With the Fed continually cutting the rate, with most people being sure we’re in a recession, etc, it’s a pretty gloomy outlook.
You know what I think of? I remember that my grandparents all lived through the Great Depression.
It wasn’t ideal, my Grandmommy was the daughter of a widow trying to make it in Ohio, my Granddaddy was put in a boys’ home because his widowed mom (and then step-dad) couldn’t afford to raise him. I don’t know how my other grandparents did, never talked about it with them. Somehow they all made it through.
Then they and my parents lived through the 1970s and stagflation (parents were born in the 1940’s, so they were full adults by then).
The ones who were left survived the dot bomb.
And that’s not as hard as it gets. Somehow billions of people manage to live without the things we consider necessities.
Of course, many of those people die and many suffer…it’s not a perfect world where everyone is secure and safe and happy.
But many do live. Many live for surprisingly long periods of time.
It’s not like having money guarantees you long life and happiness either. Health Ledger had both. Millions of well-off and healthy people die in car accidents long before “their time.” I could easily die tomorrow in a car or metro accident, be murdered, or just die in some freak way like being hit by a live power line.
I’d rather have enough money to live a comfortable life. I’d like not to have to live through or die in another Great Depression. And I can’t predict the economy, this may all blow over in a couple years. People thought the dot bomb might be the end of the economy too.
If I find myself starting to feel panicky about the situation, I think these two things:
1) People manage to live and even thrive in much worse situations than what the US is currently looking at.
2) People who have comfortable lives don’t always live or thrive.
To a degree, therefore, I can control my thriving. And I can do my best to stay alive even if conditions become positively dreadful. Victor Frankl discovered how to take control of his attitude and such in a concentration camp. He wasn’t happy, but he didn’t give up either.
In the end, the worst that can happen is that I die. But as I said above, that’s as possible now as it would be in some horrible future. So in the end that’s not something to fear about recessions either.
Does the economy scare you? How do you address those fears?
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The economy doesn’t scare me as much as it causes me to pay attention. I’m trying to pay attention to my consuming, spending, giving, and savings. That is the skill I think our grandparents had. Life is much too short to live in fear… I’m just going to pay attention and not coast through…
i do not fear the economy going down the tubes…i have been preparing for the bad times for a long time now and i believe that at this point in time i can weather just about anything. of course, that doesn’t mean that i have to like it, but i will always have some kind of shelter, food and clothing. gas? that might require some real sacrifice but i believe i could in fact get by at least 5-6 months without a fill up if i used the fuel on hand frugally.
Great post! This is exactly why I cringe when I hear people complaining about foreigners getting the chance to work for American companies (outsourcing).
Life is brutally hard for most of the people around the globe. It seems like the more affluent we get, the more self centered we become.
Lots of guns and a bunker.
Kidding.
In reality though, who knows where this will lead – I am not looking forward to finding out!
The nice thing about a slowing/failing economy is that it forces us to reflect on our lifestyles and consider the worst-case scenario. If we know things will get bumpy, we generally tighten up our spending habits and re-evaluate what we really need and what should be put away for savings. For those that are fortunate enough to have a little savings already, slowing economies present a lot of buying opportunities.
I am hunkered down like hybernating financial vole. I still have fun but I totally de-stress. All funds are gold, all property sold, all debts paid, lowest cost house I can rent. The best places will be where they were allways poor, maybe emigrate to Chad or something?
This might be like the 30s or 70s but it might be much worse than that. The air will be cleaner and they might open bycycle only lanes on the freeways.
I would advise absolute zero debt, even use bankruptcy now if one has a problem. As I see it the bankruptcy window must close. I see property ownership (free of mortgage) as a way to put my name on a local government debt ensalvement register, an anti-investment.
I bought a nearly new Renault car that is road tax free and can deliver 400 seat stature miles per imperial gallon. I remeber in the 70s that high economy cars suddely became unaffordable to buy. Worth thinking about? Large cars here in uk lose 58% of new value in year one, dont be tempted by that.
I am somewhat worried because I think peak oil and climate change may have a huge impact, perhaps worse than the Depression. I don’t really know how to prepare for that other than to get out of debt and learn basic skills.
I’m not terribly worried, but I try to be (even more) conservative with my money. Hope for the best and prepare for the worst.
Great post, Mrs. Micah!
You know, the best we can do regarding the economy is be properly educated and live responsibly with what we have, what we use, what we save. Worrying and fretting won’t solve problems; they just take the joy out of living.
Hi Mrs M – no I don’t worry too much about it. As you’ve already pointed out – others have lived through worse times and many people in the world today are living in far worse conditions than we do in the US and the UK.
Good question, I don’t think the status of our economy scares me. The last time we were dealing with job cuts and fed rate cuts was just around 2000, I think but I still managed to move 2800 miles away and secure a full time job while being 13000 in debt.
Now if the cost of hearing aids do go up, I may have to live without them but I don’t mind that either. I don’t have a car either so the gas prices ain’t bothering me none.
@ Aaron, “Life is brutally hard for most of the people around the globe. It seems like the more affluent we get, the more self centered we become.”
I think the point of the concern over sending U.S. jobs overseas is that most of us would like not to have life get brutally hard right here. No jobs + no unions + no decent wages = brutally hard.
If that’s self-centered, sorry… I grew up in a Third-World country (we didn’t use that term in those days; then we said “horrific poverty, hunger, disease, and misery”), and I sure don’t want to see conditions like that for my fellow citizens, and especially not for our children and grandchildren.
As for the current events: the best you can do in conditions such as we’re seeing (which, as Mrs. M points out, recur cyclically) is engage your common sense: get out of debt as best you can, get job skills that will carry you through more than one job in case of unemployment, build an emergency fund.
Hmm… Wouldn’t it be neat (in its way) to have ALL the freeway lanes be bicycle lanes? Now there’s a thought!
😀
I do get scared, and then I think about how good I/we have it…how many humans through the course of history have lived 27 years without major sickness, hunger, poverty, war, or political upheaval?
For some reason, that makes me feel better even though I know my good luck could end at any time…at least I had all these good years. I’m doing what I can to protect myself against bad times and as for the rest I’ll take it as it comes.
Great post!
@ Funny about Money, I understand that sentiment. And it certainly seems to make sense that “outsourcing” means fewer jobs in America, but the facts don’t back it up. Instead, the result of “sending U.S. jobs overseas” is simply a new mix of opportunities in America.
For example, the proportion of workers in manufacturing dropped from 28% to 11% between 1960 and 2004. During the same period our manufacturing output nearly quadrupled. * What happened to the 17% of the population no longer working in manufacturing?
The found new jobs in unexpected places. They became web designers, UPS/FedEx/DHL drivers/pilots, brain surgeons, video game designers, writers, researchers, interface designers, musicians, etc. The list is nearly endless.
Regarding unions and decent wages, “less than 10% of the private work force is unionized and that somehow, most workers, something over 96%, maybe closer to 99%, manage to make more than the minimum [wage].” (Cafe Hayek)
It’s been my experience that marketable skills and the willingness to work hard results in good wages. Business are willing to pay when they’re getting a useful service in return, no arm twisting required!
Getting back to my original point. What irritates me is the view that Americans (living in the land of opportunity) are more important than a would-be-worker in an impoverished country (with little to no opportunity). When we keep low skilled work in America and pay artificially high prices for the said labor, that’s what we’re saying with our actions.
Instead, I’d like to see potential workers everywhere to have a chance to start accumulating wealth for themselves which will eventually unlock unimaginable possibilities as the no-longer-poor have the opportunity to unleash their creativity.
* The Choice, by Prof. Russell Roberts
AMEN –
“What irritates me is the view that Americans (living in the land of opportunity) are more important than a would-be-worker in an impoverished country (with little to no opportunity). When we keep low skilled work in America and pay artificially high prices for the said labor, that’s what we’re saying with our actions.”
What doesn’t kill you, makes you stronger, right? I survived a war, so I know the true meaning of this saying….
US economy is strong… the current situation will not destroy those who live responsibly and save for their retirement…
lets’ see, i can squeeze 400 miles out of a tank of gas. ..and if i limit my trips for groceries, and other necessities i could probably get 6-7mos. out of that tank of gas..if i still have a job when the economy goes bust, i will have to hoof it or use a bike.
but, then i have been there-done that. so i can do it again!
@Aaron: I complain about the outsourcing thing not because I don’t think people in poorer countries shouldn’t have a chance, but because everyone in America doesn’t have a chance yet. I think we should put our own house in order before we go trying to save the rest of the world. And it’s not like these companies are doing this out of the kindness of their hearts. They’re doing it because it costs them less. As soon as they can find countries even poorer than the ones they’re working in now, they’ll pull up camp and head out of Dodge, leaving workers worse off than they were previously.
But… It’s all survivable, to a certain extent.
And there’s other discussion of this and it’s not facing the facts–Let me give you an example. NAFTA. After NAFTA a bunch of manufacturing plants left the U.S. and went down to Mexico. Obviously the people they left behind were appropriately skilled workers or they never would have hired them or kept them on. And there’s no way the workers they picked up in Mexico were as skilled as the ones they left behind; Mexico is a poorer country and most of it is rural.
On top of that they don’t have to follow the environmental standards in Mexico that they had to follow here, so there has been an alarming increase in birth defects in the communities surrounding the maquiladoras, including anencephaly (babies born without a brain or upper skull).
And that’s not getting into the other worker abuses going on, the ageism, the sexual harassment, and on and on and on. It’s notable that with all the murders of women going on in Juarez, that just happens to be a town that hosts quite a few U.S.-owned factories. I’m sure it’s no coincidence that nothing much is being done for those women.
And abuses go on in other countries too, and if you’re going to tell me it’s because U.S. workers ask for too much money, I’ll just laugh at you. But then my ideal business structure is the cooperative, not the top-down hierarchy of a typical corporation where the workers who actually do the work of, and make the money for, the company are paid thousands of times less than the guy who sits up top schmoozing with the politicians. I mean, I’m sure he has some hard work to do too, but let’s get real here, he’s not likely to have kids with birth defects or to get his arm ripped off in a slaughterhouse.
And that, ladies an’ germs, is the reality of the situation, which is easily visible when you move beyond figures on paper and start looking at people.
*gets off soapbox*
@Rachel: Lots of them, but that was before farming was invented. The ones who didn’t die in accidents lived to old age, because they got lots of exercise, ate good food, and had a cohesive social network. It sounds really weird, and I wouldn’t go back to living in a cave, but at the same time, you wonder…
@Aaron: Somehow I sincerely doubt that someone who was working in a factory went on to be a brain surgeon. If it happened, it was an exception, not the general rule. Most manufacturing jobs were replaced with service jobs and contract jobs that either don’t pay as much, don’t have the benefits or are not as secure. If you think that’s a good tradeoff, fine. I will allow that having eggs in multiple baskets is good insurance against dropping one. However, don’t pretend that everything is hunky-dory for the people left with no option of working in manufacturing (which, by the way, has been taken over in several sectors by robots and other machinery–to answer your question of why we have more output) when they were best suited to that work.
I have done service work and I have done production data entry and I would absolutely prefer the latter, because I don’t like spending my days being talked down to even when I am going ten extra miles for the customer. And that does happen, because customers can have just as bad an attitude as the service employee can. On a computer, typing in data entry, nobody yells at you.
There’s also the point that you *know* whether you have done the work you were paid to do, and whether you have gone the extra mile: production work is measurable in concrete terms. I like concrete better than abstract. Abstract depends too much on opinion, and opinion is too malleable.
I would imagine there are a lot more folks out there who feel like I do. Some of them figured out they could do production work at home and I applaud them. On the other hand, unless they pick an absolute niche industry, they face the risk of being undercut by cheaper goods from Asia even though their quality and customer service are better. It’s sad.
And as for the original topic of this post, I’m pretty much not scared, although I probably should be. I’m afraid I have been the grasshopper to everybody else’s ants. I’m getting a grip on myself lately, and little by little I will get out of this hole unless I die or am incapacitated first, but I’m really embarrassed that I left myself this vulnerable to a downturn in the economy.
*”everyone in America doesn’t have a chance yet.”*
That is true, some children are born into broken homes, poor neighborhoods, and tragically some children are born with physical challenges. But these people will not be helped by forcing employers to pay employees more (that only helps the already employed). What these children need are charitable neighbors, the freedom to pick their own schools, protection from abusive parents, and the desire to persevere against the odds.
*”As soon as they can find countries even poorer than the ones they’re working in now, they’ll pull up camp and head out of Dodge, leaving workers worse off than they were previously.”*
This has already occurred around the globe. As India’s educated and skilled workers have begun to accumulate wealth (from previous “offshoring”), they have begun to demand higher wages. Instead of being worse off, these workers are in a better position to negotiate or even found their own companies. Sometimes companies decide to stop expanding in India, they move, or they find new ways to use these increasingly skilled workers.
*”After NAFTA a bunch of manufacturing plants left the U.S. and went down to Mexico. Obviously the people they left behind were appropriately skilled workers or they never would have hired them or kept them on. And there’s no way the workers they picked up in Mexico were as skilled as the ones they left behind; Mexico is a poorer country and most of it is rural.”*
This assumes we know more about manufacturing than these actual businesses do. The benefits must have outweighed the tradeoffs (retraining, moving costs), or these businesses would not have moved. In fact, if these businesses had not moved, it’s entirely possible that they would have gone out of business as their competitors lowered their costs.
*”On top of that they don’t have to follow the environmental standards in Mexico that they had to follow here, so there has been an alarming increase in birth defects in the communities surrounding the maquiladoras, including anencephaly (babies born without a brain or upper skull).”*
This is a tragedy. Hopefully Mexicans will demand more responsibility from manufacturers. (here comes the but) Of course it would be great if poorer countries reduced their pollution production, but we really can’t understand the position they are in. When someone has the choice between starvation and working in a dirty, dangerous environment, they’ll generally choose to risk their health in order to feed their family.
Low levels of pollution and safe working environments are luxuries when you are living on the edge. If these people are given the chance, I am sure they will all take a path similar to America’s and Europe’s. As their standard of living increases, people will begin to demand cleaner air and water. And as their children have the chance at an education, they will develop new skills and the ability to earn a higher wage.
Just look at the propensity for immigrants in America to start small business, work extremely hard, and push their children academically. Parents overseas will do the same if given the chance.
*”my ideal business structure is the cooperative, not the top-down hierarchy of a typical corporation where the workers who actually do the work of, and make the money for, the company are paid thousands of times less than the guy who sits up top schmoozing with the politicians.”*
The beautiful thing about economic freedom is that we’re all free to do that: work and spend our money the way we want to. I’m an entrepreneur type myself, so please do make the world a better place by providing a useful service or product to the world. The beautiful thing about business is that a business can only survive if our neighbors (broadly speaking) value what we make or provide!
@Mrs Micah, how many more comments do we have to go before we break your record for longest comment thread?
Eh, you’ve got about 15 more to go. I’m never quite sure about how trackbacks feature in as well. And am enjoying the discussion but from a distance because I don’t like arguing politics myself. Micah does enough political writing (contra my opinoins) for the both of us. 🙂
@Dana, I should have been clearer. I too doubt many former factory workers move on to become brain surgeons, but sometimes their children do. And that’s the point I was trying to make. All we see is the personal turmoil for workers when a business shuts down, lays off workers, or moves to a cheaper location.
What we don’t think about is how these changing options affect future generations. Why would a high-school graduate choose to go to four years of college (or 8+ to become a doctor) if a high paying salary could be had at a factory? When manufacturing moves to a lower cost locale (Alabama, Mexico, Indonesia, etc), lower priced goods isn’t the only change.
Incentives change for the former workers and their children. Suddenly acquiring new skills is more appealing and more valuable.
Btw, many service jobs pay quite well and the one’s that don’t should be viewed as a temporary stop on the road to prosperity. Some high paying service jobs: doctors, lawyers, entertainers, brokers, real estate agents, interior decorators, etc. In fact, the much belittled hamburger flipping job is really no different from “manufacturing.” In both cases, a product is made/assembled for paying customers.
@ Mrs Micah, we just might hit that comment threshold. But I hope no one sees this as a political discussion. The issues can certainly be politicized, but I’m merely trying to explain that there’s more to these issues than might be expected.
Understanding how life works in the real world (what economists do) shouldn’t be politicized, unless, of course, we want the government to restrict our freedom.
Btw, if you’re at all interested in this discussion. You should check out the blog I highlighted earlier (Cafe Hayek) and the following books, The Choice: A Fable of Free Trade and Protectionism and The Invisible Heart: An Economic Romance.
I’m not a techie, but some weird message pops up when i move between your posts, says something about 404 security rewrite something or other, weird.
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