Jul
19
2010
When Do I Prosper?
Author: Gary HartWe Americans may be entering (or have already entered) a period of national re-evalution. It was fashionable a few years back for “values” to be a political buzzword, meaning if you believed in “values” (undefined) you voted in a certain way. But now, we may actually be forced to define what our true values are.
In the past three decades or more we have all become consumers. Bigger houses, bigger cars, more things. At the same time we were producing less, importing more, and basing our economy on manipulating money to make money. The results were predictable. Huge trade deficits. Selling US bonds to finance the deficits and to buy more things.
It’s pretty obvious we can’t keep doing this forever. This pattern has brought us to the mess we are in today. The question is whether we’ll find a way to pick up where consumption, money manipulation, and unproductivity left off, or whether we will restore a national economy that produces, saves, invests, makes things, and pays its way.
Ottawa, Kansas, in the 1950s was not a bad place. We didn’t have the luxuries of today and we didn’t buy things we couldn’t afford. But we had a roof over our heads, adequate nutrition, and affordable health care. Everyone worked, in my case starting at the age of eleven. (I don’t think there were child labor laws then.) We didn’t spend money we didn’t have. There were no credit cards. And my parents would have been embarrassed to go to the bank and ask for a loan to buy more gadgets. The Depression taught them, and they taught me, don’t go into debt.
Paul Volker is an economic statesman. He has been saying exactly these things for more than thirty years. The President should ask him to write this speech and should give it several times as fireside chats. I would be amazed if Republicans (or Democrats) found a way to criticize it. What could be more conservative than restoring America’s fundamental values.
July 19th, 2010 at 7:57 am
A simple axiom – live beneath your means – applied then and applies now. This is a message I’ve tried to communicate clearly through words and actions to my own children.
However, in this age of stuff, gadgets, instant gratification and an economy that is increasingly based on consumption, it’s a challenge to get kids to understand the need to save for their worldly wants and needs.
July 19th, 2010 at 9:20 am
I never thought I’d see the day come when someone could express my thoughts almost exactly in such a succinct way! I have said this myself for about 20 years, when I realized my ex-wife was stockpiling dry goods and knick-nacks and was charging most of it on a credit card with 23.9% interest! I said then, if we have enough towels and washcloths for us to survive a week, then that was enough! And the gadgets today? Everybody thinks they just HAVE to have what the other guy has. Pfft – my TV is 9 years old and still looks as good as the day I bought it. My car is a 1993 Nissan Sentra with 126,000 miles on it, and it runs like a top. People have forgotten how to be frugal, and they don’t like it when you call them out on it. Great post – I hope many people hear it!
July 19th, 2010 at 9:20 am
Here’s a fast prescription for any sane American who wants to be far better off financially a year from now than they are today:
For ANY discretionary purchase henceforth, you MUST put $1 into PERMANENT savings for every $1 you want to spend on something you don’t really need. So, if you want a new plasma TV for $1,000, then you have to wait until you have $2,000 cash, then pay cash for the TV and put $1,000 into a permanent savings account.
I guarantee you three things: You’ll buy less “stuff” this coming year, you’ll be far less in debt a year from now and you’ll have a pretty nice nest egg a year from now.
July 19th, 2010 at 9:38 am
Your words are so very true, wish I had read them sooner. As Gordon Livingston so aptly put it”…too soon old, too late smart.”
July 19th, 2010 at 9:49 am
My parents would be embarrassed to give a simple answer to a complex problem.
They were embarrassed to lose their investment in a community bank because the officers of the bank were making loans to people who could not possibly repay them. The bank officers pocketed their loan origination fees and the like and took their money off the top, then left both the bank and the community high and dry.
My wife and I don’t pay any interest on any purchase, ever. Still, we get 20 to 20 offers for credit cards and 2nd mortgages made simple every week. Our shredder is in constant use.
Simple and ignorant got us where we are. Simple and ignorant won’t fix it.
July 19th, 2010 at 9:53 am
Gary, Thank you for your wonderful post.
America will learn soon enough.
Depressions have a way of educating even the the most ruthless.
July 19th, 2010 at 10:10 am
My parents used to say, “You’ve got to save for a rainy day.” To THAT I reply, “THAT assumes there are sunny days! And also that there are more sunny days than rainy ones!”
I’m surrounded by people who used to have jobs that paid them enough to live on, but those jobs went away to be replaced by jobs that pay around the minimum wage. How can ANY budget compensate for your income being cut in half, or your commuting costs tripling, or your grocery bill doubling, or your health care premiums quadrupling, or all at the same time?
This push by the ‘have everythings’ to convince us that we just need to live more stoic lives is BS! I own NOTHING that works without having to bang on it or mess with it in some way. SAVE? I wake up each day hoping that whatever disaster I have to deal with that day will cost me less than what I am making that day. Just so I can feel like I’m a little ahead of the game.
Instead of giving us financial compensation for our increasing work loads the business community just stuffed our mailboxes with credit card applications in a larger version of the company store.
Your ‘advice’ is about as relevant as your presidential run was.
July 19th, 2010 at 10:48 am
We as Americans need to manage our own homes first and when we get our own debts repaid, we will be better able to help our neighbors. We all should make it a priority to pay off our debts and live as debt free as possible, it is freeing, invigorating, even enlightening to see the world without looking through a cloud of debt. I would like to see more people in Washington DC take this kind of stewardship attitude twards debt.
“The borrower is slave to the lender”. (I think this is the first time I have read something published on the Huffington Post that I agree with
July 19th, 2010 at 11:07 am
I don’t think the problem with this country is people borrowing money for gadgets. Most bankruptcies occur due to debt incurred as a result of an illness and the deplorable state of health insurance in this country. I saved for a rainy day, but deregulation of financial institutions has made me wish I had enjoyed the money rather than putting it in the hands of financial institutions and buying a home for cash. Savings- pfft. In the 1950′s incomes were rising, the unions had clout, health care was cheap, college was cheap and pensions were prevalent. Income inequality was nothing like it is now.
It is the abysmal failure of people in government that has put us where we are and Gary Hart wants to lay it on the shoulders of some mythical class of people who borrow money to buy electronics? Do they live next door to the other hated mythical class, the welfare queens who drive cadillacs? Give me a break.
July 19th, 2010 at 11:19 am
Life was simpler in the 50s, needs were fewer and health care was cheaper because people expected to be dead by 65. Our world is more complicated than it was in the past and if everyone suddenly started living like their depression era (great)(grand)parents we would not find ourselves in a better place. In Raleigh people were so effective at converving water that our fees had to be raised – how is that for NOT positive reinforcement. Yes banks, enabled by the politicians, created a bubble which has caused harm. That was unfortunate and the perpetraitors should be punished and not protected. Absolutely we need to create more paying jobs in this country. Spending drives the economy. Just stopping spending is not going to solve our problems and it could very likely make things worse.
July 19th, 2010 at 11:48 am
You are right on Mr. Hart.
Our economy is based on people spending every last dime to drive “growth”. People need to have savings – both shorter term and retirement savings. They need to purchase houses that are within their means. Having two parents work to get a ahead is fine. Having them both work and spending every last dime on luxuries is foolish especially when the loss of one of those incomes would throw you into financial catastrophe.
Brokaw’s greatest generation spawned the worst generation – ours. We’ve turned into a nation of spoiled brats who don’t know the meaning of hard work, how to discipline our kids, and must have the newest/best shiny toys. Sadly – I don’t see any indication that things are going to change.
July 19th, 2010 at 11:59 am
While I agree with the general message of the article, I think it’s dangerous to lump people that are in debt into one category of people who can’t stop buying a bunch of stuff. In reality, the #1 cause of bankruptcy is medical expenses. 90% of bankruptcies follow job loss. So it’s not like people are sitting around and thinking, “whoops, accidentally spent my mortgage payment on a new flat screen TV. Oh, well, I’ll just charge it.” It’s the fact that getting credit has gotten so easy and having debt and making payments has become so normalized. People think, “I’m *supposed* to have a 30-year mortgage, I’m *supposed* to have a car note, I’m *supposed* to have credit cards. And I’m *supposed* to make sensible monthly payments on all of these. I’ll be okay as long as I make the payments.” And you can’t really fault such an attitude because most people can’t save up enough money to buy a car outright (you gotta work to buy the car, you gotta have the car to work). Then when disaster strikes—medical bills, emergency home repairs, job loss—people are stuck with all this debt because hey, aren’t we *supposed* to have debt? I definitely don’t support the McMansion mentality, but I don’t think that mentality accounts for most people’s struggles with debt. It’s interesting also that you bring up values. What about corporate values of paying employees as little as they possibly can while still being legal? Also, the consumer mentality you talk about dates a lot (A LOT) further back than “the past three decades or so.”
July 19th, 2010 at 12:19 pm
Ah, the hazards of the blogworld. Of course I understand not everyone in debt is so by overconsumption. Every point cannot be made in 100-200 words. The truncated nature of communications these days [why I don't twit or tweet] prevents the “on the one hand this, but on the other hand that.” In this world one tries to make provocative, and hopefully constructive, points understanding that all the possible exceptions cannot be mentioned. The central point again: too many Americans are unnecessarily living in debt and our nation is consuming more than we are producing.
Thanks for all the comments.
July 19th, 2010 at 12:38 pm
So, you still don’t get it.
One of the “things” I’d like to stop buying is wars.
July 19th, 2010 at 12:39 pm
Thank you! The perils of greed at the corporate level has created even more losses in our economic security. Lobbyists from corporations who make handsome campaign contributions convinced senators that it was perfectly fair to take my small pension and convert it to a cash balance. It’s institutionalized campaign bribery disguised as lobbying. Who was lobbying for me? And today corporations are filled with layer upon layer of highly paid managers and VPs. These layers didn’t exist in the 1950s as they do today. The migration of wealth away from the middle-class towards this superclass of millionaire (and more) executives continues apace.
Now more than 80% of our wealth is controlled and owned by less than 1% of the population. In the 1950s income was much more evenly distributed (right through the 1970s in fact). I can save all I want, and believe me I have!
But it’s hard to save enough to make up for a pension that is 1/5th its original size.
July 19th, 2010 at 1:12 pm
Yes, indeed, we need to reduce consumption and increase savings to start bringing our society back into balance. It will be a long, hard, struggle, especially considering how the tax code is constructed for consumption. Also, we need to begin scaling back the impact of the military industrial complex, which has absorbed a significant portion of our nations’ wealth, resulting in lost opportunities for our nation to invest in other areas such as non-carbon energy tech. and infrastructure changes.
Thanks again for posting that on Huffington, Mr.Hart.
Mark Pringl
July 19th, 2010 at 1:29 pm
Senator,
When prominent Democrats, such as yourself, discus values as you have in “When do I prosper?” you add greatly to the likelihood a civil conversation ( a necessary precursor to a civil society) might just break out in our political culture. Universal values are party agnostic and that is why we at “The Character Building Project” chastise both parties and encourage a civil conversation from both parties about real American values. Thank you for your contribution to the conversation.
Michael
July 19th, 2010 at 1:29 pm
One of the problems with the economy is too much financial sector and not enough real stuff like farming and mining.
Wall street has hired a lot of “quants” who should be working on the next generation manufacturing (nanotechnology) and ways to get vast amounts of non-carbon energy.
I know of two methods that would supply energy at a low enough cost to use it to make synthetic fuels. However, there isn’t much chance they will be developed even though the cost is a small fraction of the various bailouts.
July 19th, 2010 at 1:29 pm
2001 I wrote a book entitled Money Tool Box for Women Simple Solutions for Mastering Your Money
Sold 10,000 copies self published but the publishing industry as well as the financial industry had their head in the sand and said
Women are smart and not in trouble with their money so you, Dr Audrey, do not know what you are talking about wanting us to be responsible with our money, pay bills on time and see a simple way to do this that parents had taught for generations.
Now we are here – Do not spend more than you can pay back – if you want something and do not have the money for it save for it- it will still be there when you have accumulated the cash.
and on and on
When will government get it as well – when will we demand it as the people who elect those who “represent us”, not themselves or their interests in Washington. Whre are the values that had us be a prosperous country – one able to build and rebuild ourselves after strife and conflict.
Dr Audrey
July 19th, 2010 at 3:01 pm
What a joke, Democrats lead by Bill Clinton usher in the complete destruction of our manufacturing based economy with their neo-liberal policies of faux free trade ideology, something Obama defends on a daily basis, turning our economy into a consumer based economy and then tell us to save and don’t spend, spending “is” our economy. When it is consumerism that drives the “new” economy and good paying manufacturing and even service jobs are lost to off shoring, what is the result, the result is a low wage working class who has to go into debt just to buy the bare necessities to get by, so how do they SAVE? Through low wages and consumerism, we can no longer afford to buy the crap, products we used to produce, that is now sent back over to us from slave wage countries, further depressing the economy and increasing job loss. The same is true if we save and don’t spend, there is no manufacturing base to fall back on and this won’t change until we purge the neo-liberal scum from the Democratic Party. Gary, what a charade you are!
July 19th, 2010 at 3:02 pm
Great comments, Mr. Hart! I’ve always wondered why companies have to show growth to be successful – isn’t it possible to just keep up with inflation, pay your employees, pay your business expenses, and have a margin of profit? It seems that growth every quarter has got to backfire at some point?
July 19th, 2010 at 3:05 pm
I have no problem with anything you wrote – indeed, I have always been a ‘contrarian’ in that I abhor debt, I’ve always striven to live beneath my means, and at 55 years old I am as a result not living on the edge. I have a respectable nest egg, and have owned my home outright for six years (13 years after I bought it with a 30-year mortgage). Nevertheless, what you have omitted in your post speaks volumes: For the past 30 years, the hourly wages of poor Americans at the 10 percentile income level or middle-class Americans earning median incomes (i.e., the 50 percentile point) have been completely stagnant. This is true despite fairly impressive growth in the productivity of American workers over the same period of time (greater than 40%). Virtually all the gains in income yielded by that growth in productivity has gone to the top 5% of earners, and especially to the top 2%. I’m getting pretty sick and tired of one-sided messages like yours, Senator. Yes, Americans need to learn to ignore the constant barrage of marketing telling them that happiness accrues from blowing their money and they need to ignore credit merchants encouraging them to become wage slaves who are one paycheck away from insolvency. Let’s add the the rest of the story: the wages most Americans are spending, wisely or not, should be a lot higher than they are.
July 19th, 2010 at 3:38 pm
Great insight, sir. I am hopeful our American Heritage of hard work, love of family and respect for a well done job will re-inspire us to solve our debt problems and fiscal imbalances. I believe financial education to be a cornerstone of the foundation of good citizenship. By re-establishing the values of saving and investing as a way of life and educating our citizens about net worth building, I believe American households, local, state and the Federal governments may be able to get back on solid financial footing again. By respecting each other, understanding financial pitfalls and exercising patience while paying off the bills, we can restore financial stability and continue to prosper.
July 19th, 2010 at 3:50 pm
Sooner or later, Senator Hart will begin to remember the past, but live in the present and near future. Our country has changed. Most people going in debt, are because the goverment (local and federal) are imposing debt on them. State and Federal taxes. Divorce where generally men are forced to pay child, spousal and medical support. All that support is not for children. Its for the spouse. Gary Hart is a dinosaur. That makes a differene for those who milk his house.
This country is supposed to be for equality for all. The people and organizations that prospered with discrimination and racism economically are still prospering. Never paid any retribution.
Beneficiaries like welfare. If it’s not welfare then its called spousal support even though they have remarried or formally cohabitated in States like California.
I was assaulted in California and preferred charges. It was denied because I was a minority. Contacted everyone, and nothing was done.
July 19th, 2010 at 3:57 pm
A couple of points I’d like to add to Mr. Hart’s excellent post:
1. I hate the word “entitlements”. To me, no one is entitled to anything. However, our sense of duty to society drives us, in our great democracy, to collective decisions to find ways to help those less fortunate. For example, I am currently unemployed – my job was shipped overseas. I am not entitled to unemployment insurance, but I am pleased that our country does not turn its back on me in time of need. (I know about the latest bill that the Republicans are holding up – they’re going to give in as it would be an election loser).
2. To stimulate more savings and less consumption, we should tax consumption instead of income. I’ve been saying this to people for years. The trick is to find a way to make this progressive, so that those with little or no income receive help from society so that basic needs are met (again, not an entitlement, just our values that we wish to help the less fortunate). I’ve seen proposals where everyone receives a constant yearly check from the government, but we pay a high “consumption” tax.
3. Finally, do not equate the value of “saving, not spending (and borrowing)” with the functions of government. Of course we want government to be as efficient as possible and not to run a deficit. But this is a matter of choosing how government collects and allocates money.
July 19th, 2010 at 4:19 pm
I hope for our sakes that we are in fact entering a period of re-evaluation as you put it. What you are saying is in large part on target.
Our entire economy which was built on production and innovation has been completely redirected towards making money from intangibles. We profit from debt, we deal in risk, we exploit others failures.
What has resulted after 30 years of this is a generation that does not understand or value hard work and originality. Kids enter colleges hoping to learn how to manipulate markets, profit from other peoples monies, and game the economic system. Jobs disappear as the need for labor shrinks, and the economic base that must remain healthy in order for consumerism to flourish slowly withers.
We cannot afford to continue participating in a global ponzi scheme. There must be production, there must be a tangible asset created.
It amuses me to no end, the way the Federal and State Governments refuse to release their death grip on debt based profit. We cannot simply build more houses, move people in under horrible mortgages that will eventually default, then pretend to have achieved success because although those people are jobless and homeless, we made a profit regardless.
We cannot continue to price credit like a commodity and apply “free market” principals to every single thing, which only ends up abused as creditors push free market principals to the limit and ignore restraint until the market collapses.
Whatever the market will bear does not mean as long as the bottom line is positive it is healthy. It means that as long as there is profit and the market remains strong, then the market is healthy.
I’ve reduced excessively, but as you point out Senator Hart, there isn’t much room for elaboration. Suffice to say, picking up where consumption leaves off is not the option. The option is abandoning what has proven itself unsustainable and returning to what worked, and worked well enough to put this country on the world stage as a leader.
We need to get back to creating and doing. We need to get back to building the best products, being the first in technology, leading in global solutions to world needs. Our industry, agriculture, science, technology, and production methods and abilities are emulated the world over, while we have abandoned them.
It’s time we got back to showing everyone else how it is done, instead of trying to live in the glory of our past achievements. We aren’t in need of a “re-evaluation”. We need a true, non partisan defined return to our core principals. Integrity, hard work, character, and innovation. Not get rich playing with someone else’s money.
July 19th, 2010 at 4:33 pm
I liked your article and believe you have great points. Some of us actually grew up similarly in the 1980s-early 1990s. I delievered newspapers and worked odd jobs as a teenager, my parents were not loaded but at the same time did not have credit card debt. I believe they paid off car loans in about 3 years.
Have you read “Since Yesterday – The 1930s in America”? There are some interesting contemporaneous accounts of how even the wealthy were ratcheted down a few pegs. My mom growing up indicated that the more well-off people in town wore old tweeds to church and you’d have never guessed they were well-off by how they dressed. Their modesty and understated dress could have been from experiencing the 1930s.
BTW, I enjoyed your visit to Stanford Law a few years ago.
July 19th, 2010 at 5:28 pm
On balance, I believe Mr. Hart has it right in that as a nation we should, or already have had, a national conversation on the virtues of austerity that includes a reexamination of our consumerist proclivities. However, the former senator should know all too well what happened the last time a sitting president spoke frankly to the American people – they called it the “Malaise” speech. Jimmy Carter told the American people the uncomfortable truth about energy and they laughed him out of town. Ronald Reagan thereafter waltzed into office proclaiming that it’s “morning again in America.”
This country will not grow up and turn and face the hard, cold rain that is our impending reality until we have hit rock bottom. Only when the country collapses beneath the unbearable weight of empire will we have our “come to Jesus” moment. And even then I suspect some will gravitate towards the seduction of fascism rather than accept the notion that even a nation as wealthy and powerful as ours nevertheless has limitations on its moment in the sun.
Frankly – I’m looking forward to witnessing the Palin Presidency. We deserve it.
July 19th, 2010 at 6:00 pm
Gary, your points are well presented – even in 200 words. Financial literacy should be taught beginning in 3rd grade. Adults can take such courses at community colleges. I still recall the wisdom of a college professor who said that you should only go into debt for a home, car or major appliances. Today, people are in debt over restaurant meals, vacations and clothing shopping sprees. Does one really need a $300 purse?
Leann Voss’s response is excellent as are many others here – we’re probably not as frugal as our parents were, but can and should be fiscally responsible so we’re not saddling others with our debts. Thanks for opening up this dialogue.
July 19th, 2010 at 6:08 pm
Mr. Hart,
I take umbrage with the title of this post. It’s not as if you haven’t prospered during your life, unlike the thousands of citizens that struggle daily to feed their families. A simplistic post designed to draw attention to what? The class divide in our country is growing – the rich get richer and the poor get lost. There was a time when the Democratic Party stood up for the working poor, the destitute, the citizens who needed a helping hand, yet rarely is poverty discussed in the political realm. When we, as a nation, forget that taking care of “the least of these” should be a priority; we become cynical and create offensive posts such as “When do I prosper?”
July 19th, 2010 at 7:29 pm
Dear Mr. Hart,
Those are great words. Would you mind sending this article to both the Democrats and Republicans in Washington? They surely don’t understand this concept.
July 19th, 2010 at 9:01 pm
I don’t understand how you can write about values or restraint.
It might be 20+ years, but your lack of judgment back then still affects my opinion of you today.
I agree with the stop spending money you don’t have that has been rampant in government for far too long. Starting the income tax was the worst thing to happen to fiduciary responsibility in government.
The spend and spend policies shown by government have a trickle down effect to people at a lay level. How do they learn to be financially responsible when they are taught it is OK to spend money they don’t have.
July 19th, 2010 at 9:41 pm
My 16 year old daughter came home from a babysitting job set in a big fancy house in Marin County, California. She sat down at the table and stared into space. I knew that look. She was dismayed. Finally she asked me why we couldn’t have closets where the lights come on, when you open the doors. Since I’m a designer, my first thought was ‘how can I design this for her?’ I’ve been guilty of being the all provider (generation: baby boomer). Then I got a hold of myself and calmly returned the following reply:” Darling, you’re right. We don’t have those kind of closets in our little cottage but in all your fifteen years, weren’t most of them with me, hiding under furniture in the showroom, cooking dinner from a stool at the counter? Didn’t we make most things from scratch like sewing clothes and drawing our own valentines? Would you give that all up for a lit closet? Because as I recall, you pick up their children at 2:30 in the afternoon from school and after bathing them and giving them dinner, you read to them don’t you? I wonder how many hours the children see their parents? Not many. And that’s because their parents are working that much harder to have those fancy things.”
She reluctantly agreed and said: “Yeah, I guess you’re right Ma. I like those memories we have.”
It’s not entirely about what used to be. It’s about how we do it now, bit by bit, day after day. It’s about being centered in right action and guidance and living by the solid family values we received.
Carolyn
July 20th, 2010 at 1:42 am
“dumpthetic” is way off base. Even though the so-called Free Trade Agreement did not help American workers, it did keep China from having everything that Reaganomics and the engineered giant corporate trade agreements created… a loss of US manufacturing industry, domestic product and jobs.
In terms of cause and effect, that can go around and around in circles forever and a day and everyone here has a point. The http://storyofstuff.com website has the best explanation of China US Relations today on the Internet, where everyone must go to live now as all forms, business and transactions are moving quickly into cyberspace. For that, we all need a computer with the latest hardware and software and an Internet connection that is not manufactured in the US due to Reagan, Nixon and Bushs Corporate giveaway legal teams, trade agreements and offshore tax free incentives for doing so.
The Justice Department just gave advertising agencies control over the media and disinformation, (even network access to medical devices) and destroyed any chance for consumer protections with Net Neutrality. If you think media advertising is irritating, just wait and see how you feel about neuromarketing directly to your brain without your consent.
The banks and the Federal Reserve are private and totally unregulated. Now, instead of going to prison, they get a windfall. The Yakuza mob owns Bank of America now. They bought it with Asian and Panamanian drug money and built the Networks with the profits, all with Government “cover”. Inflation is pre-WWII Germany ready.
We are all pointing fingers at one another while history is being rewritten and new age Guru religion is packaged with musical scores and selfish meditation in advance of network enabled enslavement.
We certainly cannot blame our Grandparents who survived the depression, stacked meals on wheels trays in their garages, loved us all and worked their entire lives to make a great future for us all to live the American Dream. Mine may have had a glimpse of the foreboding in a nursing home with high prescription drug costs that took the house they used to live in. They would be horrified if they were alive today to see what the future holds for their great grandchildren with no jobs, everyone treated as a mental patient (even soldiers) or experimented on with social engineering disguised as “remote medicine”.
People are forced into debt by Identity theft, time wasting and medical bills caused by Corporate chemical food.
We need to stock up on water, seeds and start community gardens next year to survive and hope the police are not mind controlled into attacking communities of poor people who are on the threat list for that reason only. After all, if they don’t have a job they must be Communists because they gave our industries to Communists. Houses? We will be living in tents like the Indians if we are lucky enough to escape the new age/new world order economy of the USA – Cheney Fema camps and private prisons.
“Morality” is taking care of each other, not an “Inquisition” against small business entrepreneurs and labor. Gary Hart is right about what to do now and the reasons for the current state of affairs are many, especially wars. His suggestion amounts to a Nationwide boycott of the largest Debtor Nation, China, and saving for a rainy day… if we can. It won’t be computers and cheap goods that go though, it will be our cars in favor of a bus ticket because people are being forced to work from home.
Meanwhile, if they revoke checks for the unemployed… they will be living in a hell pit instead and we are all next. All they have to do is mess up your Paypal button to put you there or import another batch of poisoned food from China.
July 20th, 2010 at 6:51 am
[...] Read more at Hart's blog. [...]
July 20th, 2010 at 7:18 am
Excellent post.
Pay as you go, or don’t go there.
What a concept !
Works for me.
As a 76 year old retiree, living debt free in a relatively tiny house within walking distance of one of the finest beaches in the world, I wonder how our country and many of the people in it got into such a financial mess. I suspect it is because the reach has far exceeded the grasp.
July 20th, 2010 at 8:08 am
This is the issue I have with the latest international development fad, micro-finance or micro-credit. All it does is push people into debt and a false economy, it is not creating new money or new wealth.
July 20th, 2010 at 10:10 am
Despite the effort to reduce name-calling, contained in the “welcome” to this site, I guess it will continue for the small number who cannot substitute thought for spite. For Tammi, the title of this post is ironic. Sorry you didn’t get that. Most others did. “Prosper” as used here means a return to the basics before the advertising/consumer/debt society came along. Shelter, nutrition, decent health care and other basics necessary for a productive life paid for as we go along. This is, once again, a plea to replace a national consumer society with a national productive society.
July 20th, 2010 at 10:15 am
Sen. Hart, as a former US Senator, I hope you won’t mind my non-germane comment here. Given today’s pending vote on the nomination of Elena Kagan to the Supreme Court, I did a little research on past votes. I couldn’t help but notice that you were one of 98 senators who supported Gerald Ford’s nomination of Judge John Paul Stevens to the HIgh Court in December of 1975, your first such vote. Here we are, nearly 35 years later. Personally, I couldn’t be more happy about that vote by you and your former colleagues. But I am hoping you have a few words for that nomination, how you felt about it at the time, and how you feel about it these many years later.
July 20th, 2010 at 11:05 am
You guys seem to know very little about economics. The problem is not over consumption, the problems are in order 1) Failed China – wakes up in 1978 and discovers Free markets, and sucks up American Middle Class by virtue of its ability to offer labor at poverty wage rates. 140.00 month is the minimum wage in China in 2010. This is the core problem. Obama can not fix it, only the markets and time will fix it. Next we have 2) Fanny and Freddy offering loans to any fool who wants them, causing a bubble and the crash which was bound to happen. 3) Next we have a lack of competition in Health Care, making our outstanding quality of healthcare, unaffordable to all to many people, while allowing insurers to set prices. (Anyone heard of anti-trust anymore?) 4) We also have wall street, dumping this lousy Mortgage paper onto the market, playing hot potato with billions in crummy loans, all backed by AIG’s insurance. Finally, thanks to guys like Biden, people can not Chapter 11 out of credit card debt, thereby insuring that the risk is removed from greedy C-Card companies and further insuring that they will sell credit to any FOOL that asks for it. Still, it’s wise to save, and live below one’s means, even in the face of gross failures by DC pols (both parties) to properly legislate – less they lose campaign dollars.
July 20th, 2010 at 11:06 am
Ultimate consumerism, Mr. Hart. The “athlete-hero myth” perpetuated by the media to confuse and distract the masses into thinking, I don’t have to work to succeed, if I am fast enough, if am pretty enough, if I am cool enough, then I will be wealthy. The distraction of Lebron, Tiger, Jay-Z, Paris, Angelina, and so forth keep the focus of the true problem obscured. We are dumbing down Americans so we will keep spending. We talk about the American Dream but can’t find our nation on a map, and can’t answer a simple question http://www.youtube.com/watch?v=lj3iNxZ8Dww.
Ours is a nation of immediate gratification, our logic is based in the 60 minute television program. This naivete has led us to believe that we can change the world by force, not recognizing culture and and societies. We think we can solve problems like global warming, immigration, and poverty quickly and painlessly, like they do on TV. Our dumbed-down populace has no connection with past, living for the now, the hell with tomorrow. This problem is systemic, Mr. Hart, it strikes at the very cultural core of this nation and that makes the solution complex, and most likely very painful.
Sustainability is a buzz-word that has lost meaning, every George-Dick and Sarah use the term without considering the consequence. Yes, a simpler future will include the disconnect from the mega service providers of the state and city. It will require site-based power generation, composting toilets, rainwater harvesting, gardens and walking. It will require a true armed militia to replace the oppressive police/corrections industrial complex with neighborhood patrols of average citizens. Medicine will need to rely upon prevention more than treatment, and treatment cease to be on a whim to give us a longer erection or stop our heartburn from our over-bloated guts.
In short, there must be a quantum shift in the lifestyles of the industrialized world. If not, then forget freedom, expect a spiral of Gulf of Mexico type tragedies, incessant war and oppression. We have a choice, will we be smart enough to recognize it before we reach the tipping point?
July 20th, 2010 at 11:24 am
To Ms. Hartman, we “guys” are always happy to be educated, on economics or anything else. Nevertheless, there is little in your checklist that contradicts the basic premise of the blog: we are consuming more than we are producing. Our nation and its citizens are too much in debt.
July 20th, 2010 at 11:24 am
Somewhere along the way modern economic thought began to treat capital gains and interest income in the same way as the production of tangible goods (e.g., agriculture and manufacturing). The very way in which we measure our GDP reveals the inappropriate conflation of productive and parasitic economic activities. Finance, insurance, and real estate present an increasing burden that must be borne by those of us engaged in the production of tangible goods (including useful intellectual property, etc.). Recognizing the pernicious effects of devoting more and more of our economic activity to non-productive endeavors is an essential lesson we have yet to learn.
The less we all pay in interest, for insurance, and for a piece of land, the better. If we become a nation of savers, we can pay cash for the things we buy up front, we can opt to forego comprehensive auto insurance (we may get burned here and there, but it should pay off in the long run), and we can do without that second house, thereby driving the prices of the house down for the first-time buyer as well.
One of the big problems with this realignment of spending habits, however, is that this will cause a certain amount of economic contraction, as a fraction of each dollar we spend tends to get respent by whomever we give it to. We have been spending borrowed dollars for so long — both on a personal level and through our government — that we cannot escape our self-dug hole quickly.
If we could engage in some productive economic activity in our spare time, that would help put us on the path towards freedom, greater productivity, and solvency. I have a second edition of a book I will be writing in the next year or so, for example. But I could just as easily be making bird feeders in my basement, fixing up old boats, or buying Adirondack chair kits, assembling and painting them, and reselling them.
July 20th, 2010 at 2:30 pm
RE: To Ms. Hartman
Your’e a absolutely right Mr. Hart. Those are symptoms, not the cause. We experienced a complete shift in oour economic focus brought about by conservative policies. Democrats are to blame as well for participating despite giving lip service to the very real risks. We took the concepts of fairness and opportunity and tried to shortcut our way to them. It’s really very simple. If you do not produce, you cannot sustain.
Grahm Leach should never have passed. It was the tipping point, and Glass-Stegall should be revised and reinstituted. That would reign in the worst of what has ld us to where we are. Won’t happen however. As I said, our Federal and local governments are addicted to fake money now. It’s too easy, it’s allure is too strong.The new financial regulations demonstrate this. They essentially gaurantee that we wont be creating future bailouts for those who destroy the system while trying to game it, while doing nothing to stop the practices that made those bailouts necessary.
July 20th, 2010 at 4:16 pm
The evident conundrum here is that of increasing wealth disparity and contraction of the economy. If indeed the American economy were to ‘start-up’ from scratch so to speak with all things and opportunity being equal, the idea of living within one’s means is ideologically sound. That of course is not the foundations of the American dream or the civil state on which it is built where one can be promised refuge from lifelong struggle, potentially maximizing leisure through the rewards of investment of resources and labor. This includes of course fulfillment of the American dream through the entrepreneurial spirit of the American ‘free’ market economic system. Decreasing consumption will only serve to shrink the opportunities a market has to offer and fortify a financial system whose incentives reward growing income disparity. The Wall Street practice of creating value and proprietary wealth by leveraging miscreant products will not be curtailed by decreased consumption but by better oversight. It will only serve to harm free enterprise, shrink an already diminishing tax base imperative for investment in American social programs and infrastructure, decrease social mobility and broaden the wealth gap with increased whittling of what was the middle. The goal is for those who have the income to spend, spend spend! We have grown immensely since the 1950′s.
July 21st, 2010 at 7:07 am
They can tell the future of a child by the time they’re 4 or 5. Given a piece of candy, they’re told if they wait 5 minutes for the adult to return, they can have a second piece. Some show restraint and some don’t. The behavior is replicated in later life, no restraint – I see it, I want it, now. So the question is, is “wait” a learned skill or a personality trait.
The 1950s are held in high regard as window of peace within the house and outside. The collision of job security and birth control kicked off the smaller family with discretionary funds some of which turned into roller skates, hoola hoops and bikes. The parental need for self-satisfaction by providing excess to the kids has escalated to expensive PCs, TVs, cell phones, biennial trips to Disney, endless cultural lessons, cable TV and a free college education. Given the shower of attention and goods the average child is receiving now, this isn’t going to get any better.
And I doubt the nation will reevaluate their spending as I’m still pressed hard for not having cable TV or a cell phone. The nation now views luxuries as essential, addicted to the shiny technology du jour. It just doesn’t occur to people, they don’t need it and their quality of life has actually eroded with it.
Worse, the 1950s spending model this was built upon no longer exists, job security is gone. And that indiscriminately ravages the country. The elders who were hoping to retire, the June grad. who can’t find a job and the people who have lived fiscally conservative. And the CEOs just get fatter and fatter and fatter as they now aren’t happy with the profits siphoning off of outsourcing to China and India and want to move the work to still cheaper countries. They lost sight of the formula, employment equals consumers which equal a marketplace. No employment equals no consumers equals no marketplace. So it doesn’t matter how cheap the manufacture is if there’s no marketplace. They want to find that thin slice of utilizing cheap labor without contributing consumers (employment). In the mean time, we keep handing them our unattended 401K funds to do this. Another dysfunctional invention since the 1950s.
July 21st, 2010 at 5:01 pm
This article makes it seem like people are going into debt to buy silly, unnecessary luxuries. Most people’s credit card debt is from buying food, gas, medical care and other basic needs. The middle class is trying to get by on low paying jobs, having used up the equity in their houses, their retirement money and their savings that was spent long ago. The lower middle class is down the tubes when one member of the family gets sick. And the lower class has nothing whatsoever to lose, which explains the crime rate. Maybe America needs to forget about doing everything “cheap” and start doing something right.
July 24th, 2010 at 10:59 pm
I have a lot of respect for you sir, and would just like to add another dimension to the “then and now” premise. I also grew up in a home where we lived within our means, and I don’t remember my folks having a credit card until I was an adult. I am sure that the segment of the population that just became complacent with charging everything, and getting into real debt will step back/re-evaluate and hopefully make positive changes, but, there’s a great number of folks that saw their wages either decrease or stagnate in the last 10-15 yrs, while their cost of living (housing, food, health care, clothing, education, etc.) went thru the roof. So yes, they began charging things that they would once have paid for immediately, and the change in lifestyle was so gradual they may not have realized how serious the situation was until one or both parents lost their job, someone had a heart attack, or a child became seriously ill….these are the people that have no spokesperson..and are becoming the forgotten in America.I know, I’m one of them..
July 25th, 2010 at 5:55 am
You “think” there were no child labor laws in the 1950s? Are you the same Gary Hart who once ran for high public office??
July 25th, 2010 at 11:11 am
This is cutesy and folksy and simplistic to the point of being insulting. If you really think that we got into this mess because mom and pop forgot their values and bought too many iPhones, just ask yourself this: Where did the money go? It didn’t go to China, and it didn’t go the Yakuza, it went to the wealthiest 1% of Americans who were already the wealthiest 1% of Americans, just less so.
The redistribution of wealth organized by FDR after the last depression was gradually unwound by the rich and corrupt until the wealth was once again distributed entirely with them. In the process we witnessed the birth, the life, and the death of the American middle class. The last act of this “Greek tragedy” was the massive exchange of taxpayer money in the recent bailouts, an event unprecedented in the annals of white collar crime.
And now that it’s over and we find ourselves once again penniless and in the depths of another great depression, the wealthy and powerful have the audacity to lecture us on the merits of fiscal values? Give me a break!
July 25th, 2010 at 11:21 am
True words. And to those who want to blame Clinton, please don’t forget it was a republican controlled congress. So don’t try it. And, CAFTA was done by Bush..again..the congress was under republican control.
How naive of just our current history.
To bring manufacturing back, end NAFTA and CAFTA, remove free tarriffs and apply thme fairly with other countries. Give tax breaks to those who produce jobs here instead of elsewhere. Create fair paying jobs and not these fake jobs that only pay minimum wage or a little more. You can’t make a living off that and one shouldn’t be expected to try to do so. Those jobs are perfect for kids who still have the security of mom and dad.
And, just because mey not like “greenies” so to speak, it doesn’t mean that they don’t have good ideas. Producing energy efficient cars and power can be our next manufacturing business. Its good for jobs, which are good for the economy which is good for the environment all around.
July 25th, 2010 at 11:32 am
This has been said before. Only problem, we live in a different world today than in the 50′s..
July 25th, 2010 at 11:55 am
I enjoyed this piece immensely. I’ve been saying the same things at least since the mid-’80s, when my then chosen profession of Accounting was beginning to be off-shored, & I could only get long term temp jobs. As “contract labor”, there were no benefits to be paid, payroll taxes or charge to labor cost – just a charge to a project as an expense. Great cost savings for the companies, not so great for me.
For the last 15 years, I’ve been building/rebuilding/repairing PCs out of my home for a charity. It doesn’t pay much, but it pays enough & that’s all I want. I’ve had a life long horror of debt & have always lived by the dictum “If I can’t pay for it, I don’t buy it”. Consequently, I haven’t had the latest anything. If I want something badly enough, I save up for it. I still have a rich, full life without those “things”, & without the worry of debt weighing me down. I weather the economic downturns just fine, because frugality is a way of life for me – nothing changes.
If anything, we’re doing better now, because people still want their PCs, they just can’t afford $500-$1500 for the latest & greatest. So, they come to us to get what they need, knowing they can upgrade later.
That all said, I’m still waiting for the day when Corporate America finally wakes up & realizes that manufacturing HAS to come back here, for there to be any economy at all.
July 25th, 2010 at 7:56 pm
It’s funny that you would mention that Paul Volcker has been saying the same thing for over 30 years. That would mean this has been going on since Ronald Reagan and the Republicans took over. The Republicans were in the White House between 1969 and 2009 eight out of twelve terms. Republicn Presidents outnumber Democratic Presidents 2 to 1 in this time frame.
What on Earth had the American voter been thinking for the last 40 years? They actually believed a Hollywood actor could run the country! The Conservative agenda finally blew-up on George W Bush’s watch leaving the world economy, national security, American prestige wrecked, abandoned and in flames. And now it is up to the Democrats to repair the economic engine and clear the political debris strewn around the globe.
I don’t know if you’ve noticed but I think there has been a Republican War on Roosevelt since 1936 and their triumph is the $790 Billion big bank bailout necessary to save the econonmy in the final months of GW Bush’s second term.
Any theories you have to explain this are welcome.
July 27th, 2010 at 10:17 pm
Gary Hart would have us beleive that medical bankruptcies and job loss are “exceptions” to his general premise that debt is caused by irresponsible consumers buying chinese electronic junk. He whines there wasn’t enough space to say it in 100-200 words. Poor Gary. What a phony.
Instead he lies and tries to blame strapped workers left out of 30 years of productivity and profit gains.
Truth is almost all bankruptcy is the result of medical, job loss, income loss, and people using credit to pay for overpriced housing, food and energy.
See, only 91 words to tell the truth.
Hey, Gary I know how YOU can save $1,000 a month:
Turn off your phone, cable and lights
Walk don’t drive
Eat one meal a day
You can save even more if you don’t pay your mortgage or dock fees
Next he’ll be shilling for the catfood commission.
August 28th, 2010 at 6:36 am
I thought you might like this
The person who knows how to laugh at himself will never cease to be amused.
April 10th, 2011 at 12:15 pm
Some really prize content on this web site , saved to favorites .