There I was talking about household debt, which is so grossly disproportionate to household income and assets that we will need five to seven years to clear our family balance sheets.
Today, I am going to link an interview with Nassim Nicholas Taleb from NPR. Link here.
You may recognize Taleb as the author of a wonderful book called: The Black Swan: Second Edition: The Impact of the Highly Improbable: With a new section: "On Robustness and Fragility"
. It's great fun, a brilliant guide to some of the more sophisticated thinking about the art and science of predicting the future.Taleb believes that the world is addicted to debt, and that we need to stop indulging our out-of-control appetite for it. The more you feed that beast the more ravenous and uncompromising it becomes. Thus he advises severe austerity measures.
Others, most prominently Paul Krugman and the Obama administration, feel that the cure for too much debt is more debt-- that is, economic stimulus.
The question I raised yesterday, and that I would like to keep open, is simply this: when a nation is addicted to debt, when it functions on debt, how does that affect the behavior of citizens, their values and their virtues?
I think our government's abusive addiction to debt has an effect on many citizens of weak character. I've seen an increase in people giving themselves excuses for being irresponsible with their credit cards and walking away from other responsibilities (like homes they never should have tried to purchase in the first place).
ReplyDeleteThis shameful Zeitgeist directly correlates to the "bale-out" mentality that has been promoted by the current administration.
It's not only debt that matters, it's the purpose for which the debt is being incurred: is it a productive asset, or is it consumption? Debts that the government incurred to win WWII, fund the GI bill, build the TVA and the Interstate Highway System, and create the air traffic control system mostly fall on the "productive asset" side of the ledger. This is much less true of most current government spending.
ReplyDeleteThe same rule applies to individual debt: incurring debt to buy a business is different from incurring debt for current consumption. The housing bubble was in large part due to consumption masquerading as productive assets.
Greedy consumerism have slowly been inculcated into the American mindset. Seems that each successive generation is increasingly spoiled and sheltered from hardship in expanding measure.
ReplyDeleteThe levels of hardship my son experiences are minute compared to what I experienced just 30 years previous, but conversely, the hardships I experienced are nothing compared to what my parents experienced in the 40s, just 26 years previous.
We want the best for our children but as the means to give them a better life have become more available, we've lost the ability to pass on humility and discipline along with the gold and glitter.