Make that change

I grew up in a rich country. My family wasn't rich by any stretch of the imagination but we had everything we needed. As a result I learned from an early age that there was a clear difference between what I needed and what I wanted. There was a reason why my parents didn't buy me everything I wanted. For starters, I was one of four boys, so there were multiple needs that they were required to meet. I knew in one sense that I had everything I needed and for that I was grateful. When I got my first job and started earning I began to buy some of the things I wanted - a new bike, a CD player, CDs and more. Because I was still living at home under the gracious care of my parents most of my basic needs were still being looked after. This spending freedom meant that I denied myself nothing. Trouble began for me when I moved out on my own and had to start looking after my needs as well as my wants. I had grown accustomed to getting the things that I wanted. When my needs cut into my discretionary spending I did what most college students do - I took advantage of one of the two dozen credit card offers that targeted students living on little income. By this point my college tuition and books ate up most of my money. So to eat and buy the CDs I 'needed' I had to use a credit card. I could have changed my behavior; I should have changed my behavior. Whenever I thought about making a change I would take a look around. Everyone else was doing exactly the same thing. Why should I change? No one else seems to be worried about the debt they were piling up. "I'll be okay," I told myself.

Lost opportunities

When I left College I was given an opportunity to go to Graduate School. My grades were good enough to get into the programme but the tuition bill frightened me. I had just completed four years of study with what I thought to be a sizable student loan. The tuition bill for the Masters degree was going to be ten times what I already owed. So I put it off. I decided to continue to work in the hope that I would be able to save enough to pay off my student loan and one day be able to go back and study. But this was a lot harder than I thought. I did what I thought I could to get by, but this included the continued use of a credit card to help out.

Chen and the 'benefits' of Affluence

Why am I telling you all this? I read two articles this week that sparked some reflection on the current state of the world. The first article was about how young Chinese workers are beginning to say no to dead end jobs (Foreman, 2010). Foremen spoke with Chen Qinghai, a 19-year old factory worker who was looking for a more fulfilling job. Speaking about the difference between his and his parent's generations, Chen told Foreman that, "It's true that we're less willing to eat bitterness" (Foreman, 2010). Chen also informs Foreman that his generation is better educated and know their rights. This morning when I woke up, I woke up with over a two billion other people who want a better life then they have now. What's the difference between me and Chen? I want a better life, but I don't necessarily need one. I'm already living better than the majority of the world's population. What will happen when my generation discovers that the privileges we grew up with aren't necessarily our rights? When I realize that all that I have is not a right, but a privilege, how will that change my thinking about my current way of life? A 'generational war' has commenced according to Bernard Hickey of interest.co.nz. In Hickey's terms, the war is between Baby Boomers and Generation X. He is right in one sense, but I don't think the war will be that simple. Battles will also take place among Generations X, Y, and Millennials who will be up against the billions in Asia and other parts of the developing world. We won't be able to fight a war on two fronts. We'll either squabble over the inheritance that will be whittled away by parents and grandparents by ballooning health care costs while paying higher taxes to help support the greater strain on public funds, or we'll come to the realization that times have changed. An affluent lifestyle isn't my right. My focus needs to be on what I can do or create to help my family and others as opposed to waiting for what I believe I deserve. But we haven't learned much from the GFC (Global Financial Crisis). It feels like we're just waiting for things to come right so we can resume our way of living. But things have fundamentally changed.

This leads me into the second article. Jaime Doward (2010) reported on research conducted by two Canadian economists, Curtis Eaton and Mukesh Eswaran (2009). In brief, Eaton and Eswaran found that once a reasonable standard of living was reach by a country's population, there is little benefit, in fact, a negative benefit to gaining greater wealth. In other words, buying 'toys' will make me feel good but will potentially make others feel worse, especially if they can't afford the same objects. Status symbols with no intrinsic value will drive those without to want these symbols so that they fit in. This will drive them to use debt to achieve a lifestyle that really can't be sustained. This was me during my university years. I wanted the status symbols (CD players, iPods, cell phone, etc.) so that I would fit in. These were all things that I couldn't afford, but they made me feel better (at least until I got the credit card statement). 

Making a change

It's been ten years since I graduate from university. Much in my life has changed, but I still get aggravated by the fact that I was not able to change my spending behaviors when I was younger. I see now the difficult financial position I put myself in and often wish I could have a few words with the university 'me' that applied for that credit card. It was my fault that I got into the financial position I was in. But I was helped along by a culture that held up 'things' as a sign of importance. I was alright if I had things. I was just like everyone else. I fit in. But I can recall few peers or superiors who demonstrated a different kind of lifestyle and who chose to behave differently with their money. I'm in a much better position now thanks to my wife. Living in relationship has taught me a lot about reorganizing my priorities. I still get things mixed up from time to time, but I'm getting better (I hope). So on the back of reading about Chen and the empirical study that shows that I'm worse off when I have more than I need, what am I to do now to change my behaviors, particularly with regards to spending?

Firstly, I need to rethink my attitudes and behaviors toward money. I think one of the hardest things to do is to fast. A fast is when you give something up for a specified period of time. If you want to try something hard, give up spending for a day, week, or month. Spend money only on necessities like food, your mortgage/rent, and bills. For those of you who are religious, don't give up on tithing. See how you go with this. Budget agencies will often get you to ask the question: "Do I need it?" A need is defined as something you can't live without. I can't live without food so this is obviously a need. But do I need to eat fish and chips from the take-away shop or will I save money by making fish and chips at home? I don't need the latest Lady Gaga CD, although I may want it. It's pretty simple to determine the difference between a need and a want. But it's something entirely different to ask and answer the question when you're holding a shiny new Blu-ray of your favorite film.

If you have trouble determining whether or not the object you're holding will satisfy a need or a want, the second question you can ask is: "how will this investment help my family or others?" If you have trouble saying no to something you want it can often help to think of someone else while making your decision to buy. This one can be just as tricky as the first, but it moves the decision from self to others, which may help you paint a more realistic picture of reality. If I'm thinking about buying a house, for example, I might be able to justify the purchase if I think that my family will benefit from having a home of their own. If I have a suitable deposit and can afford the mortgage payments without having to use my credit card on a regular basis to pay for my basic needs, then a house purchase is probably a good idea. If I don't have the deposit and know that the monthly payments aren't sustainable, but do it anyway just because others are doing it and I don't want to miss out, then it's probably not a good idea.

Finally, I need to think about others more often than I do, even when I'm not being faced with a decision to purchase something. When I read about Chen this week I realized that there are a lot of people in the world striving for a 'reasonable standard of living'. Eaton and Eswaran (2009) found that greater affluence leads to a breakdown of trust and community because we spend more time pursuing status symbols and less time focused on people. I need to think of my family first but I can't stop there. I must consider my neighbors, community, country, and the rest of the world. This is a pretty big task which is probably why most of us don't bother. It's so much easier to just think about ourselves.

With these things in mind, we might just find happiness in the middle of a recession. If enough of us try living this way, we might even find ourselves coming out of the recession as the result of dealing with the fundamental behaviors that got us into the mess in the first place.   

References

Doward, J. (2010, March 15). Life & Style: Too much wealth can make us worse off: study. New Zealand Herald. Retrieved from http://www.nzherald.co.nz/lifestyle/news/article.cfm?c_id=6&objectid=10632032

Eaton, B.C., & Eswaran, M. (2009). Well-being and affluence in the presence of a Veblen good. The Economic Journal, 119 (539), pp. 1088-1104.

Foreman, W. (2010, March 15). Economy: Younger generation of Chinese reject dead-end jobs. New Zealand Herald. Retrieved from http://www.nzherald.co.nz/economy/news/article.cfm?c_id=34&objectid=10632062

Hickey, B. (2010, March 15). Business: Show Me the Money: First shots in generational war. New Zealand Herald. Retrieved from http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10631831

Plasmas, baches, and saving behaviours

David Van Beima wrote an article for Time magazine in October 2008 entitled Maybe We Should Blame God for the Subprime Mess (Van Beima, 2008). The New York Times reported that the city of Cleveland, Ohio sued 21 banks because of the abundance of subprime mortgages that were sold in their city (Maag, 2008). There seems to be a lot of finger pointing going on, particularly in the world of economics and finance. We’re faced with the massive global failures in our financial systems and free market economies. As many as 20 million people may be added to the unemployment rolls worldwide before the ‘crisis’ is over (Newstalk ZB, 2008). The finger pointers include those who have lost their homes due to mortgage sales; those who have lost their retirement due to dropping stock prices; and governments who sat back and allowed it to happen in the first place. In all this finger pointing – in all the ranting, raving, and analysis that has been done – we hear very little about the need for us to adjust our individual and collective behaviours.

Micro and macro economics involve various systems. Little changes in one place can mean big changes in another. Our individual and collective behaviours have added up to the mess that we’re now in. Has greed been involved? Yes. Is there justification for $500 million compensation packages? Probably not. At the same time, however, there were those who took out mortgages when they knew they couldn’t afford them. There were others who invested in things that they really didn’t understand. And even though we intuitively know that in all things it is wise for there to be a sense of balance, our equilibrium was out of whack in global proportions.

As the current economic downturn is expected to go well into 2009 and perhaps early 2010 there will be ample time for us to reflect (mostly because we’ll be spending less at the malls and shops). While we cool off from buying house, going on shopping sprees with next year’s wages, and buying big screen plasma TVs just because everyone else is, let’s consider the following:

How will I as a Christian change my behaviours?

What will I do that will impact the global market and the economy?

How will I help to create jobs that will lead to growth?

How will I partake in innovation and other things that will help build an economy?

How will I as an individual in society save, spend and use credit responsibly?

We need to ask all of these questions individually while we are pointing fingers at those who have made obscene amounts of money over the last several years during the economic boom. The economic and financial systems we have are not perfect. But these systems are run and managed by individuals. The systems may need to be adjusted – but so too our behaviours and attitudes. I’m not advocating poverty nor am I advocating prosperity. Rather I would argue for a balance and a renewal to our commitment to find the voice that we as Christians should have and must have in a society that serves mammon, not God.

There have been few Christian voices that have called out in the desert. Many of those that I’ve read point to the top. They appear to absolve the individual of any responsibility for the current situation and suggest that we leave it to God to sort out. As we enter into a time at the end/beginning of the year, it is a good time for us to stop and pause. How have our lives been different from those around us who don’t know and follow Jesus? In what ways can we speak out of our own experiences of God’s faithfulness and his blessings in, on and around our lives? I think we should ponder these things in the hopes that we as a Christian community (both micro and macro) might be able to speak about the experience that we have, but more than that, that we might be able to demonstrate the experience we have in the way we live our lives – not just on Sunday, but every day of the week.

Maag, C. (2008). Cleveland Sues 21 Lenders Over Subprime Mortgages [Electronic Version]. The New York Times. Retrieved 25 November 2008 from http://www.nytimes.com/2008/01/12/us/12cleveland.html?_r=1&scp=1&sq=cleveland%20sues%2021%20lenders&st=cse.

Newstalk ZB. (2008). Global unemployed to rise by 20 million [Electronic Version]. The New Zealand Herald. Retrieved 26 November 2008 from http://www.nzherald.co.nz/world/news/article.cfm?c_id=2&objectid=10544621.

Van Beima, D. (2008). Maybe We Should Blame God for the Subprime Mess [Electronic Version]. Time, October 3. Retrieved 25 November 2008 from http://www.time.com/time/business/article/0,8599,1847053,00.html.

America – A voice or an echo?

An echo is sound reverberating off a mountain, hill or wall; a reflection of a sound, heard again; a person [or group of people] reflecting the ideas, opinions, or action of someone else. In Classical Mythology, Echo was a mountain nymph who longed for the love of Narcissus until all that was left of her was her voice (Definitions of 'echo'). Has America become only an echo of the shining light on the hill that it once was?[1] Is it only an imitation of its former self? Does it still possess the voice capable of ringing from the mountaintops? Before I get too sentimental carried away with ideology, we need to reflect further on these questions.

Standing on the precipice of 2008 America is poised on a year of change. The most obvious and most visible will be the selection of a new president to lead the country. In eleven months, Americans will make their decision. In a little over a year, a new voice will be heard coming from the Presidential pulpit. Will this voice be strong and new, or a mere echo of all that has been said before? Will voters turn out to re-elect someone who sounds like everyone else or someone who sounds different? Will American’s exercise their democratic right (some say duty) and show up at the polls or will they leave the decision making up to those who do get involved. A recent Harvard Law Review Note argues a case for compulsory voting in America. The argument considers the fact that only about 60% of Americans voted in the 2004 presidential election. The note cites sources that put European voting at over 80% (The Case for Compulsory Voting in the United States, 2007). New Zealand’s Ministry of Social Development reported that in the last general election (2005) there was a 77% voter turned out (Ministry of Social Development, 2007). America considers itself to be the proponent of liberty and democracy, yet it falls behind when it comes to demonstrating its commitment to the democratic process. Is voter turnout an indication that the American voice is dwindling into an echo? Or is it a sign that there is waning trust in the institutions and individuals who govern it?

Financial challenges also face America in 2008. The sub-prime mortgage crisis that I wrote about previously, is probably only the beginning. Financial institutions will continue to be hurt by the ongoing uncertainty caused by this crisis. The price of gold is surging towards record highs, this in part due the weakening American Dollar (The Associated Press, 2008). It took America years of struggle to establish itself on the world stage. Its citizen’s worked hard, made sacrifices, and were commitment to the ideals of the American dream. As a result, it grew into the economic powerhouse of the 20th century. It now lags behind many developing economies. For 2008, the International Monetary Fund is projecting that US Gross Domestic Product [GDP] will grow by 1.9% while its projections for other emerging and developing markets will grow by 7.4% (International Monetary Fund, 2007). A note of caution – economist think that GDP is not an accurate indicator of economic wealth. Economist have been increasingly questioning the usefulness of the data gathered to generate GDP, particularly since it fails to reflect key elements such as the value of volunteerism, the cost of natural resource depletion, and tasks formally done by individuals that are not done by service industries (like child care and house cleaning) (Robert D. Hershey, 1995).

If America wants to be more than an echo in the 21st century, then political and economic restoration, both domestically and internationally, are vital to reclaiming its voice. Having read or heard about the rise and decline of great civilizations, I have often reflected on where America is in the cycle. I came across this concept recently in Michael LeGault’s book Think. He cites historian James Anthony Froude who summarizes this cycle: “Virtue and truth produce strength, strength dominion, dominion riches, riches luxury and luxury weakness and collapse – the fatal sequence repeated so often” (LeGault, 2006, p. 321). America’s richness and luxury may be giving way to weakness and collapse, but it is not too late. If it wishes to get its voice back it must be prepared to sacrifice again. This will be a painful thing for those American’s who may feel like they have been making sacrifices over the last few years. It will mean settling for lifestyles that are within our means. It will mean helping out those who are less fortunate than us. It means voicing our opinions. It also means closing our mouths, opening our ears and listening to the opinions of others. A voice must be heard and to be heard it must be listened to. It is not enough for us to allow everyone to just have an opinion. We must restore the expectation that if an opinion if voiced, the one voicing that opinion should also be willing to backed up and defended it. In a politically correct society, we expect that we can say whatever we want and others will have to accept it because we say it. In a democratic society, one that is healthy and robust, there is room for plenty of opinion. However, we must also fight to make room for those opinions to be challenged, modified and even recast if needs be.

The Founders fought long and hard to form the words of the Declaration and Constitution. They argued over words and meaning of words. They knew the magnitude of what they were writing and knew the importance of getting it right. They were aware of the impact of spoken and written word: “We hold these truths to be self-evident” and “We, the people of the United States….” They used these words for a reason. They did not write “We, the Catholics, Protestants, Jews, Muslims and Hindus” or “We, the English, French, Polish and German of the United States” or “Some of us hold these truths and some of hold other truths to be self-evident.” I hope you get the point. They were not satisfied to throw out a few thoughts and opinions on government. They would not have expected a government formed on the opinions of one or two to stand for over two hundred years. They debated and argued their thoughts and opinions. But here’s the crucial part, they came to a conclusion, a compromise that they decided they could live with. A politically correct society is apt either to compromise without conclusion or come to conclusions without compromise. The Founders considered the difficulty and challenges they faced as worthwhile because they believed that it would lead to a better future for their children and grandchildren. America must restore its focus on the future. It cannot let a materialistic ‘me’ generation take hold or else the riches and luxuries that our parents and grandparents worked so hard for will lead to weakness and decay. America must rediscover what its virtues and truths are if it is to return to a position of strength. I choose not to name those virtues and truth, because I believe an ongoing healthy debate and discussion is always required to sort out what they are or should be.

America (and the world) stands on the precipice of a New Year, a year that will bring many new challenges. Collectively and individually it must make a crucial decision. Will the voices of the Founders become merely an echo, a shadow of what was? Or, will its people find their voice again and again proclaim, “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.”

In closing, I want to share few words from one of America’s Founding Mothers. Abigail Adams, in a farewell note to her son John, wrote about the times in which they lived and the importance of taking full advantage of them, not only for the present, but for future generations. She wrote:

It will be expected of you, my son, that as you are favored with superior advantages under the instructive eye of a tender parent, that your improvements should bear some proportion to your advantages. These are the times in which a genius would wish to live. It is not in the still calm of life, or the repose of a pacific station, that great characters are formed. The habits of a vigorous mind are formed in contending with difficulties. Great necessities call out great virtues. When a mind is raised, and animated by scenes that engage the heart, then those qualities which would otherwise lay dormant, wake into life and form the character of the hero and the statesmen. (McCullough, 2001)

May America rediscovery its virtues and truths, and in restored character, contend with the difficulties it now faces.

Bibliography

Clinton, W. J. (2004). My Life. London: Hutchinson.

Definitions of 'echo'. (n.d.). Retrieved January 5, 2008, from Dictionary.com: http://dictionary.reference.com/browse/echo

International Monetary Fund. (2007, October). Data and Statistics. Retrieved January 5, 2008, from International Monetary Fund: http://www.imf.org/external/datamapper/index.php

LeGault, M. (2006). Think: Why crucial decisions can't be made in the blink of an eye. New York: Threshold.

McCullough, D. (2001). John Adams. New York: Simon & Schuster.

Ministry of Social Development. (2007). Voter Turnout. Retrieved January 5, 2008, from The Social Report: http://www.socialreport.msd.govt.nz/civil-political-rights/voter-turnout.html

Robert D. Hershey, J. (1995, December 19). Business - Counting the Wealth of Nations;G.D.P.'s Accuracy Is Under Attack From All Sides. Retrieved January 5, 2008, from The New York Times: http://query.nytimes.com/gst/fullpage.html?res=9803E5DC1439F93AA25751C1A963958260

The Associated Press. (2008, January 3). Gold Futures Near Record High. Retrieved January 2008, 5, from The New York Times: http://www.nytimes.com/aponline/business/AP-Commodities-Review.html?_r=1&oref=slogin

The Case for Compulsory Voting in the United States. (2007, December). Retrieved January 5, 2008, from Harvard Law Review: http://www.harvardlawreview.org/issues/121/dec07/notes/compulsory_voting.pdf

[1] Bill Clinton, in his autobiography, reflects on his journey through Russia and the Baltic States in the late 60s, recalls that American Democracy was still seen by those under communist rule as ‘a beacon of light.’ See (Clinton, 2004, p. 170)