A recent Reuters article captures how it is possible that Americans, collectively, have been able to spend about six percent more than they earned each year over the past half-decade. “Between 2001 and 2006, the Moorheads refinanced their three-bedroom San Diego home at least nine times, county records show…Moorhead and her husband now owe $603,000, up from $196,000 when they started, and more than $10,000 over what their house is worth, according to one online estimate. They're likely to lose it soon if they can't somehow make payments greater than their monthly income.” This couple somehow borrowed and spent (and paid in refinancing fees) $400,000 more than they earned in five years, or $80,000 per year. Multiply that by a few million similar middle-income families, and as many lower income households with sub-prime loans, and you have the intermediate-term direction of our economy. This has already gone on longer than I thought it could, but things that cannot go on forever won’t.

Personal consumption is going to have to go down, though I’m not sure how this will play out. Inflation and a falling dollar reducing the energy and imported goods Americans can afford? Falling profits and asset prices forcing state and local governments to raise taxes and cut services? Rising unemployment?

Not that a disaster is to be expected. I put the term “hard times” in quotes for a reason, for the worst that is likely to happen would not be recognized as much of a problem by people in most of the world, and would not have been recognized as “hard times’ by past generations of Americans. Unless there is a massive social, moral and political failure no one is likely to starve. But many Americans are about to face diminished circumstances relative to their expectations, and that is going to have political consequences. They will not be pleased.

The short-term insanity comes at the end of two long-term trends. First, for a large share of the American population earnings have been stagnant. Private businesses have disguised this by taking away deferred compensation in the form of retirement benefits and health care, which most people don’t really need until their 50s, rather than spendable cash, but in some cases cash earnings have fallen as well. In addition, for decades the share of those over 65 living in poverty has fallen, but many people are now approaching old age in much worse financial shape than previous generations, in part due to their own higher consumption when young, in part due to decisions those prior generations made at their expense. When they arrive in old age, they are going to have to cut back.

Second, a huge and powerful industry, the advertising industry, continues to redefine what is required for someone to consider themself part of the middle class, always in ways that cost more money. A few free television stations are replaced by cable, and then satellite, and a black and white television is replaced by color, and then by multiple televisions, and then by flat panels. Fans are replaced by air conditioning. Board games are replaced by expensive electronics. One family car is replaced by two family trucks. Food cooked from scratch at home is replaced by takeout, dinners out, and food with extensive “value added” in the factory. Driving to campgrounds and the Jersey Shore is replaced by air travel around the world. All these changes have taken place since the 1960s. Measured by the share of the population that has various stuff, and has benefited from various services, the notion that people in the United States are materially worse off is simply untrue.

Some of these changes are worth it, and some are not. In my house we skip cable and AC, generally eat food cooked from scratch, and miss the days when you got almost all the away Mets, Yankees, Knicks and Rangers games on WOR and WPIX, but we appreciate the personal computer and the internet. I want to be sure that we do not live in a way that I cannot be reasonably sure my children will be able to afford when they go out on their own, to ensure they will not either feel deprived or feel the need to spend that extra $80,000 per year like the Moorheads. But if people want those things, that’s their choice.

Yet there is a problem: surveys show all this stuff hasn’t made people feel better off, yet those same people will feel extremely diminished if they have to cut, back because their material standard of living is pretty much their whole value of life. And, as it happens, many people have felt compelled to buy more good and services than the can afford. Hence the problem of “hard times.”

And where is the alternative information coming from? Religion? I get the feeling my church believes a return to the spirit of St. Francis would complete the emptying of the pews (perhaps true, but they might then refill with someone else). Politicians? We have a Senator who pops up every few Sunday nights to tell people they have a right to cheap gasoline so they can go burning as much as they want, and a Congressman who has come out in favor of everyone being able to drive to Manhattan for nothing. And we have politicians who, when the price of gasoline goes up, propose cutting the gasoline tax so people can afford to burn as much as before, deferring the cost of maintaining the infrastructure to another day, and another generation.

Nearly every time an elected official proposes reducing the cost of living, closer inspection shows they actually propose shifting the same cost, or even a higher cost, to someone else, or some future time when they won’t be around. Public policy has followed private practice: cutting taxes has been more popular than cutting spending. Working together to live more cheaply? It’s hard to think of a recent example of anyone daring to suggest this.

When hard times arrive, might these politicians choose to deny some people necessities to spare others the pain of diminished expectations? What does the past New York State school aid formula, and our current system of health care finance – unlimited care at unlimited cost for some, nothing for others who pay taxes for what they do not get, say about that? Some people are deprived. But everyone, it seems, feels deprived and wants someone to feel their pain. And only their pain.

It would be nice if there was some kind of reassessment that allowed those who have more to be happy with a little less. Because some time soon the alternative to “voluntary simplicity” will be “involuntary simplicity.” Compared to the problems of other countries and other generations, our problems are modest, and it is embarrassing that we cannot confront them head on. People who are objectively well off, but not quite as well off as before, seem to be less happy, hopeful, and confident in the future that those who are not so well off, but whose situation is improving. To me, that means that when you upsize your standard of living, every addition is a potential source of misery, taken for granted if you have it, missed when you no longer do. As a country, we are now dependent on our psychological well being on an endless supply of foreign oil and foreign money, and thus vulnerable.

This is a national problem that I believe will be much worse outside NYC, though Brooklyn isn’t quite the hideout from material madness I thought it would be 20 years ago. Elsewhere, they’ll be looking for someone to blame. As I told my staunch Democrat friends back in 2004, the day would come when they thanked their lucky stars Bush defeated Kerry in that elections. They might even regret taking over Congress in 2006 if 2008 unfolds the way it might.

I remember getting a look at the 1990 Census of Population, and comparing figures for occupations with figures for educational attainment in 1950, 1960, 1970, 1980, and 1990. The latter year was the first time the number of college graduates age 25+ exceeded the number of Americans in managerial and professional occupations. I saw that and knew the first President Bush was toast.

We had had really bad recessions in the mid-1970s and early 1980s, but the early 1990s recession was the first time college graduates really faced "hard times," and they weren't pleased. Back then they blamed poor minorities, immigrants, and those living in older central cities for the most part, particularly in 1994. Who is to blame this time, Mr. and Mrs. Moreland?