Archive for the 'Dollars and Sense' Category

Are Things Getting Better?

“Better a diamond with a flaw than a pebble without.” -Confucius

The other day I was asked if the world is becoming a better place to live. Sure, the question is open-ended, but I think, in general, the answer is yes. Certainly if you’re an American whose home was foreclosed on last year or any number of “uncontacted people” who were contacted and then died of disease or Moammar Gaddafi, no your life isn’t better. I would argue, however, that for the vast majority of people, their lives are better now than they were 50 years ago and will be even better in another 50 years.

Steven Pinker’s Book The Better Angles Of Our Nature discusses the decrease in violence, especially among Western nations. The idea of a war like World War II is pretty much inconceivable among most Americans and Western Europeans of my generation. The current crisis facing Europe is, while very serious, minor when compared with the wars and dictators of the previous century.

And life hasn’t just improved for those of us fortunate enough to live in a Western country. The World Bank reports that the number of people living in extreme poverty (less than $1.25 per day) has declined. The World Health Organization has met its sanitary water goal ahead of schedule. Compare even the current atrocities in Syria. The current conflict started in January 2011 and has killed an estimated 8,000 – 10,000 people. While horrendous, this is much less violent than the conflict which occurred in the country in 1982. The Hama massacre saw somewhere between 10,000 and 40,000 people killed in a single month.

Despite the recent controversy surrounding women’s reproductive health, life for women in the US is better than it was 30 years ago. And for the LGBT community. And people of color. Are things perfect? No. But thing have improved.

And, I think, they will keep improving.

Published on March 9, 2012 in Dollars and Sense, Hodgepodge and The Gentle Art of Making Enemies. 0 Comments

Pity The Rich

“No man is rich enough to buy back his past.”  -Oscar Wilde

Megan McArdle is at it again.

She asks “Are the Rich Completely Undeserving of Sympathy?” and concludes that no, we should be empathetic to their plight. All while effectively demonstrating to me that, no, we really shouldn’t.

I don’t feel any sorrier for this rich guy in Brooklyn than I did for this rich guy in Chicago.

From McArdle’s piece:

“I believe that Elizabeth Warren has made this point–when people get into financial trouble, they often say, “Well, I didn’t take fancy vacations or go to restaurants all the time or buy 17 pairs of Jimmy Choos.”  But (with the exception of some really compulsive spenders) this isn’t the stuff that gets people into trouble.  It’s the big house with the stretch mortgage that you convinced yourself you had to have because it was in a good school district and you needed a yard and a bedroom apiece for the kids.  It’s that brand new SUV (or Volvo station wagon) you persuaded yourself to buy because it was important to have a safe car.  It’s the school activities or travel sports teams that cost thousands of dollars, which you let your kids start in ninth grade because you didn’t know that you’d have to break their hearts by pulling them out in their junior year. The divorce decree you signed because you didn’t realize your income was going to drop by a third.”

I don’t feel bad for very wealthy people who buy too much house or too much car or too much school for their kids. These people are well-educated. If they don’t understand finance themselves, they have access to planners and accountants to make sound financial decisions.

They should know better. Period.

They should be cognizant that they could lose a client or a bonus or a job. They have easy access to family planning, they are unlikely to be set back by medical problems because they have health insurance, they have retirement funds. The very wealthy should have no problem maintaining a reasonable lifestyle. They could live in smaller houses, take public transit, own fewer (and cheaper) cars, be more responsible about family planning, and shop at discount stores. In fact, they should. If you make $350,000 a year, you can live a very nice lifestyle on $200,000 and put $150,000 away for a rainy day.

McArdle makes this point for us when she cites houses, cars, kids, and divorces as the major reasons for the rich to run into financial problems. Yet the wealthy have the best resources to make smart decisions. So they’ve been given every opportunity, every tool, every resource to make responsible decisions. And when they don’t, we’re supposed to feel bad for them?

Published on March 6, 2012 in Dollars and Sense. 0 Comments

A Generation Of Renters

“If money can’t buy happiness, I guess you’ll just have to rent it.”

Derek Thompson wrote a piece for The Atlantic about why young people aren’t buying more houses. The reasons are as you would expect; student loan debt, marrying later, lack of funds. There is a reason, and I think a big reason, that he left out: fear of commitment.

Thompson mentions fear of the economy and uncertainty about future employment as a factor. He’s certainly correct that those are major contributing factors. Beyond that, however, I think even young people who are settling down (getting married, having children, starting down career paths) are wary of committing to something as long term and financially significant as a house.

Prior to the Great Recession, it’s unlikely that upper and middle class young people even knew anyone who had experienced foreclosure. Now, 1 in every 70 homes is in default. Those rates are even higher in states like Nevada where 1 in every 16 homes is in default. Our parents’ seemingly safe neighborhoods are now littered with “Short Sell” signs. We are acutely aware that foreclosure could, ever easily, happen to us.

Since we’ve now seen what happens to people who are foreclosed on, we know how stressful and humiliating the experience is. We may have witnessed friends or families having their belongings stacked in the front yard; we’ve been exposed to the sleepless nights of people terrified over losing their home and to our friends changing schools or dropping out of college as a result of their parents’ dire financial situation.

We also know just how hard it can be to get rid of a house if you lose a job or need to move for a new job. We’re coming into maturity in the worst housing crisis ever. Breaking a lease is easy when compared to selling a house with an underwater mortgage. And we also know just how valuable mobility can be. My generation keeps in touch with all of our classmates from high school and college. We read on Facebook that our friends are living in South Dakota or Washington, DC and their companies are hiring. Our parents may have spent their entire working lives at a single company, but we know that we won’t.

To us, homeownership seems less like the American dream and more like the American albatross.

Published on March 5, 2012 in Dollars and Sense. 6 Comments

A Symbiotic Relationship

“She’s an unfuckable lard-arse.” Former Italian Prime Minister Silvio Berlusconi on German Chancellor Angela Merkel

I’m not really sure how the whole European financial crisis is playing out in American news, but it’s basically unavoidable here. There’s a story nearly every day in all the magazines and newspapers, and I think BBC radio has forgotten other news exists.

The story often casts Germany as the responsible country, which is now expected to rescue irresponsible Greece, Spain, Italy and so forth. It is certainly true that Germany and most of the northern European countries aren’t facing the same budget crises or debt burdens that their southern counterparts are. However, that is due in part to those southern countries spending lots of money to purchase goods made in northern Europe.

Greek imports of German goods tripled after the introduction of the Euro. Same with Spanish imports. And Portuguese imports. Now that those countries can’t afford their goods, German exports are falling. German exports fell 3.6% in October. And Germany isn’t the only country feeling the pinch. Dutch exports dropped for the first time in two years, down 2% in October.

Clearly, the government of Greece and Italy and the others made poor financial decisions…and it isn’t as if Greece doesn’t have a long history of defaulting on its debts. But let’s not pretend that the budgets of northern Europe were being supported merely by the will and responsibility of its people.

 

Published on December 24, 2011 in Dollars and Sense and The Gentle Art of Making Enemies. 1 Comment

No Degree In Economics Needed

“If ignorance paid dividends most Americans could make a fortune out of what they don’t know about economics.” -Luther Hodges

Bread LinesThe Dutch Social Affairs Minister is calling for people on welfare to move, if they can’t find a job where they are currently residing. His rational is that there are plenty of jobs available in the Netherlands.

“’We have half a million people under the age of 65 who get benefits but are able to work,’ he said. ‘We have 300,000 people from other EU countries who fill jobs here and we have 100,000 vacancies. So there is plenty of work.’”

Of course, he doesn’t seem to consider that many of the people on welfare probably don’t have the skills required to fill many of those positions. There are plenty of companies hiring in nearly every place with high unemployment. It’s called structural unemployment.*

How many of those half a million people have PhDs? Probably very few, yet I see plenty of postings for jobs requiring a PhD. How many of those people speak Swedish or Italian? Well then you can’t apply for all of those jobs requiring fluency in those languages.

Perhaps instead of griping about the people on welfare, this MP could set up schools to teach recipients Swedish.

*For the record, neither GDNAL nor myself could remember this term. My little brother did.

Published on December 16, 2011 in Dollars and Sense. 4 Comments
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