Don't know about you, but the "stuff" problem becomes acute in the immediate wake of Christmas. For many of us it begins, the moment Christmas decor goes up in stores in October and Christmas music starts. Now, on the cusp of the New Year, comes the leaner time of the year -- post-glut house-cleaning, trips to Goodwill, diets.
Paul Krugman reminds us that, world-wide, we'd better get used to having less. That doesn't sound like a threat this morning, that sounds like a friggin' blessing, doesn't it!
But this is serious. Commodity prices are rising. Things are changing. As Krugman puts it, we live in a finite world.
... The rapid growth of emerging economies is placing pressure on limited supplies of raw materials, pushing up their prices. And America is, for the most part, just a bystander in this story.
Some background: The last time the prices of oil and other commodities were this high, two and a half years ago, many commentators dismissed the price spike as an aberration driven by speculators. And they claimed vindication when commodity prices plunged in the second half of 2008.
But that price collapse coincided with a severe global recession, which led to a sharp fall in demand for raw materials. The big test would come when the world economy recovered. Would raw materials once again become expensive?
Well, it still feels like a recession in America. But thanks to growth in developing nations, world industrial production recently passed its previous peak — and, sure enough, commodity prices are surging again.
Oh woe is me Glenn Beck was right after all? The government has been covering up inflation figures? This is all about isn't that finite world thing, it's dreaded hyperinflation?
No. It's worse, Glenn, in a way. It's having to trim our sails, not overbuy and toss out carelessly. Basic commodities will be less easy to get and costlier. It's a world thing, Beck.
... The big problem with those blaming the Fed for rising commodity prices is that they’re suffering from delusions of U.S. economic grandeur. For commodity prices are set globally, and what America does just isn’t that important a factor.
In particular, today, as in 2007-2008, the primary driving force behind rising commodity prices isn’t demand from the United States. It’s demand from China and other emerging economies. As more and more people in formerly poor nations are entering the global middle class, they’re beginning to drive cars and eat meat, placing growing pressure on world oil and food supplies.
And those supplies aren’t keeping pace.
We don't have the option, anymore, of living in a throwaway world. But look at the bright side. Quite apart from the pleasure of cutting the crap out of our lives, it's going to make us a lot healthier as a society and as individuals. Our health stats tell us Americans have been living increasingly unhealthy lives.
This won’t bring an end to economic growth, let alone a descent into Mad Max-style collapse. It will require that we gradually change the way we live, adapting our economy and our lifestyles to the reality of more expensive resources.
But that’s for the future. Right now, rising commodity prices are basically the result of global recovery. They have no bearing, one way or another, on U.S. monetary policy. For this is a global story; at a fundamental level, it’s not about us.
Of course, if we Americans continue to indulge ourselves by living in a winner-take-all political and economic system, we're going to be in real trouble.
Truth be told, we already are. We've been putting up Christmas decor and broadcasting cheesy goodwill year-round for decades without ever, ever really cleaning house or really going on a diet. One look at the American population waddling into WalMart or Macy's on the day after Christmas and you can see some of the saddest results of being "winners."
