The space formerly occupied by Borders Books & Music in Davis Commons has been temporarily taken over by a “pop-up” store —Spirit Halloween, an evolution that seemed entirely appropriate to us.
Our economy now seems driven by irrational forces. Alan Greenspan, at the height of our Age of Excess, talked about “irrational exuberance,” and Joan Robinson, another famous economist, used the term “animal spirits” to talk about similar behavior.
We believe our current economy can be conjured as a “trick-or-treat” economy as for increasing millions of people, America has become a virtual haunted house where they are at risk from the depredations of devils, goblins, hobgoblins, grim reapers, zombies and vampires.
Mass media have been devoting an unusually large amount of attention lately to supernatural phenomena and horror stories, more than seems merely incidental. It suggests a fundamental shift in our popular culture: belief in science and rationality is decreasing even as this upsurge of interest in the supernatural explodes. This shift represents a return to durable historical patterns of belief and practice.
For millennia, Europeans practiced and believed in pagan religions, rites and rituals. When Christianity conquered Europe, indigenous cultures merely assimilated pagan practices into Christian ones. Halloween is one such pagan ritual practice — “It was a pagan belief that on one night of the year, the souls of the dead return to their original homes, there to be entertained with food. If food and shelter were not provided, the evil spirits would cast spells and cause havoc toward those failing to fulfill their requests. Sacrifices were offered on this night to the dead spirits …”
One can read a deeper meaning into the fact that Borders has been replaced by a “haunted house” inhabited by witches, spooks and evil spirits — the “trick-or-treat” economy has grown even as the other economy has imploded, taking down confidence in our leaders and governing institutions — an essential for a workable democracy.
Despite numerous programs, and at least $4 trillion of government support, we still seem locked in a “here today, gone tomorrow” syndrome: Mervyns, Gottschalks, Circuit City, Borders, Good Guys and good jobs, gone; Gap, Lowe’s the U.S. Postal Service, going; and millions of homes foreclosed, sacrificed to “zombie” banks. (A Google search produced almost 5.9 million results for “zombie banks.”)
Wikipedia defines a zombie bank as a financial institution that has an economic net worth less than zero but continues to operate because its ability to pay its debts is shored up by implicit or explicit government credit support. European economies are rife with zombie banks.
A recent Reuters news posting said “a stalled economy hasn’t spooked Americans out of enjoying Halloween.” But the article contradicts itself when it reveals that average expected spending on Halloween would decrease from $73 in 2010 to $53 in 2011 — a 27 percent decrease, indicating that American households are indeed “spooked” by the economy. How else to explain it!
George H.W. Bush, in his campaign to secure the Republican presidential nomination, labeled Ronald Reagan’s “supply-side”economic policy proposals as “voodoo economics,” another import from the supernatural world. “Supply-side” economics proposed to increase tax revenues by decreasing taxes — not, on the face of it, a logical proposition.
In the case of “voodoo economics,” the treat was decreased taxes, and the trick was the $14 trillion debt and more than $1 trillion-per-year deficit that is now our collective responsibility. So, “morning in America” has become a monumental post-Halloween sugar-binge hangover. But, like true addicts, we are still hooked on the sugar high.
We all now know about the mortgage bubble that led to the collapse of the “trick-or-treat” economy in 2008. A current iteration of that bubble is the higher education con. The treat is the promise of a vocation, a skill, a profession that guarantees economic and social security in maintstream society. The trick is the mountain of debt and the poor job prospects that face students upon graduation as well as the permanence of that debt, bankruptcy being precluded by the success of the financial industry’s lobbying.
Thus, for millions of students, dreams of freedom and economic security are turned into a harrowing reality of debt peonage, a modern post-industrial version of sharecropping that shackled generations of black Americans to Southern plantations. Total student debt has now passed the trillion-dollar marker.
A 1972 Time magazine article, “The Economy: Behind the Currency Curtain: Meet a Real Gnome,” sought to educate as to the true identity of “the gnomes of Zurich,” as a British politician called this class of economic actors. It offered that “by far the most important dabblers in foreign exchange are not slick and selfish operators but the sober-sided officers of banks and multinational corporations.” Of course, this was before credit default swaps and toxic assets.
A recent Huffington Post article probes behind the alarming increase in student debt. The article, “With Goldman’s Foray into Higher Education, A Predatory Pursuit of Students and Revenues,” details how Goldman’s acquisition of Education Management Corp. created a new culture “… designed to prey on poor and uneducated consumers” because “…this new market in higher education boasted seemingly unlimited growth potential at virtually zero risk.”
If the Occupy America insurgency serves to shock us back into reality, however dismaying it is to awake from a pleasant fantasy, it would have served a good purpose.
— Desmond Jolly is an emeritus economist, formerly of UC Davis’ department of agricultural and resource economics. He teaches economics courses for UCD’s Osher Lifelong Learning Institute.