Declining Standard of Living, What Do You Think???

30 July 2011 4 Comments

via Google Images

Normally I don’t think highly of scare-mongering, but the deterioration of today’s economic climate warrants some serious consideration of what to expect in the future and for the future of our children.  The damage from the Great Recession is done, and while the threat of a U.S. downgrade in credit  for the first time in a century symbolizes a fundamental destabilization of American finance, the question remains as to how this will affect millions of Americans.  And while most Americans go about their daily routines, I think a large consensus has emerged among those paying attention that the U.S. will see a significant decline in the national standard of living.  If you are used to driving a Mercedes, you may just have to settle for a Ford Focus.  If you are like me and many others, you may just have to stick with local commuting on your bicycle.   Creature comforts such as central air and frequent nights out with friends, along with diminished savings and retirement funds will usher in a long period of readjustment for Americans especially.

Terry Smith, CEO of Tullett Prebon, made some dismal observations in a BBC radio interview concerning what will be long-term adjustments in living for British subjects due to the Euro zone crisis.  Given the problems on this side of the Atlantic and the rapidity with which the liquidity crisis in 2008 encircled the globe, I am not so optimistic to think America will be an exception.

  • We are all going to be very significantly poorer than we thought we were over the last 20 years, because we just simply won’t have the same standard of living. Pension entitlements will be less than we thought we had.
  • From the government’s point of view, they should have fessed up at the outset, treated people as adults and told people the truth — that we are going to see a major shrinkage of the public sector and an awful lot of things are going to be worse than we thought they would be, including our pension entitlements.
  •  There’s only one thing worse than living in fear, and that’s living in fantasy like we are now.

So just how much has the economic climate changed for America since the Great Recession began?  Below is an interesting pictorial representation courtesy of The Atlantic.  It shows not just change in economic growth, but changes in other interesting factors that bear association to a decline in standard of living, civil unrest, and an increase in the size of government.

Click Image to Enlarge

Please take a look and do some research of your own.  I think what you will find is an association between the growth of our federal government and a decline in quality of life for the people.  Also, please take a look at the second article below, as it engages in a useful discussion of what the author classifies (and I agree) as structural issues in American government and economics.

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About Jeremiah Dow
I have a B.S. in Politics, Philosophy, and Economics with a minor in Economics. I finished school in 2010 and am currently working on independent research in various areas including political and economic philosophy, government, and history. I am also currently looking for work in research, particularly the social sciences dealing with public policy work. I aspire to a top-level graduate institution, but would first prefer some professional research experience. Some of my primary influences are Ayn Rand, Noam Chomsky, and Howard Zinn among others.

4 Responses to Declining Standard of Living, What Do You Think???

  1. Pingback: Before and Now » Monty Pelerin's World

  2. Brenda Bell says:
    2 August 2011 at 16:08

    There is one very big elephant in the room that nobody’s addressed: globalization. Aside from government size, domestic and foreign aid, and various subsidies, there is the issue that a lot of work that used to be done in first-world nations — because of high transportation costs and lack of communication infrastructure — can be done, and is being done, remotely in emerging nations and economically-disadvantaged nations where the cost of labor is lower. Rather than net producers of goods and services, developed nations have become net importers of goods and services produced abroad. This local (national) deficit spending is enriching the laborers in emerging nations and improving their lives; at the same time it is — and MUST be — diminishing ours. It is the First Law of Thermodynamics, applied to microeconomics, where the microcosm is no longer the community, the state/province, or the nation/State — it is the “big blue marble”.

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  3. Jeremiah Dow says:
    2 August 2011 at 16:27

    I absolutely agree. It seems the specter of globalism cannot be ignored. To a degree, the fact that highly industrialized nations such as America no longer produce as much and import much more is good for the broader picture of the world. Given the movement of capital that results from free-markets, prosperity at home will eventually spread overseas just, as Adam Smith noted, it spread from city to country. However, such sentiments must take a back seat to the fact that our leaders’ policies and spending habits (deficit-spending in particular) are effectively draining the wealth of America via Keynesian economics, i.e. domestic stimulus and foreign austerity measures. I fear that the globalist philosophy, what some of our elite political figures in Washington have termed “The New World Order,” will inevitably pull America down to the depths of lesser-developed nations rather than lifting them up as fully industrialized economies.

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