Uncle Sam wants you....to shop?

As the war in Iraq was first getting underway, George Bush encouraged Americans to keep spending, and to try to enjoy life without focusing on the war. In 2001, the defense secretary at the time, told a press conference "We have a choice, either to change the way we live, which is unacceptable, or to change the way that they live, and we chose the latter." (Washington Post) The problem is, we did not have a choice. War inevitably demands changes from all parties involved, and as we neglected that fact the public and private defects grew and grew. To encourage people to spend, credit companies began cutting interest rates and handing out approvals to those who could never hope to pay. The credit companies started facing bankruptcy and the government went further into debt trying to bail them out. Meanwhile, citizens faced increasing debt and foreclosures. I have seen it proposed that when the recession began it was due to a fear based economy. What this means is that there was no great financial problem, but because people were afraid that there was, they began spending like there was. With the decreased cash flow businesses started closing, jobs were lost, and product values plummeted. 


However the recession came about, there is no question that we have found ourselves with too few jobs to go around, and often with too little cash to pay the bills and creditors. So is it patriotic to shop? First we have to define what we mean by the term patriotic. The Word English Dictionary defines the term "Patriot" as "A person who vigorously supports his country and its way of life." However, some definitions say instead that it is one who supports the nations interests, or does what is best for the nation. There is no doubt that consumption is part of the American way of life, so if we are to define patriotism as supporting the way of life of our country, I suppose we could say that it is patriotic to shop. However, when we consider the definition that includes doing what is best for one's country, the question gets a bit more complicated. What a nation does, its way of life, is not always what is best for it. So we must examine the context and the national situation. In our nation, we are currently trying to dig ourselves out of a heap of debt and many cannot even find work. Is it good for the nation for such people to have a consumer mentality? Shopping is a welcome distraction from the stress of everyday life, but it is only a temporary fix. When the government issues stimulus packages it is easy to be temporarily relieved, but to forget that the money will only last so long. The strategy behind stimulus packages seems to be lulling people into a false sense of security in hopes that it will motivate them to get out and invest wisely and develop a safety net, which in turn will contribute to a secure economy being built. This is rarely what winds up happening. More often, people find themselves using stimulus money to pay up various overdue bills and purchase trivial items that the recession has left them without. Once the money is gone, they find themselves taking out more loans and applying for more federal assistance. There is a phenomenon known as a bubble economy, which refers to an unsustainable economy based on artificially induced spending, or from items being sold far about their value and in large quantity. Artificially stimulating the economy can boost it for a time, but eventually the market will come crashing back down to where it began. This could very well lead to the kind of double-dip recession we are all hoping to avoid. Therefore, while spending is important, it is also important that we do not spend all at once, in a fashion that cannot be continued.  The economic stimulus increases demand for a short time, but once supply has increased and there is no longer money to go around, market values plummet and companies wind up having to cut wages and jobs to make it.


On the other hand, what is the benefit of shopping? Pete made some very good points in his blog about the necessity to spend in order to keep the economy afloat. It is indeed important for those with money not to hoard it. As I mentioned previously, a fear based economy occurs when people have enough money, but fear not having it for long and stop spending. Often this is based on a false assumption that the economy is going downhill, and the very act of people pulling their investments and stockpiling creates the very recession they fear. In the case of avoiding a recession, it is vital to invest and purchase. I also agree with Pete that if one is in the position to shop without creating debt, it is very important to consider where the merchandise is coming from. If an investment is to be made, should it be made in an overseas and successful company, or in a small business that needs some help to grow? The small business investment would create jobs, while the overseas investment will likely yield more money that can then be reinvested into the economy. Which is ultimately better for the economy? Clearly the question does not have a simple yes or no answer. Patriotism and the wisdom of spending depend on many variables. For one person, even during a recession, shopping might be the best thing they can do to help, while for others it might be the worst. Patriotic shopping requires that we consciously consider whether our purchases are truly helping the U.S. economy, as they might simply be creating more business to be shipped overseas, or creating more debt within our borders. 


For the sake of argument, we will use the most common criteria for being a patriot, and that is selfless support of ones country. This means doing what the country needs and not just what you want. What the country needs right now is investment in job security, more jobs created, and less outstanding debt. Because this helps the economy, and therefore the nation, is patriotic to spend in these areas. However, it is a mistake to broad-brush this problem and say that is is patriotic to spend no matter what the money is spent on. It is not patriotic to spend if the spending will create more debt for the nation to face later, because this is not in the nation's best interest. It is not patriotic to spend if if could lead to more foreclosures that will further reduce home values. It is not patriotic to take advantage of low home prices, only to find oneself making too little income to sustain the investment. The important thing about spending as a patriot is to consider whether the purchases will boost the economy for more than just a short time. Spending should be a goal, but savings and security should come first, because these actions will be more likely to facilitate permanent financial stability. Those who do not have sufficient savings, or might be at financial risk, would show more patriotism by holding onto what they have so as to reduce the chance of needing federal assistance just to survive. With savings and good money management, these individuals set themselves up to be able to spend more later, when it will not increase their level of debt. It was not the government debt that caused credit companies to require a bailout, it was individuals taking out loans they could not afford to pay off. It is very important that the people manage their budget wisely. 



The best answer here is that while it is important to keep people optimistic and encourage some spending, we must take care to spend in the right ways and at the right time. It is only patriotic to shop when the purchases made will not cause bigger economic worries down the road. It is not appropriate to spend and spend and spend in the name of economic growth without considering any consequences. To increase truly patriotic spending, the government should focus on issuing stimulus packages in areas that will create opportunities for permanent growth, like issuing better grants for first time small business owners. This would increase the work available and therefore the amount of money to be spent. Perhaps in the future, when job stability has returned for the majority of the nation's citizens and more of us have savings in the bank, frivolous spending and credit building can be encouraged again. What is patriotic changes depending on the needs of the nation. Right now, the most patriotic thing to do must be determined based on circumstances. For those who are well off and have no debt, the best thing is to spend in areas where it counts. For those without the funds available, however, the most patriotic thing is to take steps to build up financial security and reduce debt.  


Sources:



Bacevich, Andrew J. He Told Us to Go Shopping. (2008, October 5). The Washington Post. Retrieved from http://www.washingtonpost.com/wp-dyn/content/article/2008/10/03/AR2008100301977.html on 22 September 2010.

Farrell, Maureen, & Lindner, Melanie. Where's The Stimulus For Small Business? (2009, February 24). Forbes Magazine. Retrieved from http://www.forbes.com/2009/02/24/small-business-stimulus-entrepreneurs-law_stimulus.html on 22 September 2010.

Lillis, Mike. The Troubles With Bubbles. (2009, February 4). The Washington Independent. Retrieved from http://washingtonindependent.com/28899/the-troubles-with-bubbles on 22 September 2010. 

"Patriot." Word English Dictionary. (2010). Dictionary.com. 22 September 2010. Http://dictionary.reference.com/browse/patriot