All I Really Need to Know About the Economy I Learned in Genesis

I’m not an economist but I am an avid gardener and I know that green shoots can be deceiving. Not everything that pokes its little green head above the soil is desirable… or survives the frost. I hope reports that this recession is coming to an end are correct, but even if they are, or when it does, I do not think our economy is going to look anything like what it did oh, say, three years ago.

It’s about slack. The US economy is said to be the engine of the world economy with the US consumer being the driving force. The US consumer will, I think, not ever go back to the kind of free for all spending that was driving the world economy just a few years ago, because there is a long way to go before anywhere near that level of demand will be seen again. The US consumer has a lot of budget tightening that can still be done, or that can be continued, and a lot of it will.

Just take shoes for example. Most adults in this country could go literally years without buying shoes and not be stuck with the choice of having to buy shoes or go barefoot. It’s different for children who grow out of their shoes, of course. (And for little for children, there a lot of good, barely worn, used shoes in the pipeline — just drive around the garage sales some weekend.) I’m confident that if not a single new pair of adult shoes were imported into this country in 2010, we could shrug it off. We might prefer to buy shoes, but for very few of us is there a real need to.

Housing is another area in which a lot of slack still exists to be taken up. This is because economic necessity is forcing families to make due with smaller homes or reduce expenses by sharing homes. Kids moving back with parents is just one trend that has been noted, but other family members are doubling up housing as well.

We could substitute almost any other consumer good and find the same thing. People do for the most part have in abundance what they really need. Most consumer purchases replace something that still works, but that the consumer wants to “upgrade” — this is true of everything from winter coats to washing machines, from blenders to cars.

On top of this is the fact that the biggest transfer of wealth in the history of the world has just begun with the retirement and death of the baby boom generation. However conspicuous their spending habits were, they are coming up against the most brutal of the brute laws of economics — you can’t take it with you. “You are dust and to dust you shall return.” And everything dust leaves behind, from teapots to homes, from dressers to lawn mowers, goes into the hands of someone else who then does not need to buy that item new.

And there aren’t nearly as many of those someone elses as there should have been because going forth and acquiring has taken the place of going forth and multiplying for the baby boomers like no generation previous to them. That means that the goods they leave behind are usually not being spread among a large number of living descendants, especially considering that the voice of the blood of millions of them cries out to God from the ground.

For those of the baby boomers’ children and grandchildren who do survive, however, this recession will be a defining moment. Defining in the way that the great depression was defining for the boomers’ grandparents. It will deeply alter their relationship with money and the “consumer culture” — making them wary, suspicious. Dave Ramsey’s slogan echoes ever more loudly across the fruited plain: “Debt is dumb and cash is king.” Even the depression era’s “use it up and wear it out” philosophy is being recycled.

Running the printing presses day and night to churn out dollar bills is not going to revitalize the economy. At is most basic level every economy is about dealing with the “dust from the ground” of which we are made, with the rocks and soil of this planet. We aren’t like God, able to create ex nihilo; we aren’t angels who can sustain ourselves on “information.” The real stuff that makes an economy hum is fished or grown or mined. It is taking the raw materials of this earth, “by the sweat of your face,” and making it edible, wearable, or otherwise usable to some other human being that forms the basis of any economy. When we see growth there, that is when we will be back.

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  • Claire

    Great article. This hits the nail on the head and puts everything in perspective.

  • http://arkanabar.blogspot.com Arkanabar Ilarsadin

    Too right about the printing presses! Inflation is not rising prices. Inflation is when there’s more new dollars than there is stuff to buy with them. Rising prices are merely how the increased supply of dollars results in decreased demand. It benefits debtors and punishes those who save.

    And since the world’s largest debtor is the U. S. Government…..

  • http://catholichawk.com PrairieHawk

    Mary is right. The “information economy” trades in exactly nothing. Consider what the physical reality behind the World Wide Web is: it is millions of hard disks cross-connected by cleverly-assembled wires and electronic gates that allow me here in Minnesota to see what’s on a computer in India. And those hard disks contain metal platters with magnetic fields that are oriented in particular ways so that images, text, and sound can be reproduced. It’s not real, just a collection of magnetic fields.

    How can a nation prosper by trading in magnetism? Yes, the Web is useful, even ingenious; but we can only go so far with it unless our farmers are growing crops, our factories are producing automobiles; and, by the way, where is all the computer equipment that harnesses the marvel of magnetism made? I suspect that most of it comes from China. We are trading in nothing, and the real things that allow us to trade in nothing are made by our enemies. This is a sorry state indeed.

    My advice? Buy a couple of goats and plant a garden. If you like eggs, get a chicken. Learn canning, food preservation, and biointensive gardening methods. Your computer will be useless if (when?) there’s a general collapse. We’re going to have a lot bigger things to worry about than weather.com’s predictions for Bangor, Maine.

  • Joe DeVet

    Not a very good reflection of either economics or recent history–or sociology for that matter.

    Just recall what has happened after every run-up in gasoline prices. Consumers suddenly “get religion” and buy Smart Cars, Priuses, etc–until about 2 seconds after the current bubble bursts and world crude oil prices start to fall. Then it’s back to big trucks, SUV’s, etc, guzzling gas till kingdom come. People quickly forget that each price rise is another “saw tooth” in a long-term trend of rising energy costs.

    It will happen again with the current recession–in energy costs as well as any other economic index. Where I live, for example, housing prices have already bottomed out and are on the rise again. Demand expands as quickly as people’s appetites, and while Dave Ramsey makes sense, he doesn’t have much of a following when it comes to real behavior.

    Unfortunately, for our Catholic leaders the title of this piece is their mantra when it comes to economics. Any level of ignorance of economics does just fine, thank you. Then they turn around and lecture those who are actually in the economic system and thereby know better, how the system should work. Much of it is offering platitudes on platitudes, which in the actual world of things “grown, taken from the dust of the earth and manufactured” are often self-contradictory.

    A case in point is health care. It’s treated as a “right” for all, while overlooking that whether or not it is a “right” in some sense, it is for sure an economic entity. A story from my town may illustrate the point. Just 3 or 4 years ago the Church sold the downtown Catholic hospital because it was not able to sustain the annual losses. Now, having abandoned providing any health care thru that hospital, the Church feels free to turn around and lecture the present hospital owners and workers on how they should conduct their business.

    I’m not talking about outright cheating, fraud, life issues or any other points on which the Church can and must speak out. I’m talking about questions of economic systems, where Church leaders with profound ignorance of economic science feel free to “correct” the notions of those who have the competence.

    I’m also not saying that the Church shouldn’t offer her suggestions in any area of social justice. I am saying that when she does, she should be better-prepared to make sense and take into account all of our hard-won human knowledge. Otherwise, she loses credibility and people feel free to ignore her when she speaks in areas of faith or morals where she has real competence and authority.

  • DWC

    Well stated Joe.

  • James A Gallagher

    Terrific essay. Requires no further elaboration. No Cross, No Crown – William Penn

  • waynergf

    Sorry, but I disagree that this recession can in any way be compared to the Great Depression in terms of its lasting effects. How long was the Great Depression? How deep did it cut? What proportion of the population was significantly impacted? The Great Depresion was so severe for so long that fundamental behavior changes occurred even in those with long-established consumption habits -and these were people who already were frugal and thrifty by today’s lifestyles.

    Not so with this current recession. And, when the coming inflationary cycle hits we’ll all be encouraged to spend more than we have and become debtors so we can pay back with cheaper dollars.

  • goral

    In theology economy is defined as the divine plan for humanity, from creation through redemption to final beatitude.

    Mary, in that sense you are an economist as you contribute and manage so much discussion in the realm of our Salvation.

    All of us are quite capable of managing our own micro-economic systems.
    Unfortunately on the macro scale we have become a nation of consumers. It’s going to take more than this jolt to get us thinking sacrifice, production and capital formation.

    Yes, debt is dumb, but our economy is built on it. Hmmm!

  • Jeff Reser

    Mary,

    I hope your wrong about the shoe analogy– I’m in the shoe biz! Actually, I heard an interesting statistic about shoes. Americans have over four years worth of shoes in their closets. Fortunately, we are in the medical end of the footwear business which has stayed strong.

    Great article.

  • applegrower

    Sorry, Mary, but the only part of your essay that made sense was the initial phrase–”I’m not an economist but I am an avid gardener….”

    On the other hand, Jo DeVet’s arguments make perfect sense. Read and learn. Your suggestion in your last paragraph, Mary, that we continue extracting our natural resources as we have been doing, is probably the reason we are up the creek to begin with. I suggest, Mary, that with the two books I recommended you read a couple of days ago, you should continue your “economic” education with “SEA SICK,” to find out what condition our oceans are in due to reckless “extraction,” and Jeff Rubin’s recent book, “WHY YOUR WORLD IS ABOUT TO GET A WHOLE LOT SMALLER.” Smaller, because soon you will no longer be able to depend on others to provide you with the basic necessities of life. Water tables over the world are being depleted; petroleum sources and volume have reached a peak or soon will; fertilizer manufacture requires this same product.
    Yes, let’s continue extracting all of our resources. You need to enrich your reading besides the book of Genesis.

  • Mary Kochan

    Thanks for your comment, applegrower.

    There isn’t anything I wrote to suggest doing what we have been doing. As Prairiehawk inferred — we can’t.

    PS You really think all I read is Genesis, dear? ;-)

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