Friday, July 15, 2011

The Penalty of Saving Money

Having grown up in the ‘50s, ‘60s and ‘70s at a time when optimism and affluence abounded I was effectively insulated from the uninspiring worry I imagine is now the imposed rage of the present generation – namely, saving money. In the good ‘ole days it was all about big cars and spending money. Remember the two-ton T-Bird? And the Lincoln land yachts? The issues – if I may so dignify them - in my childhood years were dramatized in “Father Knows Best”, a thinly veiled elitist and conventional model to say the least not to mention the hindrance it was to the feminist cause. Now however the ubiquitous talk of global indebtedness is impossible to avoid at every turn. Corny television shows do little to distract us from the over-riding reality. Listen to the media and all you hear is the prospect of entire countries going bankrupt. Lately even the United States is being served up to the chopping block (though I suspect this is a provocative stage show designed to make us all feel bad about our naughty profligate selves). Nonetheless one doesn’t want to disregard the emergency signals.

The plain truth of the matter is that we of the “industrialized nations” have exhausted our credit and now it’s pay-back time. This chilling reality is for Americans more than an intrusive news report from abroad; for them it is a blunt instrument made in the USA. We Canadians – thanks to the Chairman of the Bank of Canada or Paul Martin (whichever works for you politically) – are still sheltered from the meteoric effect of the global collapse of banks and other credit agencies. Are we simply more austere? Have we Canadians guarded our resources more prudently than our erstwhile rich neighbours to the South? Or has the American dream simply become derailed by greed and unprincipled bankers? And in any event, will we be gobbled up by the devouring demon to the south?

For those of you who listen to the Bloomberg radio station, you will know that the American preoccupation with the accumulation of wealth is hardly an esoteric subject; its prescriptions are marketed and consumed broadly. There is no longer any attempt to hide the defeat of “the system” behind useless economic theories. The plain truth is that we all need to shape up. That appears to be the frank conclusion of any analysis of the current situation. The disturbing corollary to this enquiry is that we as a human race – the entire world, can you imagine! – have over-stepped ourselves. When giants like Lehman Brothers begin to tumble (the largest bankruptcy in U.S. history), people sit up and take notice.

There are undoubtedly some among us who merely smirk at hearing these tales of woe. Some people, no matter what their station in life, understand and accept that life is for the most part uncomplicated. This includes the obvious need to save for the future, a hobby even the lowly squirrel has cultivated. Nonetheless the utility and innate intelligence of saving money is more often than not side-lined by overpowering urges to acquire things. The focus is acquisition, not saving and management of existing assets. It is a tough sell to get people to adopt an attitude for saving. There are so many convenient excuses for not doing so, but the greatest of them is the mere sense of deprivation. In its most basic form, the conundrum is captured in the adage, “You can’t have money and things”. The bloated metaphor of Americans generally is no accident. We are a consumptive society, almost to the extent of being wasteful and destructive. Trimming the fat from this long-standing model requires a significant shift in posture.

I have heard it said that losing weight is like growing a garden – it has to be managed slowly and regularly, not all at once. Getting an entire country to modify its appalling monetary practices will similarly require gradual and steady application. There is a movement afoot to enforce greater obligations upon individuals to save for their retirement. On the corporate level the Bank of Canada is already reining in the cost of money and reducing its availability. Both these austerities speak to the anticipated decline in possessions, a hard pill to swallow.

In the end the course we follow will be predicted not by either laws or psyche but merely need. This isn’t a new religion or a temporary pastime.

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