The United States will never have a strong economy while its economy depends on consumer spending. "Consumer spending," implicitly and explicitly touted as a way out of recession, is in simplest terms a macro Ponzi scheme, and it demands the general population to fork over cash that the individual members of that general population need, sometimes desperately, to keep in their own pockets, purses and bank accounts. Individual consumer spending, often to the detriment of the individual doing the spending, is being used as a substitute for rational industrial policy, for rational agricultural policy, and for rational public spending. (We're still paying for Vietnam. We'll be paying for Iraq and Afghanistan for decades.)

Just as date rape is still rape--as former Virginia Gov. Doug Wilder pointed out--and white-collar crime is still crime, consumer spending is still spending. It is not somehow an essentially different and sanitized kind of spending; it is another kind of not saving. And unlike paying for a house or home improvements, or a college education, or safe transportation, or investment, it is not a kind of spending that can validly be represented as a transfer from one kind of asset to another kind of asset. Almost all consumer spending--discretionary spending, not necessities of food, utilities, medicine etc--means buying retail and selling, if you can sell at all, wholesale. That's one reason eBay* is doing so well, along with the convenience and saving in transportation and time of buying online; the price is often right because it beats retail.

To say that spending is not saving might seem obvious, or at best just common sense, but the reminders can get scary at times. One instance: Today's Wall Street Journal article reporting that college students are borrowing more than ever to go to college. (On Huffington Post, this article is illustrated by an AP photo of my alma mater.) The figures cited in the report are terrifying: $75 billion in federal student loans in the 2008-2009 school year, two-thirds of all college students borrowing to go to college, an average debt load for students of $23,000 by graduation.



Some of what this particular article does not mention is even more frightening. The $23,000 is about equal to the after-taxes salary of a typical entry-level job. (In depressed regions of the country and in regions where cost of living and wages are low, that figure about equals before-taxes pay.) And that's if the recent college graduate is fortunate enough to get hired in a steady job, even at entry level. College debt--like any other kind of debt--is an awful burden for young adults; to be carrying that kind of load at graduation starts them off behind the eight ball.

The officially sanctioned federal loans for education are not always the only form of debt, either. Credit card lenders have been culpable for years in massive campaigns to market credit-card debt to college-age young people, sometimes without regard to their ability to pay off the debt. Witness the young people who tragically have committed suicide over their debt loads.

For college students, the burden of debt can become debilitating well before graduation. Incurring a financial debt without any clear idea how to pay it off clouds the judgment--impairing what psychologists call executive function. It intensifies the psychological burden of obligation, which can weigh particularly heavily on students from families of modest means and on students who are among the first in their families to get a college education. It also intensifies every other pressure--academic, social--including the pressure to settle on a major and to streamline decision-making artificially in setting what should be lifetime goals.

Another thing the WSJ article does not mention, of course, is that thousands of students have to incur education debt because their parents did not save, or were not able to save, to send them to college. I am not writing this to fault the parents--although I have written for years in favor of saving; one of my columns for the now-defunct PrinceGeorge's Journal, where I published columns for eight years, was a plea to parents to save for their children's education. But it is telling that the WSJ cannot even mention the virtue of saving. Telling, but fitting. The silk-stocking pillars of a general economy that relies on "consumer spending" to stay afloat and to fund its state and local governments, that touts shopping as a citizen's patriotic duty--remember GWBush just after 9/11?--that boosts the virtues of individual thrift and industry only in the vaguest and most airbrushed ways, while failing to apply sanctions in favor of same to individuals (Bernard Madoff being the obvious example) at the top levels of corporate management . . . have little standing to remind parents to save for college.




*An eBay consumer myself, I did most household shopping online when going without a car, after our old Toyota Corolla caught fire and burned up on the Washington Beltway.