The Great Accumulation hits a wall

December 16, 2008

The recession is here and credit is disappearing.  Shopaholics everywhere must now cope with the reality that accumulation is no longer possible at rates of the recent past.  The middle column in yesterday’s WSJ is particularly funny (sad?)…

On Black Friday, the day after Thanksgiving and the first official day of the holiday shopping season, 31-year-old confessed shopaholic Nikki Ebben was holed up in her bedroom in Appleton, Wis., while her husband went to Wal-Mart to snag a $500 flat-screen TV. Ms. Ebben, who has maxed out 15 credit cards and racked up more than $80,000 in debt, says she vowed to stay away from stores. Still, she couldn’t resist the temptation of e-commerce, particularly the appeal of 30% off and free shipping. While her husband was gone, she spent $400 at and, using money from the couple’s joint bank account.

“I went crazy,” admits Ms. Ebben, whose mother stopped speaking to her for a time because she owed her parents so much money.

CNBC also has a story about shoppers coping, or not…

In the coming months, mental health experts expect a rise in theft, depression, drug use, anxiety and even violence as consumers confront a harsh new reality and must live within diminished means.

“People start seeing their economic situation change, and it stimulates a sort of survival panic,” said Gaetano Vaccaro, deputy clinical director of Moonview Sanctuary, which treats patients for emotional and behavioral disorders. “When we are in a survival panic, we are prone to really extreme behaviors.”

As a society, we’ve come to define ourselves by the amount of stuff we have.  Look no further than U.S. GDP, two-thirds of which is driven by “consumption.”  The CNBC article notes that politicians encouraged spending in the wake of 9/11 in order to keep the economy going strong.  What happened to patriotism being about sacrifice?

At this point, the conventional wisdom is that the Great Accumulation can’t be allowed to stop.  The economy wouldn’t survive it.  Look at the Detroit bailout.  Economists and politicians everywhere acknowledge that Detroit automakers have made bad decisions, but most argue they must be rescued anyway.  We can’t let them fail because too many jobs would be lost.

But why rescue those jobs?  To what end?  So the U.S. auto industry retains the capacity to build/sell 15 million autos per year?  Annualizing auto sales for November suggests the market for new cars is probably half that now.  Thinking dispassionately about the matter, is it such a terrible thing if Americans buy fewer cars?

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