Sunday, February 1, 2009

The Squeeze Is On! Why We Need to Explore Communal, As Well As Individual Responses to the Economic Crisis

The Squeeze Is On! Why We Need to Explore Communal, As Well As Individual Responses to the Economic Crisis

Dr Mark Naison
Fordham University

During the next year, and possible longer, the American economy will be squeezing out jobs at a rapidly accelerating rate. Americans working in finance, manufacturing, retail trades, transportation, entertainment, and goverment employment, will be pushed out of the labor market until the economy bottoms out sometime in 2010, and will be forced to scramble to find new sources of income and in some cases, new living arragnements.

All of our training, and all of our instincts, will be to respond to this challenge on a strictly individual basis. We will go back to school, upgrade our resumes, start working out regularly, and get fashion make-overs to make ourselves seem attractive to prospective employers.

But until the economy starts growing again, these responses are unlikely to restore even a fraction of the jobs that were lost. What they will do is simply create a fiercer competition for the declining pool of jobs left and put people further in debt at a time when they need to husband scarce resources

What Americans need to start doing, to survive what may be a two or three year period of deleveraging and deflation, is to start pooling their resoucres to live less wastefully, and begin saving money and accumulating capital to form new enterprises which may provide needed goods and services..

At a time when banks, because of the huge amount of unsecured debt still on their books, are unlikely to provide credit to consumers or new businesses in proportions needed to jump start the economy, capital accumulation for small businesses or non profit organizations may have to come as much from savings as from bank credit.

But to save, Americans, especially young Americans, may have to consider living arragnements that are unfamiliar, or even repugnant, to most middle class people, but have been central to the survival and success of many recent immigrants.

The most important of these are communal living arrangements. All over the United Sates, immigrants from Mexico, Central America, Africa, and South Asia, are living communally, sharing rent and food, to radically reduce living costs and allow them to send remittances home to relatives in their homelands.

Young people graduating from college or coming out of the military, should consider the same strategy. Whether in couples or not, they should form living cooperatives that share space, food, and income, allowing all to live at a fraction of the cost they would if they were living on their own. With whatever surplus they accumulate, they should purchase equipment to start their own small cooperative enterprises, whether it involves cleaning and home repair, landscaping, hydroponic agriculture, green energy conversion, catering, tutoring, auto and computer repair, information technology, fitness training, even music production. Because of the huge amount of abandoned space about to become available, either through foreclosures or new construction, finding residential and commercial space for such cooperatives, at reasonable rents, will not be difficult.

The genius of such arrangements is they allow people to pool income from a wide variety of sources including jobs, government transfer payments, gifts from family members, and avoid depending on credit arrgangements which may not be available, or that produce debt levels not easily repaid in a stagnant economy.

But equally important, such cooperatives could turn out to be an engine of long term economic growth As young people freed from the constraints of hyper consumption and indebtedness, seek economic niches where their services are needed, they are likely to find creative solutions to problems which conventional enterprises are unable to solve, or which are only economically viable if implemented on a small scale.

For many Americans, the flush days where economic success took the form of Hummers , McMansions and expensive trips to Vegas are coming to an end. But if they take a lesson from America's immigrants, who share resources and defer consumption to accumulate savings and build businesses, they may come out of this crisis stronger than before.

Communalism and solidarity, principles long of fashion in our society, need to get a new lease on ife. Individualism and consumerism gone mad got us into this mess.

It will take Cooperation to get us out

Mark Naison
February 1, 2009

1 comment:

Ray said...

Well said, Dr. Naison. Kudos for this and your previous posts. One of the upsides to societal crisis is the opening it provides for new ways of thinking, living, and working. That may prove to be especially true during the Obama years, since he himself appears to be open to new ways of thinking. Let's rock while the beat is on.