Responding to Two Views of the American Economy

We want to thank all the respondents for taking time out of their very busy schedules to respond to our “Reflections on the Psychology of Savings in the U.S. and China.” The four commentators leave us with the following impression.

There must be two separate worlds in America. The first world, most clearly articulated by Drs. Collins and Felix, reveals for us a robust America with a thriving economy filled with hope, abundance, and a happy citizenry. Let’s call this the “Bush World.” According to their macroeconomic view, Americans spend as much as they wish and this results in a booming economy. When we asked my local deli owner about his spending habits he proudly remarked, “I spend more than I make!” He then showed us a receipt from the previous night for $215 for dinner for two at an expensive steak house. In this world we order what we want and give a big tip as a chaser.

But we fear there is another America that exists beneath this cheery world so well described by the deli owner and Drs. Collins and Felix. So we asked a shy clerk behind the deli counter about his spending habits. He told us in a low sheepish voice that he declared bankruptcy years ago and now tries to live within his means. Let’s call this the “Real World.” What Collins and Felix appear to have missed in their macroeconomic accounts of a thriving America are the very real pain, exhaustion, anguish, and fear that many Americans feel nearly every day and seen only by a microeconomist. What is it like to receive phone calls at 8 a.m. on a Sunday morning from your credit card company? There are many Americans who know this feeling and they are none too happy about it. The denial that prompts Americans to overspend is the very same denial that prompts Collins and Felix to underrepresent this problem.

We have no doubt that the American economy is powerful and thriving. But we also observe that this has resulted in a population that is overworked and overspent. It is almost as if the masses are unwittingly sacrificing their blood, sweat, and tears in order to benefit a thriving economy. Microeconomics suffers as macroeconomics thrives.

Furthermore it is clear that the media world we all live in has created what social economist Juliet Schor of Boston College (and formerly of Harvard) calls our “new reference group” (The Overspent American, 1998). We no longer keep up with the Joneses. We could care less about our neighbors. We don’t even know their names. We now must keep up with the Jacksons that is, the world of Michael Jackson. We live in a fictional world of rich celebrities populated by Tom Cruise, Angelina Jolie, and Britney Spears. These folks make millions, not thousands. This new reference group instills pressure

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as does advertising and financial institutes all of which combine to create a new malignant form of narcissism, one producing out-of-control spending. These influences have created the overspent American.

We suggest that it makes little difference how many intellectual arguments historians want to use. In the end, Freud was probably right. He described the unconscious as a confused impulsive entity working with its own set of rules and its own set of needs, and often against the real interest of the person. But please don’t try using that as an excuse when that credit card company calls you at 8 a.m. Sunday morning asking for that minimum payment.

One more point needs to be made. Dr. Elovitz brings up the very interesting proposition that we have lined up China as our next potential enemy. Referencing Hartmann, Lifton, and Volkan he points out that all nations appear to need an enemy onto which to project its aggression. We also have noted that since the fall of the Soviet Union in 1991 America has been desperate to find a worthy enemy. We fear that what has occurred is that America has introjected its aggression and turned it against itself. We now fear and loathe our neighbors whereas in the past we hated Communists. All the more reason to buy a McMansion and hide inside. Americans are now driven by jealousy, envy, and hatred, and we spend ourselves into an exhausted frenzy. Here we have the new American narcissist. Overspent, in debt, alone, and angry, but not really knowing what we have done wrong. We have come a long way from the days when Christopher Lasch first described this entity. It has only gotten worse. You may call this a jeremiad, but we call it the “new America.”

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