Cleaning house

In The Progress Paradox, Gregg Easterbrook details the ways in which people today are materially so much better off than their grandparents were, and yet are no happier, and in many cases far more dissatisfied with their lives. We really are better off than our parents, grandparents or great-grandparents, and yet at the same time we feel as though we’re more tired, more stressed, more rushed, more likely to be under a financial sword of Damocles.

One reason for this is the gaping chasm between our reality and our expectations, a gap that I would argue is greater today than it was a half or even a quarter century ago. We hear a lot about how bad the middle class is doing, how they can’t pay their grocery and heating bills. But many middle-class people who stand in danger of losing their homes have air conditioning, cell phones, i-pods, GPS systems, Wii game sets, DVD players (one for each TV in the home and one to shut the kids up in the car), computers, internet and Blackberrys — not to mention things that have become absolute essentials like microwave ovens, garbage disposals, TV sets and automobiles. How many of these things did our grandparents live without? Our grandparents not only did without TV and microwaves, but they didn’t have a bathroom for every person who lived in the house.

It’s true that I didn’t own a home until I was in my mid-30s and my parents bought one in their early 20s. So were they better off? Well, yes and no. The house they bought, where my parents and brother and I lived when I was young, was a two bedroom, one bath house that was probably about 1000 sq ft. The lone bathroom wasn’t much bigger than the oversize jacuzzi bathtubs that today grace McMansions across America. How many couples are content with a starter home like that today?

It’s also true that in order for my husband and me to pay our mortgage, I had to work the first five years I was a mother (I am home full-time with the children now), whereas my mother was able to be a full time housewife as soon as I was born. But did I really have to work? It sure seemed like it at the time, but in retrospect, I probably could have stayed home with my children if my husband and I had lived more like people did when I was a child. If we hadn’t taken as many vacations, eaten in as many restaurants, seen as many movies, if we’d gotten more of our books from the library than from Borders, if I hadn’t belonged to a gym and my husband hadn’t gotten a new computer as often, if we’d lived in a 1000 square foot house with a single tiny bathroom.

I don’t mean to imply that we were profligate. We lived well beneath our means for many years, which is how we were eventually able to afford a down payment on our first home. There were a lot of things we didn’t buy, making do with our eclectic mix of mostly second-hand furniture and buying our cars used. I’ve never been one of those women who just couldn’t resist the latest fashion in shoes or handbags, and resisting the urge to shop hasn’t been all that much of a hardship.

Shopping, however, is something of a compulsion for all too many Americans who are addicted to e-Bay, Home Shopping Channel and the mall. And let’s not forget all that tantalizingly cheap stuff they make in China and sell at Wal-Mart, seductively beckoning the shopper who went there intending to buy only cleaning supplies and breakfast cereal.

While up at 3 a.m. to feed the baby this past summer, I discovered a TV show called Clean House, in which people drowning in a sea of clutter call in sassy domestic diva Niecy Nash and her crew to help them find the floor again. I could not believe the stuff these people had in their houses — huge heaps of ridiculous, mostly useless flotsam that must have had them up to their eyeballs in credit card debt to pay for it all. Even more incredible is someone whose house looks like that letting a TV crew film it, but I guess a free home makeover is worth half an hour of public humiliation.

And then there are the intangibles for which people are pulling out home equity to pay — restaurant meals, bar tabs, movie and concert and sports tickets, travel, and yes, even plastic surgery. In “Saving the economy — one face-lift at a time,” Rosa Brooks writes,

Over the summer, 53% of the cosmetic surgeons surveyed by the American Society for Aesthetic Plastic Surgery reported that their businesses were suffering as a result of the recession. That may not sound too terrible to you — but the figure translates into untold thousands of Americans forced, by hard economic necessity, to soldier on without liposuction, breast augmentation or face-lifts.

The reason the economic downturn has had such an impact on cosmetic surgery is that it has ceased to be the province of socialites and starlets, and has become a consumer good for the masses:

In 2005, one survey found that 30% of cosmetic surgery patients had annual household incomes of $30,000 or less, and another 41% had household incomes between $31,000 and $60,000.

I’m not saying people with small incomes and large waistlines shouldn’t have lipo if they want to. I am saying that they shouldn’t be putting it on their credit cards or pulling equity out of their homes to pay for it if that equity is the result of an inflated real estate market that is due for a correction. I’m also not saying that cutting back on Botox and i-pods will solve our country’s financial crisis. It won’t. The problem has gone on far too long, and the crisis is far too severe, to be solved so easily. What I am saying is that our culture of consumerism has been an underlying cause of the crisis, and that as long as that culture remains intact, our economy will remain vulnerable.

The “I want it now” mentality that developed over the course of the late twentieth century in this country goes radically against the grain of the rugged pioneer spirit that built this country. Frugality, hard work and self-sacrifice are old hat. We are, in the words of the eminent philosopher Tyler Durden,

an entire generation pumping gas, waiting tables; slaves with white collars. Advertising has us chasing cars and clothes, working jobs we hate so we can buy shit we don’t need.

Ironically, the moment Americans stop buying things they don’t need, the economic indicators flash Red Alert. Every year on the day after Thanksgiving, the talking heads on the financial news shows wring their hands in anguished lamentation if the majority of their countrymen weren’t at the mall wearing holes in their credit cards. If the year ever comes when every American who calls him or herself a Christian really starts believing that Christmas is about the nativity of the Lord rather than the activity at the mall, it would start a recession.

Recession. It’s a scary word. And if you think about it, that’s exactly what would happen if every consumer in the U.S. was as careful about spending money as I am. Our economy is built on rampant consumerism, and if the party stops, the economy goes into cardiac arrest.

But people survive heart attacks, and so can our economy. For some people, a heart attack is a warning sign, making them change their eating and exercise habits, and they end up leading healthier lives afterward. Theoretically, the same thing could happen to our economy. The initial shock would be unpleasant, and so would the recovery, at first. But eventually, once the economy had contracted, it would be less volatile than it is now, since most of the spending that would be driving it would be necessary spending. The highs would be lower, but the lows would be less dramatic.

Of course, this is all my own personal economic fantasy. It’s never going to happen, at least from what I can see. All anyone wants to do now is call for government bail-outs or more government regulation, and nobody’s talking about the self-destructive mentality that got us into this mess.

Would government regulation help? Maybe, depending on the type of regulation. A regulation requiring 20% down on any home loan, for example, might have prevented a lot of the bad mortgages that are now in foreclosure.

Say a couple has $50,000 saved up for a down payment, and with both of them working can qualify just by the skin of their teeth for a $450,000 loan. With 10% down, that couple can get a luxurious $500,000 house with four bedrooms, five bathrooms and all the bells and whistles (assuming they don’t live in Los Angeles, New York, or some other high-end real estate market). Or they could put 20% down on a $250,000 house. That way, their mortgage payment would be so low that they could still make it if one of them lost his or her job, or if good times continued they could make extra payments and pay it off sooner, or put away a nice chunk of cash in savings. But who wants to live in a modest 3 + 1 or 2 + 2 little house without granite countertops and walk-in closets when they don’t have to? Who wants a little square of grass and window boxes when they can have a lushly landscaped garden and in-ground pool? Why should they do without? What the hell, they think, let’s go for it.

Then one of them gets laid off. They can’t make the mortgage payments. They put the house on the market, but it doesn’t sell. They take what they can out of savings, borrow what they can from their parents, but the great sucking sound continues, and each month the numbers get scarier. They’re part of the mortgage crisis, and people blame government and big business for letting it happen. But did anyone make them reach for the brass ring they could just barely reach by stretching their assets paper thin? Should the government be held responsible because this couple wasn’t?

Before the hate mail starts, please understand, I realize this isn’t the story of every family suffering foreclosure. A lot of them did the best they could, made smart decisions, worked hard, had bad luck, and could not have avoided it. But there are others like the hypothetical couple I described, people who wanted to have it all right now.

It’s sad that we need even consider additional regulation for the mortgage industry, sad that so many Americans are so lacking in self-discipline that they need government to tell them when they shouldn’t be taking out a loan, sad that so many mortgage brokers at so many mortgage companies are so unscrupulous as to make loans that they have a pretty good idea the borrowers are in no position to pay back.

But I guess we do need more regulation. We need it like those slobs on Clean House need Miss Niecy.

Comments 3

  1. Frank DuBois wrote:

    A great post…you are a wonderful writer.

    Posted 19 Sep 2008 at 5:17 am
  2. Martha Brozyna wrote:

    Bravo! Your post is right on the money. Part of the financial crisis we are seeing today is caused by Americans’ ridiculous spending habits. (The Germans have a great word for it — “Konsumrausch” — which can be roughly translated to mean a frenzied need to go out and buy stuff). The politicians from both parties are too afraid to say it (God forbid we hold people responsible for their behavior), but one talking head on CNBC did mention this earlier today. It’s astonishing when you hear that the average credit card debt per American household is around $8,500. People have to stop spending more than they earn, and start saving more, otherwise we’re really going to be in trouble.

    Posted 20 Sep 2008 at 12:12 am
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