Tuesday, May 30, 2006

A Thousand Little Cuts 

Even though the U.S. economy is doing well, people don't feel like it's doing well. That's the gist of this article on why talking up the economy might not be a good vote-getting strategy for Republicans this year.

But why do people have a pessimistic view that seems at odds with economists' numbers? I think it can partly be explained by a forum post I read recently made by a mom despairing over her family's finances. She listed their major expenses and asked for help from fellow posters in creating a budget. Among those expenses were over $100 for her cell phone and around $60 for her husband's cell phone.

As little as ten years ago, only people with garrulous out-of-state relatives paid $160 a month for home phone service. Today, someone who barely makes enough to get by considers that a necessary, basic expense (she needed her phone for work, she said). Read the comments that follow this Slashdot story and you'll see a litany of complaints about phone companies charging customers recurring fees for every least little feature, driving up prices while guaranteeing the companies a steady source of income. And it's not just cell phones: many Americans pay monthly fees for cable TV and Internet access as well. And how about that ?

The "subscription model" is nickel-and-diming middle-class Americans to death. You can't just cut back on entertainment the month your car breaks down if you've got Netflix and emusic subscriptions to pay. And people get trapped into contracts, so what ought to be an optional expense, like the cable company's Sports Package, becomes part of the obligation that must be met each month.

People are spending a larger chunk of their salaries for "services" and getting fewer tangible things in return. No wonder that, even with all our wealth, we don't feel like the economy is doing well.


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