Financial restraint is on the rise again

The spirit of solvency may be taking hold in America again.

In personal finance, in energy conservation, in health care and disease prevention, and in the use of water and other basic resources, Americans are slowly realizing that credit isn’t wealth, that debt is financial illness, that pills and palliatives aren’t health, and that when you run out of water no government, and certainly no corporation, can make more of it.

Solvency is the enemy of a financial system built on advertising, public relations, spin doctoring, credit and pathological debt.

Solvency is a disaster for corporate finance, and for global capitalism based on the assumption that the American consumer a greedy materialist and a spending sap.

Water solvency, using no more than what we have and what can be annually renewed, is an equal disaster for the home building and selling industry in the arid southwest. Growth has been achieved by water debt, by dedications promising to secure water rights after subdivisions are built and sold, and by buying water from hard-up rural New Mexico, the water agriculture needs if it is to economically prosper by providing more locally produced food.

Everything is for sale in modern America, even the most precious of things – health, water and freedom of political expression.

I wonder if that’s why the conservative majority on the U.S. Supreme Court is angling to give corporate America a free ride to spend all the money it wants to crank up its advertising genius to sell political candidates and political ideas like it’s been selling us cars, houses, and an endless array of goods and games we’ve never asked for, or needed, or even wanted if it hadn’t been for our susceptibility, if not outright gullibility, to advertising.

In refusing to hear a narrow case involving political advertising against Hilary Clinton last year that a political action group tried to pawn off as “entertainment” to get around the McCain-Feingold campaign finance law of 2002, the court postponed its decision and moved to consider the broader issue of the free speech of so-called “corporate persons” in which money equals speech.

Corporate personhood is said to have been established in a Supreme Court case in 1886, Santa Clara County v. Southern Pacific Railroad. The court ruled, some say, that the framers of the constitution intended that corporations have the same rights as natural persons. Opponents of that view, who have been in the minority ever since, contend corporations have no basic right to non-commercial freedom of speech.

The McCain-Feinbold Act forbade the “advocacy ads” and other “electioneering communications” that name a federal candidate before a primary or general election.

I think the Court’s move is blatantly unconstitutional, as the Supreme Court is strictly an appeals court and has no business ruling on issues that have not been brought before it through the appeal process.

This conservative judicial activism comes at a time when corporate America is floundering as it rarely has before. It wants to rig the game against consumers and voters even more than it has before.

Americans are starting to save money again. This means to me that we’re not only thinking clearly about our financial vulnerability, but that we’re beginning to think for ourselves again.

Not long ago, Americans were spending so much that most of us could not stash away even one percent of our incomes. Now the government reports the national savings rate in May reached 6.9 percent, a 15 year high. Some financial analysts wonder if this is the end of a retail bubble that has driven our economy for decades. Big retail chains and malls are hurting. Sales for some are down as much as 28 percent recently.

The retail bubble has thrived because our commercial culture depended on us not being worried about our financial futures.

Now we are worried. We’re beginning to behave with financial restraint. The whole false economy of creating demand by inducing wants and desires that products are designed to fulfill is starting to flounder.

And the most obvious place where the creation of false demand is falling apart is in health care. While conservatives allegedly oppose universal health care because it might cause people to frivolously over use “free care,” most of us know that we’ve become a hypochondriacal society in part by being peddled fear by the health care and pharmaceutical establishment’s advertising. We’re being sold fear precisely to raise consumption of the existing for-profit health system.

Self-sufficiency, the very opposite of being gulled by advertising, is slowly surfacing again. But when will our financial institutions, our corporate bureaucracies, our governments, and our judicial system support solvency and reward it, and teach young people about it, rather than supporting the companies, institutions, and ideologies that have sunk us so low?

When it comes to long term investments in an age of global warming, “bubble” prosperity, and the financial instruments that inflate market sectors, is not self-sustaining.

There’s only one sector of our economy that isn’t prone to bubble popping, and that’s the green or the sustainability sector. Most of us who are saving now, will come to practice age old methods of conservation in the future just to keep afloat. It will be harder to con us into spending money on what we don’t need. It’s a sobering shift in the way the world does business. Big companies don’t get it yet. They have forgotten how to read the needs of the people.

Consumer capitalism won’t come crashing down anytime soon. Consumers will still drive the marketplace, but trends in savings and debt resolution are showing that consumers want to have real clout again.

For American retail to prosper again over the long haul, American companies have to hire American workers so they will have sufficient incomes to buy the American goods their lives require.

This spirit will slip over into the management of basic resources as well, including water and energy.

At some point, we’ll stopped being conned about “inevitable growth.” Capitalism, it is true, needs growth to operate. But it can grow profits selling products and ideas that further solvency, self-sufficiency, and the economic security that comes from living within your means, in other words by creating a green economy.

A throwaway, unsustainable society is not the only option for consumer capitalism.

What has happened to the financial markets over the last twelve months is a perfect analogy for what could happen to water in New Mexico over the next decade — enormous water debt choking the economy, paper assets disguising vanished plenty, a bubble bursting that brings down the housing market and the construction trades.

There’s no federal reserve that can create more water. There’s no congressional action that can magically fill reservoirs like stuffing banks and businesses with cash. When the water goes, that’s it.

Capitalism can always be reinvented. But new capitalism will have to supply real needs, not invent false demands, and understand the economic viability of conservation, or risk ecological bankruptcy.