Newsweek's Robert Samuelson, he of the rolled-up shirtsleeve and rumpled tie, has an article in this week's issue that poses the question: Are oil prices finally going to put a dent in the US economy?
The answer is: Maybe. Maybe not. No one really knows.
No kidding. I could have told you that. And it would have saved you the trouble of picking up all those subscription cards that fall out of your copy of Newsweek.
Here's a real newsflash for you, folks. The field of economics has a lot more to do with psychology than it does with numbers. Why does anything have value? Because enough people think it does.
Gold? It's a shiny mineral that looks great on women and doesn't tarnish. Aluminum could fit that description too, but it's not as valuable, because enough people perceive it to be less valuable.
Cash money? It's only paper, dude. Oh sure, it's backed by the issuing country, but that only helps people believe it's got value. Just because Uncle Sam is behind that greenback in your wallet doesn't force you to believe in it's worth. It might, depending on your political inclinations, detract from your belief in it's worth.
What about oil? Maybe a little tougher to dismiss oil's intrinsic value. Certainly, before the advent of the internal combustion engine, oil was laying around in pools all over the place, essentially worthless except for kerosene and a few other derivatives.
But for the modern economy, is oil "essential"? Couldn't we, if we REALLY had to, find other ways to power our societies? Sure, we could. It wouldn't be easy to change over, and there would be other trade-offs (more cost, more pollution, more risk, etc), but it could be done.
The psychology of this whole thing is fascinating to me. As oil prices get higher, I wait for the "realization" to hit - oil is more expensive, so the economy must be worse, right? And, voila, the economy is worse.
I know how New Age, Tony Robbins-y it sounds, but a bit of positivity (whatever) would sure go a long way here.
1 comment:
These so called economists that are saying that high prices so far have not changed Americans driving habits is a bunch of bull. In the last week I have heard numerous stories on the radio/tv news about people feeling the crunch!
The first report was some bozo on the tv news that said last month he paid $500.00 to fill up his pick-up truck last month which is more than the actual truck payment.
The second was a woman on the radio in PA that said she needs to drive from NY to PA for her job and that she has no money to spend on anything except gas and food!
The third was a guy on the radio that said he has kept his car in his driveway for two months because he cannot afford the gas and he has been taking mass transportation to work.
Then take note of two reports recently in the NY DAILY NEWS. Late Payments on credit cards are soaring this quarter even higher that the first quarter. And in today's NY DAILY NEWS they say last year was the first year since the GREAT DEPRESSION Americans savings rates were negative!
So we are up to our eyeballs in debt and slapping these gas prices on credit cards so economists look us in the eye and tell us it is not a problem!
Post a Comment