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Rick Bookstaber recently blogged about the coming decline in conspicuous consumption. Invoking Thorstein Veblen, who introduced the concept a century ago, Bookstaber remarked, “We are seeing the twilight of conspicuous leisure, and of conspicuous waste and conspicuous consumption as well.”
I’m not so sure about that. I’m reminded, instead, of what Gandhi is reputed to have said when asked what he thought of Western civilization: “I think it would be a good idea.”
In late 2008, as the financial crisis was tilting into a kamikaze dive, I expressed my hope that it would have a silver lining"”a revival of the dying American virtue of thrift.
After all, if you ask just about anybody what made America great"”and what made figures like Benjamin Franklin, Abraham Lincoln and Thomas Edison into icons of the American dream"”people always name the same handful of virtues. The first ones that pop into my mind are persistence, ingenuity, optimism"”and thrift.
Waste not, want not…. A penny saved is a penny earned…. A stitch in time saves nine: These are more than proverbs. For centuries, they were watchwords for the American way of life.
The last couple decades of bingeing on debt trained all too many Americans to believe that saving was an unnecessary annoyance. Why set money aside for tomorrow when you can borrow today?
Last week brought yet another disturbing data point suggesting that we may have a long way to go before thrift can again be regarded as one of the cardinal American virtues. The Federal Reserve released data showing that Americans had jacked up their borrowing by more than $33 billion in December, the third-biggest jump in almost two decades.
The brilliant work of economists Carmen Reinhart and Kenneth Rogoff shows that financial crises drag years of wreckage behind them in their wake: Before finally hitting bottom, economic growth shrivels for nearly two more years, stock markets three and a half years, employment almost five years and housing prices six years.
How long will it take before consumers stop spending beyond their means? Evidently a few more years still.
I don’t know about you, but I’m looking forward to the day when Americans no longer leave an SUV that gets 12 miles to the gallon idling in a parking lot while they step into a store to wait for a disposable cup of $5 coffee. Some people seem to think it’s worth paying at least $200 a gallon for mineral water or $6.2 million for a bottle of whisky.  I’m a pet owner, but I think people are barking mad if they pay $12.94 per ounce for hypoallergenic dog perfume.
We’ll know the financial crisis is well and truly behind us when Americans stop frittering their money away on absurd fripperies like these and start saving again. Maybe, by then, the Federal Reserve’s zero-interest-rate policies will be behind us, too, so saving money will no longer feel like taking a vow of poverty.
By the way, it’s worth remembering that Thorstein Veblen inspired one of the most brilliant outbursts of invective in the history of American journalism: H.L. Mencken’s devastating deconstruction of Veblen’s unreadable prose. If you’ve never read it, you should.
Which luxuries or vanities strike you as the silliest you’ve heard about lately? When do you think Americans will finally start saving again in earnest?
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Going further into debt at this time – for practically any purpose – is pure crazy . Unless the borrowed money is assured to have close to risk-free investment (and I don’t consider government bond risk-free), any consumption beyond your income should be avoided.
The unfortunate thing of course, is that this is not the view of most of the brain-washed liberal-oriented economy majors in college today. Likewise, many politicians and Fed reserve think that you should borrow money to spend so that the other guy can get a job. They call it economic stimulus.
I call it senseless.
Thrift allowed me to retire debt free at age 58 when our facility closed. I was the only one of the management team that did not have to continue to work. I did not make big bucks but we lived well below our means saving 15%-20% of my salary while working. When my wife traded her job for staying at home for 7 years when our son when he was born I had to scale back my savings to 10%-12%. When she went back in the workforce I ramped it up again. I did without the big new trucks, large bass boats and other man toys that my colleagues bought seemingly on a bi-annual basis.
I am now 60 – they continue to work because they can’t afford to retire. I’m enjoying my retirement.
As Jean-Luc said – thrift means freedom.
This is an incomplete analysis. The money you spend goes around, supporting jobs at the local grocery store, and supporting the suppliers of the store, jobs at the supplier’s….and so on. Holding back from spending will also mean no business for these guys. There is nothing wrong with spending if you can afford it. This kind of “save, save” rhetoric is very grandpa-esque and has no economic basis.
Women’s plastic surgery.
Just date young women and go back home for a nitecap for free.
The Financial Crisis Will Be Over When "¦
Obama’s government peeps stop trying to “fix” it.
Total Return covers the latest personal-finance and investing news and trends, helping readers make sensible money decisions in a complex financial world. Send your comments, feedback and questions to totalreturn@wsj.com.
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