A binge is a binge

Brad DeLong brings to my attention this article, which purports to show that America's "consumption binge" over the last couple of decades was actually just a rise in health care costs:

Everyone knows that American consumers have been on a binge for the last ten or twenty years. Data connoisseurs could even tell you that the consumption share of GDP rose from an average of 64% in the 1980s to 70% in 2007–8. But while the numbers are accurate, they’re not really telling the story of a binge. Much of the rise has come from spending on health care, not flat-screen TVs...

Medical spending accounted for almost a third of [the] rise [in consumption] between 1997 and 2008. Energy accounted for another third. Spending on goods accounted for just 3% of the rise, or 0.1 point. In other words, the familiar story that Americans went hogwild buying all kinds of stuff is wrong. So the much-lamented decline in the U.S. savings rate begins to look less lamentable in light of this news.

So, even if we agree that "almost a third" = "most", this analysis (which Yglesias made a while ago) contains within it an important assumption: that only changes in spending matter, as opposed to levels of spending.

In other words: In the 2000s, Americans' real wages and real income declined, even as health care, education, and energy costs soared. Americans could have responded to these pressures by consuming fewer goods - fewer big-screen TVs, ipods, etc. - but they didn't. Americans could have responded to these pressures by living in smaller houses, closer to their workplaces - but they didn't. Instead, Americans kept their spending on consumer goods roughly flat, and continued to live in bigger and bigger houses. And they borrowed. They borrowed a lot. A huge amount. Far more than ever before.

Not only did Americans borrow, not only did they fail to reduce their consumption of goods, but they made political choices that ensured that health care costs would continue to rise. Al Gore, John Kerry, and congressional Democrats from 00 through 04 ran on promises to contain health care costs. The Republicans, by contrast, had soundly defeated the nation's best hope for containing costs back in 1993, and ran on promises to do more of the same. Meanwhile, Democratic complaints about stagnant incomes were mostly ignored before the current crisis hit. By voting for Republicans in 00, 02, and 04, America's citizens made sure that they would have to keep borrowing and borrowing in order to have health care, a big house, and a big-screen TV all at once.

So don't tell me that Americans didn't get ourselves into the mess we're in now. We could have tightened our belts, lived frugally, and angrily demanded change at the ballot box. Instead, we mortgaged our futures, refused to cut back on anything, and let the same old corrupt do-nothings run the show until the economy outright collapsed.