BARE NECESSITIES?

In an 8/26/07 Chicago Tribune front page article outlining the all but inevitable crunch in revolving lines of personal credit (i.e., credit cards), Harvard law Professor Elizabeth Warren seeks to deflect blame for the problem of credit overextension from the very people who got themselves into financial trouble:

“The real problem lies in the basics: Median earning families simply don’t have enough money to pay the mortgage, buy health insurance, pay for transportation and day care, and still put groceries on the table.”

Professor Warren may be technically right. But could the problem lie in the expanding definition of “the basics”? Perhaps young adults don’t have to live as well as their parent live as soon as they enter the job market. Perhaps a $400,000 house is not a necessity after all, maybe a $200,000 house would do just as well. Maybe people ought to do something really unconventional and rent for a few years and save (Perish the thought!) for a generous down payment on a home in order to make a mortgage payment more affordable. Transportation? How is that defined? Many people consider a $30,000 car basic transportation. Maybe a $20,000 car is more in order. Perhaps a Honda is as good as an Acura, but how can we expect people to endure the shame of having to face the neighbors in a (Sniff!) “mass market” car. Strictly for the plebes! As sacrosanct as health care is in this country, we clearly spend far too much taking care of ourselves. Years of having someone else pick up the tab for our doctor visits have made us a society of hypochondriacs. We go to the doctor for minor allergies, heartburn (er, sorry, acid reflux disease), and other minor maladies that were once considered part of life and were best treated by waiting them out. We also indulge ourselves in the yearly physician’s fishing expeditions called “checkups,” which tap our wallets (or our insurance company’s reserves and, consequently, our health premia) and feed our anxiety and paranoia, which themselves take their toll on our health. These costs were always there; now that consumers are being asked to pay for more of the “health care” they demand, they are finally beginning to notice.

Doubtless, one can cite examples of people in financial trouble though no fault of their own, whose money problems arose from health troubles, divorce, etc. No one, however, honestly believes that the credit crisis in this country is solely, or even largely, attributable to blameless individuals who got into trouble through bad luck or the vicissitudes of the new economy. If you really believe that, take a look around your neighborhood, observe your neighbors’ spending habits, and tell me with a straight face that our credit problems arose from those who had a round of bad luck or from people merely trying to provide the real necessities. If these were the only people in credit trouble, the scope of the problem would be small enough to render it imperceptible.

The problem, as was alluded to earlier in this excellent Tribune article, is that median earning families don’t want to live like median earning families. Everyone has to have everything…now. The source of this fixation lies deep in our new national psyche: We have bought the codswallop that having the latest gadget or gizmo with the label that the addle-brained opinion makers have suddenly deemed “stylish” will make us happy or win us the esteem of our neighbors. Instead, this fatuous pursuit leaves us frustrated and resentful. While we all hail the virtues of “simple living,” few of us practice it. This is a shame, because the rewards of simple living, of being content with one has and of not being concerned with what one’s neighbors have, are real and innumerable. Someone said that about 2,000 years ago, but no one listens to Him, or his colleagues in faith, any more. Our spiritual vacuum might be the ultimate source of our financial problem.