Now this is interesting. Matt has a post up talking about the assumption that Americans have been engaged in an orgy of personal consumption driven by an explosion in expensive entertainment and communication products. The past decade has seen computers and cell phones, at least, become practically mandatory. It's tempting, therefore, to assume people are setting aside more of their money for computers, iPods, cell phones, etc., and Matt quotes William Galston making just that assumption.
Nothing has defined the past decade more than the orgy of personal consumption. From large flat-screen TVs and i-phones to furniture and foreign cars, Americans spent as though there were no tomorrow, until tomorrow came.
But Matt argues, with this handy chart, that personal consumption actually fell as a percentage of people's spending even as the number of gadgets cluttering our desks, purses, and living rooms went up.
A big reason for this is that these items are relatively cheap. Matt assumes that the explosion in spending has more to do with exploding health care and education costs, and I'd imagine that spending on housing has gone up a lot, too. Remember, one reason everyone was buying these houses was that the price of houses was going up, and they assumed that it would always go up. It was a classic bubble. But what bubbles do, in the middle of them at least, is drive the price of the item everyone's speculating on way the fuck up. But housing is an item that you really can't opt out of, so I imagine that this is a source of a lot of spending that causes debt to rise and savings to dwindle, as well.
It's interesting to me, because a lot of the discourse about who is "deserving" and not that always pops up when something like health care becomes a national issue focuses on resenting lower income people for having small luxuries like iPods, cable TV, or good shoes. But dwelling on consumer electronics is an increasingly stupid tool to stir up this sort of resentment, because these electronics are really cheap in the scheme of things, and give people a lot of return on their money. Really, if people have a TV and video game system that keeps them in with their friends, that's a lot cheaper in the long run that hitting the bars. Hell, it's cheaper even if they're still drinking the samem amount while they play video games. Buying this sort of at-home entertainment is exactly the long term economic thinking that lower income folks are often accused of not displaying. The ugly truth is that an iPod is rarely going to be the difference between whether you can keep paying rent or not, and it has no impact on your ability to pay outrageous medical bills, if you get sick.