy would recover from this economic recession. life has been very hard with these massive job cuts.