Email this article to a friend

The ITT List

Friday, Feb 22, 2008, 2:38 pm

A fix for our falling savings rate?

By Adam Doster
To some extent, I agree with Dalton Conely's op-ed. America's falling savings rate is a big problem, and one that has roots in our consumer culture as well as in our economic decision making. But this passage seems fundamentally wrong to me.
The last time the savings rate dipped into the red was during the Great Depression. At that time, of course, it made sense not to save. Joblessness was high and money scarce; we needed to dip into our kitty to survive. But our negative savings during the Bush boom had a different cause. Evidently, we felt so flush with (paper) gains in the stock and housing markets that we spent money as if there were no tomorrow.
The most enduring characteristic of the "Bush boom" has been soaring inequality, a macro-trend that often inhibits broad saving. For the wealthy, there is flexibility to spend more income than they have historically. Their nest egg is set, and you can only save so much, so why not buy a luxury car? For the rest, it's virtually impossible to save when health care, housing, transportation, education and food costs are soaring and incomes are falling. People aren't spending as if there was no tomorrow; they are spending so they can get to tomorrow.

The working and middle class will save when their wages allow them to. Instead of tinkering around the edges, why don't we rebuild the safety net and redistribute some of that wealth that's being wasted up top?

Adam Doster, a contributing editor at In These Times, is a Chicago-based freelance writer and former reporter-blogger for Progress Illinois.

View Comments