Economic sobriety has its upside
The morning after overdoing it, some of us take pleasure in the cleansing process. The carrot juice goes down smoothly, and a simple walk feels virtuous. One vows to exert more self-control and give yoga another try.
The current economic downturn creates its own kind of a hangover and a potential learning experience. For many consumers, it has tolled closing time on too much borrowing, too much spending, too much sweet talk about real estate. The game is over. But while the dawn may seem cruel, it sheds light on certain truths that had been suppressed. Enrolling one’s finances into a 12-step program is a healthy thing to do.
As American consumers can no longer mask rising prices and stagnant wages with borrowed money, they will demand greater discipline from Washington – on budgeting as well as the energy policy. The sessions in rehab can also include expressions of regret over the lost opportunities of recent years.
For example, the 50-cent-a-gallon gasoline tax proposed by maverick presidential candidate Ross Perot in 1992 would have created an earlier incentive to use less foreign oil. Consumers would have long ago demanded more economical cars, and Detroit would have secured more of the market for them.
We now have the higher prices needed to encourage conservation, but the money isn’t filling the U.S. Treasury – as Perot’s 50-cent tax would have done. Instead, it’s going to various foreign autocrats and terrorists. (Too bad we didn’t follow the European model and use gas taxes to fund health care.)
Collapsing house prices are bad for people who paid their bills by riding the real-estate rocket. But it’s good for first-time buyers who wanted to buy a house but weren’t willing to borrow up to their eyeballs. There’s finally a reward for prudence.
Case in point: Ilda and Manuel Mendes, parents of two, thought they could never afford a home in the expensive Boston housing market. Now they can. According to the Boston Globe, they’ve just bought a place in a working-class neighborhood for $50,000 below the original asking price of $430,000.
Slowdowns can advance the environmental cause. The high cost of gas has fueled a surge in mass transit ridership. In car-dependent Southern California, drivers see some lightening of traffic. The morning commute from Simi Valley to Los Angeles has reportedly fallen by six minutes over the last year, state officials report.
The housing slump helps environmentalists who were struggling to protect landscapes. Real-estate mania had prompted developers to snap up desirable land. Thanks to a lousy market and terrified lenders, many of these developers are now unloading their properties to land trusts at favorable prices.
In one small victory, conservationists bought a 27-acre parcel in Portland that was about to be covered with 65 houses. And there’s a potentially big win in Hawaii, where lenders have pulled the plug from a developer’s plan to build a mega-resort on Oahu’s still lovely North Shore. Environmentalists are now negotiating for that choice piece of beachfront.
The nurses don’t like this, I’m sure, but harder economic times are forcing many of them to postpone retirement or go back into the profession – and that has somewhat eased the nursing shortage. In some cases, a spouse was laid off. And job insecurity in other parts of the economy has goosed the number of nursing school enrollments. So much for selling real estate.
Hey, there’s serenity in living within one’s means and being happy about it. And if this new sobriety moves America even a few inches away from abject dependence on debt and foreign oil, we’ll all feel so much better in the morning.