Top 5 Problems Facing the Economy 2

Today I will write about what I feel is the number 2 problem of the top five problems facing the economy: chronic fat – that is, consuming beyond our means.  This problem manifests itself throughout various levels of society.

• Governments around the world, like the United States, Japan, Greece, Argentina, and so forth are all nations that issue gigantic amounts of debt and run chronic budget deficits.  That is, these nations spend more than they collect in taxes.  The difference is financed by issuing debt, presumably secured with future tax revenues, and in the worst case scenario, with the assets of the nation.  These debtor nations exist at the good graces of their creditors.  Unfortunately, these nations direct more and more of their resources to making interest payments, rather than directing their resources to productive, economic growth enterprises.  This is a drag on the world’s economy.
• Individuals around the world use credit cards to purchase all kinds of stupid stuff, spending beyond their means.  We all know the story of the consumer whose mortgage, car payment, student loans, and credit cards overwhelmed them.  Personal bankruptcy followed and it set off a personal financial catastrophe resulting in 7 years of bad debt.  These folks frequently ask friends and family for money to help with their financial problems.  Ultimately, when they truly fail to keep up with their debt payments they are a drag on the economy.
• Fat isn’t just about debt, it is also about producing stuff that assumes that there are no consequences to what is produced.  Why is this fat?  Because when people who are overweight overeat they know the detrimental consequences – obesity – but do it anyway.  Even when the consequences aren’t specifically anticipated – heart disease, sluggishness, being ostracized, death – the habit is still in place like an out of control zombie.  Businesses certainly know that some of what they produce is dangerous – mortgages underwritten for the borderline credit risk; 30,000 chemicals whose possible environmentally detrimental interactions cannot be anticipated; the production of high fat, high salt and high sugar foods; and so on.  Consumers are fat in similar ways, too.  They leave their lights on in rooms they don’t occupy; they leave their appliances plugged in even when they aren’t using them; they don’t plan their shopping trips so that they are efficient; they buy gigantic, gas guzzling cars; and they have an aversion to sacrifice, which makes them vulnerable to elected officials and companies only too willing to take advantage of that fact.  Many of these activities have direct consequences now that result in a drag on the economy.  Worse still, because some of these activities have long-term, but unanticipated consequences, we may not know just how big a drag on the economy they are.

Underlying each of these problems, and I am sure that you can each think of hundreds more examples of our “fat” culture, is a lack of emotional discipline.  Further there is an inability to focus on anything other than short-term gratification.  Whether that short-term gratification is a politician’s desire to get re-elected by funding a pork barrel project; a consumer’s desire for that new pair of shoes despite having dozens of others; and that desire to make the quarterly profit number on the part of business.  All of these manifestations of “fat” result in a drag on the economy.

The problem is that the enlightened outcomes predicted by Adam Smith in the Wealth of Nations when people follow their self-interest don’t quite happen when there is no overarching view of the consequences of 7 billion people on the planet all acting in their self-interest, many of whom are living beyond their means.  As we all know, eventually the problem is that payment of debts, losing the weight of fat, happens and typically this isn’t gentle.

So how do we correct for this problem?

1. Begin to emphasize a pursuit of happiness in your own life.  Genuine happiness is sourced in a healthy, unconditional love of self.  This love comes from within and you don’t need to look outside of yourself to find fulfillment.  When you are content then you don’t need to live beyond your means in order to feel satisfied.
2. Your vote does count.  Spend as much time choosing your elected officials as you do choosing your curtains, or new interior wall paint.  So much of what goes on at the governmental level in terms of issuance of government debt happens because the public is apathetic.  Debt reduction at the national level is a very, very important issue.  Whomever you vote for this needs to be on their agenda.  By the way, most of the debts the United States faces were put on by Republican presidents.  This isn’t meant to spark some gigantic debate – but just saying: Don’t Believe the Hype.
3. Your vote as a consumer counts, too.  Don’t do business with organizations that are profligate abusers of the environment.  This can be your choice to eat organic foods – which hurts the chemical companies.  Exercise and eat well to take care of your health problems, rather than ingesting a chemical, unless absolutely necessary.
4. Save money for what you want, rather than using credit cards.
5. Understand that life does involve sacrifices and stop whining about that fact for God’s sake.
6. In general, be conscious of your choices, as all of them have consequences.  Try and make as many of your choices so that you and others both get benefit.

Jason