No, I have not been living in a cave for the past year.
It is true that the economy is not doing too well these days. I would be remiss if I were to underestimate the tragedy of lost jobs, shuttered businesses and wrecked lives. But at the same time, I wonder how much of what we are going through is a simple matter of our reaping what we sow.
According to a recent statistic, the average Chinese person lives on 75% of what they make, while the average American family lives on 110% of what they bring home.
The problem is not just confined to the USA: When I left England fifteen years ago, there were few Credit Counseling firms; now, they are everywhere and are even advertising on TV. In the early 1990s, a Mortgage lender would lend you 3-5x your annual salary. In 2007 (the last time I was there) they were lending 8-10x your salary. How long did they think that this state of economic gravity-defying would last?
To make a few extra bucks, the corporations that used to employ us have happily outsourced our jobs to China. This sounds like a good thing, but when the lion’s share of our manufacturing jobs are elsewhere, how will we earn the money to afford the goods that they produce? For years I have been saying, half-jokingly, that one day we would wake up to find all of our money was over there, and all of their plastic crap was over here. Now it is not so funny.
Everywhere I look, new Mini-malls and retail parks are springing up on any bit of spare land that the developers can lay their grubby hands on. Before the economy tanked, I used to ask “Who is going to support these businesses with their purchasing dollars?” Nowadays I ask “What are the developers smoking?”
I am not mad at the developers – they stay in business by building stuff, whether it is useful or not. I am not mad at the Chinese, either. While I may disagree with their Government, the people strike me as hard-working, thrifty and industrious. I’m not even mad at the corporations; you can rely on them to go where the money is…
I’m mad at us.
We have been living it up since the 70s. This is not in itself a bad thing, but it does mean that a whole generation has grown up knowing nothing else. I have often mused that when a “starter couple” cannot afford a “starter home”, something is wrong. But that is not entirely fair, and it is not entirely true – today’s couple wants a 2500-square-foot four-bedroom MacMansion in the nice part of town in which to raise their 2.2 kids. Meanwhile, on the other side of town, Grandma still lives in the 700-square-foot two-bedroom house in which she and Grampa somehow raised six children and put them all through college… on one blue-collar salary.
It seems like everyone drives a nicer car than me. Given that my car is 17 years old, this is not exactly difficult, but I am constantly astounded at how many people’s wheels seem a little out of step with their earning power. In The Millionaire Next Door, Thomas Stanley draws a parallel between “Cadillacs” and “Clunkers”, both in terms of vehicle and lifestyle. In Grampa’s day, your status was reflected in the car you drive. This is still seen today in GM’s badge-branding; the same vehicle is often released with different trim levels and marketing under the Pontiac (young/hip), Chevrolet (Family) and Buick (Professionals/old folks) brands.
These days, however, your car does not reflect your status; not even close. I am amazed at the cars driven by some people I know. Look at the cars being driven out of your local High School at kick-out time; how many clunkers do you see? Not many – but there are a lot of late-model sports cars, lots of European Imports and not a few Lexuses (Lexii?) I don’t have anything against High School Students driving nice cars, but how many of the students driving them even have jobs? How many of them will be pushing a mower this summer? Precious few, if my neighborhood is anything to go by.
Whatever happened to the “start-at-the-bottom-and-work-your-way-up” mentality? What about “Paying your dues”? Where did Hard Work, Honesty, Attitude and Character go? Most of the High School Students that I meet are genuinely clever and intelligent, but have no clue of what is about to hit them when life drops them into the proverbial shark tank.
But they’re not to blame; for decades we have lived high on the hog, aided and abetted by a media that pushes the affluent lifestyle as the be-all and end-all of the American Dream. And we have ended up with a society whose drug of choice is the antidepressant.
The typical American family – and this includes people I know – have forgotten how to save. They live on more than they make, have no plans for retirement (spending all the money now – usually on the kids), and I am appalled to hear that most of them have little or no savings. Why are we so surprised that they are struggling?
Where did we go wrong? How can we get out of this hole? And how do you combat a multibillion-dollar industry that is set on sucking all of the money out of your wallet? Ben Franklin used to say “Out of Debt is Out of Danger”. He must be spinning in his grave.
President Obama is right – it will take time and hard work to turn this ship around (though I suspect that we lack the will to make the sacrifices to succeed). But it would be unfair to blame either him or his predecessor – we got ourselves into this mess. Theodore Roosevelt said that “The things that will destroy America are: prosperity at any price, peace at any price, safety first instead of duty first, the love of soft living and the get rich quick theory of life.”