This article is an interesting read about how debt has rapidly seducing our society. That between 1989 and 2001, as a nation we tripled our credit card debt to $692 billion, and last year it hit $937 billion. Ouch. The article asks what happened to our frugality of a nation? Our capitalistic natures and our productivity?
The article claims that we’ve increased our social and environmental morals but loosened our consciousness about debt and money. And our government has played a huge role in this mentality. State governments are running lotteries, with 20% of Americans playing regularly spending $60 billion annually. Unfortunately the people who play the lottery are mostly part of the lower income brackets. A family making $13k/year spend $645 on lottery tickets or 9%!
Also credit card lenders have seduced young college students into debt early. While payday loans have allowed people to get cash they haven’t yet earned! And the government allows all of these practices.
But is it really the government’s business or fault? The article suggests taxing consumption and not taxing savings. It also suggests that churches and foundations take the place of payday loans. And it also suggests programs be put in place to educate the middle and lower classes.
I have to disagree. It’s not the government’s fault or business. It’s our society. We say it’s okay to keep spending. We idolize a keeping up with the Joneses lifestyle and do it ourselves. We never bother to tell our children we’re deeply in debt. We can’t afford a private university for college.
We keep consuming. The only way to change that is not by force, but by hitting rock bottom. You can lead a horse to water but you can’t make it drink. Well the perfect example is gas hitting $4/gallon. Americans are spoiled by cheap gas. So we drive massive SUVs, trucks, cars, etc. We drive because it’s cheap. Well now that it’s becoming expensive like every other country, suddenly we’re changing our driving habits. Suddenly SUVs, cars with poor gas mileage are becoming passe and out. Americans are using mass transit in record numbers! But we refused to change until we COULDN’T AFFORD to drive. Suddenly we’re whining over $4/gallon.
And I think we’ll continue down this path of spending. We’ll continue to consume and spend freely until we’ve hit rock bottom. Until we are ready to admit we have a problem there is no way of fixing the ”problem”. We’re destined to like our housing bubble to continue until people admit defeat.
2 responses so far ↓
1 Todd the Bod // Jun 17, 2008 at 8:59 am
Three problems that come to mind:
The government tells us we need to consume in order to keep the economy going. Unfortunately this is in part true. Really though, how much of that is staying in this country and providing good jobs to our citizens?
The government itself sets a bad example for its citizens by spending money it doesn’t have on things it doesn’t need.
And as you mentioned, keeping up with the Jones’s. It’s amazing how powerful that temptation can be.
2 Clair Schwan // Jun 17, 2008 at 9:25 pm
If you look at American history, you’ll see that we aren’t very proactive, but instead we are very reactive. It is part of our “hitting rock bottom” culture.
Changes in driving habits and use of mass transit are part of that reactive culture. You’ll notice that everytime there is a jump in gas prices, there are land yachts and large trucks and SUVs for sale.
The same reactive culture applies to debt. We are great at needing help to get out of debt, because we’re at or near “rock bottom”, but there aren’t many people standing in line trying to figure out how not to sink in the first place. The attitude is simply : it isn’t a problem yet, so there is no need to react.
We also have a very short memory. If it isn’t stuck in our face, on the “news” each night, then we don’t recognize it as part of our world. This aspect of our culture goes hand in hand with our reactive nature. Once things are back in our sights, then we react to them once again.
Lastly, we have a want-it-now attitude. The idea of delaying gratification just isn’t appealing. If we have to plan, work and save, then it is just too much work for many of us. And, it isn’t near as much fun. We want what we see on TV, and we don’t want to have to wait.
How these things get fixed is on an individual basis, some through foresight and some through hard experience. Those people and families with a different view of the world and a different culture than what is depicted in the world of commercial advertising will be the ones who are generally more successful.
Everyone learns differently and at a different pace. I believe that people generally won’t change what they are doing until they get mad enough to make a change. This is the “rock bottom” aspect of our decision-making. We tend to need that wakeup call - it is part of our reactive culture.
While some of us work on keeping ourselves in a proactive mode, the best thing we can do is make certain that we aren’t enabling others to be irresponsible by “helping” them too much.
If we lend money, have them stay at our house, or otherwise help fix their problems, then we aren’t doing them any favors. We aren’t doing ourselves any favors either as we will likely drain ourselves in many ways. My personal experience suggests: stay away from those “tar babies”.
Some folks have to get themselves out of trouble in order to understand just how deep they are into it. They need to understand that choice have consequences. It is up to each family to make certain they instill values that help their members make better choices.
We can’t legislate a better society or a better world, it has to be cultivated at home.
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