Some days, representatives of aggregate demand almost seem like underdogs, which are trying to be heard above the fray of tight money "white noise". Other days they're more like a snarling bear which is defending her cubs, in fact when they're not busy snipping away at one another. Just the same, there is a lot to defend against all around, especially as some elements of the supply side status quo clamp down hard on any potential for future or present growth. Yep, I warned certain supply siders they were "in trouble' in my last post and so here goes: What if I told you that aggregate demand is the sum total of grand strategies, and supply side is but a maid servant for society's common vision sets? Someone is rolling around on the floor laughing right now, but think about it for a minute.
First, there is this beautiful quote that I came across earlier in the week, from Benjamin Graham (HT Farnam St):
In the short run the market is a voting machine, but in the long run it is a weighing machine.Okay, people "vote" every day (to some degree, anyway) with the goods they consume, so what's up with that? Yes, but what do they consume those goods for? Is it just a matter of taking care of basic everyday activities or is there more at stake? Are those everyday activities somehow contributing to a further evolution of something else that is going on in the world around the individual consumer? If not, when why not? What's more, if the whole cycle finally becomes about finding ways to perpetuate what already came before, the "end of history" is never the static daydream it appears.
No matter how determined governments and their favored special interests want life to be predictable...no matter how much they would rather weigh their riches than vote on anything substantial in the present, life is still going to...change. And just as Heraclitus indicated long ago, we don't step into the same river twice.
Certainly however, people could be forgiven for worrying whether that is happening now. After plenty of breathless excitement in the past decade as to the end of scarcity and the rise of egalitarian non hierarchical structure we now have...a shortage of housekeepers and butlers for estates? While this certainly isn't the first time the WSJ has run such articles, the idea of expensive educations for glorified house sitting can nonetheless be a bit unsettling. Back to the above quote: who, exactly "voted" for this kind of work trajectory in the marketplace with their skills and time investments?
While we don't always think of individual work options as prime product, they remain part and parcel of the product that anyone would seek for identity in today's world. What's more, when robots are utilized, that should suggest further aggregate "room" for the complexity and capacity of the human mind, not less. Yet present economic realities still don't match up with how people expect to be able to create and generate wealth. After all, some of the biggest commitments of recent generations were taken on so that the human mind could be an active and vital part of the economic landscape.
Why has this investment turned out so differently (thus far) from other kinds of capital investments which took place in more concrete and recognizable terms? Could it have been that the ultimate goal of higher education for its paying investors, er, customers was that of making good citizens, rather than the direct participation of the citizen herself in the actual workings of society? If indeed that were the ultimate strategy, at the very least we got a long coast downhill from that lofty short sighted vision, until government's love affair with McMansions and thirty year mortgages could no longer sustain it. Higher education almost appears as an intellectual form of polygamy, in which a lack of belief in total economic participation on the part of a populace results in "harems" of educators, to substitute for knowledge generation and manifest destiny on the part of the masses.
In a sense, much of the social evolution from more than 100 years ago, can also be thought of as aggregate demand strategies, even if they weren't consciously thought of in those terms. Whatever any one thinks of the progressive movements of those times, let alone some of the dubious results of the present, the fact remains that multiple strategies were playing out, all of which had plenty of effect on the world stage. A lot of people had visions for the future which quite frequently didn't mesh up with the visions and ideas of others. Just the same, they saw massive new wealth formations in their midst and reacted in kind. In the process, these mass movements led to multiple outcomes of which people also "voted" with their own participation. In many instances, these movements also interacted directly with governments, which ultimately led to some of the rigidities of the present.
However, before such rigidities had a chance to materialize, a lot of economic evolution intervened. Long before aggregate supply ever "became" Mars and aggregate demand "became" Venus, Venus was calling a lot more moves regarding wealth creation than anyone would have suspected from the dance itself - a dance especially apparent a century earlier. After all, there was incredible potential from the new wealth possibilities of that time, and the societal response in turn dramatically shaped the previous wealth creation in ways that augmented and made it more complex and meaningful than before.
The reality is that we should have been working on better strategies for integrated working and life provisions - at the very least - thirty years ago. Such efforts need representatives from all walks of life, to coordinate better strategies amongst all income classes for the big three: having families, innovating new ways to "keep stuff" and more reasonable ways for everyone to "get around" that work for even the "sparrows". And the fact that we have not is to a large degree also responsible for the fact that federal prison populations have increased eight fold in the last thirty years. That is not even counting the increases in state prison populations. Much of this is not easy to turn around because the war on drugs is entrenched into society in both social and economic dimensions.
We get stupid wars on drugs when people at the highest levels think that life can continue on as usual, even when policymakers remain clueless as to ongoing realities. And then those policymakers turn around with the worst psychological projection imaginable, by making it even more difficult for other countries which suffer the same drug ridden fates.
Because too few bothered to connect the dots between positive human motivations and economic realities, the U.S. settled for drug wars instead. The cost of the escape for all those "losers", provides money for drug suppliers and in turn, local governments who put both these groups into jail and confiscate their belongings for local, state and national coffers. In other words, it is not easy to do away with this unfortunate consolation "gift" of government to local economies (security goodies and property confiscation rights) for the loss of true economic activity, without looking to see what could take its place. While having plenty of guns is an understandable right, the economic importance this facet of life has taken on, starts to look more and more like the economies of broken nations, something that continues to be exacerbated at national levels by decisions on the part of millionaires for the lives of everyone else.
And all signs point to the dire need of knowledge based economies at local levels, so that those who profit from drugs and also escape to them because of empty lives, will have better options. Such options would make reliance on drugs or drug money in any form, mostly unnecessary. No one can expect the millionaires in Washington to know how to accomplish this, because the lives these individuals live are quite different from those of many in the nation. The rest of the U.S. needs new and better ways to tend to the daily details of their realities. Yet governments continue to put away people they don't know what else to do with, because no one has been able to have the kinds of national conversations about life direction which were once possible.
None of us need give up on the investments we have made in ourselves over the better part of our lives, and if we work together to create clear paths for the future, no one need give up on aggregate demand for what we can create on our own. Today's gold mines are about the hope we have in ourselves, and the ways we translate that in economic realities. To tap into this gold mine, we recognize the degree it already exists in ourselves, even as our governments have lost the ability to recognize that. We don't need to convince governments we are worthy of their support, we need to convince ourselves that our own efforts for societal and economic inclusion are worthy of support. Together, we can do far more to create further wealth than our governments can yet imagine, stuck as they are in the mire of austerity and entrenched interests.
Supply side limitations and morality plays may yet appear dominant. But without adequate buyers there cannot remain adequate sellers, to maintain a civilization. If people do not have either adequate reason or means to buy, not enough will be able to continue doing so. No one can forget that the very act of buying is also the act of participating on a world stage where much more is at stake than the simple item being purchased. No one can afford to forget the underlying currents of meaning which make people desire to leave their own "burrows" and come to the stage in the first place.