Wednesday, February 4, 2009

Stop Saving, or Else!


Here’s the dilemma for our economy: the more we save and pay down our debts the more we are perpetuating this recession. Indeed, it certainly appears as if this new-found embrace of simple living values among Americans is wreaking havoc from Wall Street to Main Street:

Americans’ Saving More, Spending Less :

“Economists call it the "paradox of thrift." What's good for individuals — spending less, saving more — is bad for the economy when everyone does it…Like a teeter-totter, when the savings rate rises, spending falls. The latter accounts for about 70 percent of economic activity. When consumers refuse to spend, companies cut back, layoffs rise, people pinch pennies even more and the recession deepens.”

Can we Have an Economy Without Spending? :

“You are familiar with Zen koans like "What is the sound of one hand clapping?". They are designed to open up consciousness with paradoxical or impossible questions. Well here's one: Can we have an economy that is not so dependent on rampant consumer spending?

After 9/11, Bush's solution was to exhort consumers to spend more as the way to propel ourselves out of the downturn. Today we are hearing similar advice.

Problem is, people are saving (or at least not spending, which I don't think is quite the same thing) rather than spending.”


I don’t know about you, but I’m not about to apologize for cutting my spending, paying off my debts and living within my means. There is something incredibly perverse about a “governmental-financial-industrial complex” that actively encourages you to spend money you don’t have for the sake of the national/collective good.

Now, I acknowledge that we live in a consumer-based economy, one that feeds on spending, accessible credit and a continuous hunger for better, faster, cheaper products. But a consumer-based economy is not the only model to follow. Who knows…maybe this economic meltdown will force us to reassess our incentives and restructure our economic priorities. Maybe, in the end, a good collective kick in the ass will be a catalyst for changing everything for the better.


Heather's Moving Castle said...

I keep thinking to myself how wonderful it is to just be at peace (at home with the kiddos or out being frugal) rather than getting up to go to a job everyday. I could send my kids to school so they can learn to be good little worker bees and consumers like I did. It was a lot to unlearn, but our family did it!

You catch on quick! What you have figured out sometimes take people a lifetime or never happens. Kudos to you and thanks for spreading the word to others who feel trapped. Thanks for another awesome post.


Smilin-buddha said...

I am saving got a second job to help pay it down faster.

Anonymous said...

Amen, Brother!

Srividya said...

Perhaps, we can have a system that can make what it can consume and not consume what it doesn't make and can't afford!

Anonymous said...

Sure, I'll spend...on solar panels and deep cycle batteries and canned food and ammo......;)

dtb said...

My monetary behavior hasn't changed a bit. I've always been a debt-fearing pinchpenny, thanks to being raised by older parents who were born during the depression and never embraced the boom mentality.

I think that, in the long run, we are a better race for being healthy, wealthy and wise, even if it means that we'll have to go through a rough patch in the meantime.

Anonymous said...

Thanks for putting into words what's been going through my head lately. Awesome post!

Jack said...

Good for you! Your kids and your grandchildren will thank you.

Kick ass!

Right back at you. Thanks for commenting.

Jack said...

Not being an economist, I can only speculate. But having such a concept as the foundation of a functional and efficient economic system would be ideal.


I’m with you. Let the system shake this thing out. I just hope some of the lessons we are learning don’t go out the window once the economy comes roaring back.

rachaelgking said...

Amen. I was just saying yesterday how I can't remember the last "extraneous" thing I purchased (other than booze) since Christmas, and you know what? It feels good.

Michelle said...

Yup, saving hurts the economy, but only in the short run. I think in the long run, if everyone were to curb their spending, our country would come out stronger in the end. We will hurt for a while but be better for it later. Of course, not what the masses want to hear nor the government but...just my thoughts.

I totally agree with your post!

Anonymous said...

Great Blog Jack!

My wife and I have been slowly moving in the same direction at a much slower, more 'organic' pace over the past 10 years.

It started by coming to terms with the reality that debt is an enemy of free people (Proverbs 22:7: The borrower is the slave of the lender), and our pursuit of paying it off caused us to simplify out of necessity.

Once we had a few children (3), and no debt we almost imperceptibly began accumulating stuff over the past few years again, recently we've again been feeling ourselves moving towards simplifying and having less clutter in our lives.

Anyway, the real point of this was to point you to a blog which promotes an economic system that you might find appealing.

It's called Distributism. It is the brain child primarily of early 20th Century Catholic thinkers G.K. Chesterton, and Hilaire Belloc. It was conceived as a counter to Capitalism and Communism, but never found widespread implementation because of the more or less cut throat nature of the other two philosophies.

The blog below is an ongoing discussion of Distributism from a group of folks trying to promote it.

The ChesterBelloc Mandate

The FAQ gets into it a bit more, but the crux of the idea is that one of the fundamental roles of government is to prevent the accumulation of too much wealth/property wealth into to few hands. To have ownership of property as widely distributed as possible.

The closest thing I've seen as an actual implementation is the economic system in the Amish Communities (though not quite the same).

In such communities there is an understood agreement that no one person may accumulate more than some limit (years ago it was about $500,000) in property lest it reduce the opportunities of others in the community to provide for themselves.

It fits rather well with the whole simply living idea as I think the it's good fit with the Amish community testifies.

Anonymous said...

Great post. And how interesting is it that Bush, who thought it was an economic necessity for consumers to spend money they didn't have, also caused billions to be spent on a war we didn't need?

Jack said...




Tell me about it. Booze is a priority for me.


Right on! The more we become fiscally responsible the stronger our culture and our economy will be.

Dreamer said...

Jack - Im with you - I wont apologise for saving and not spending either.

Kim Richard Smith said...

What's bad for the economy is good for the environment. I glad for the current economic downturn--the further the better!

Anonymous said...

I personally think an economic downturn is the ONLY thing that can change the U.S. economy from a consumer-based economy to a sustainable one.

We are (unfortunately?) the chosen children of American history that will have to pay the price for decades of ignorance and excess. We will be teaching our kids how to stretch hamburger meat and prepare homegrown vegetables, because that's all many will be able to afford.

Dare I hope for an agrarian revolt?

You bet your ass I do.

Anonymous said...

Hey, I figured I'd leave my general comment on the latest post though it's really not on this particular post. After reading most of your blog...Interesting. Clearly you are the kind of fella who I used to have quite a bit of contempt for (and being one of those surgical specialist who makes a bunch of money after going fancy schmantzy med school in NYC with siblings who went Ivy for undergrad and law, I know a lot of empty suits with a lot of material possessions, intelligence but no perception and a sense of anomie buried in spending, alcohol, adultery or other external validation that sometimes ends in the ostensibly unexplainable suicide/"accident"/mid-life crisis)
I am impressed that you have put yourself on this path. Kind of irritating to have a startling epiphany then to find it mass marketed and, shudder "popular." But it's like losing weight - everyone believes in it and wants it, many people do it, few people can live the change and stay on the path. You seem to be the real deal. Kudos.
Having myself recently ditched the hospital supported large group practice with well into 6 figure reimbursement for a practice of my own, I might have more time to follow your journey. I've always been frugal so I just did it without the elaborate plan. It's fun but scary.
Just think of this as your early mid life crisis, early enough to have most of your whole life in front of your rather than behind you. Good luck and keep evolving.

-jd said...

Where have you been Jack? Well wishes.


Me said...

You know my opinion.

Amen, dtb,

Jack said...


Wow, I actually never heard of the term. Thanks for the link. I’m reviewing it as we speak. Imagine how cool it would be to get people from all walks of life, philosophies, cultures to get together and brainstorm ideas in preparation for reforming our economic system. Stuff like this would enrich that discussion.


Thanks. Good point. Pretty weird irony.

Somehow, I knew you would!

Jack said...


I probably won’t go that far. The way I see it, the horrors of this economy will encourage better management going forward. Nothing like a little fear to clean house.

@Black Thumb Girl,

I’m starting to see it that way too (well, the fact that the downturn may fundamentally alter our economic model). See my previous comment. Agrarian revolt might be too much for me but broad-based, meaningful reform for sure. On the other hand, if we don’t get that then a good revolt or two might be needed.


Thanks for the comment. Do comment again. Would love to know how this new practice flourishes.

Jack said...


Thanks for the comment. It’s good to hear from you again. Too much stuff going on lately. I should be good to go starting this coming week.


Somehow, I figured you would agree this post. BTW, super hot pic. JD is a lucky dude.

Len said...

Jack, quick tip, don't moderate your comments too much, it demoralizes your audience. Loved your blog initially, but signing off now. Best of luck to you.

Jack said...


Thanks for the kudos, though I am wondering what you are referring to with respect to moderating comments. As far as I can recall, I have rejected less than a hand-full of comments since I started moderating. Have you read some of the very critical comments I have accepted? Anyone with even just a bare argument is usually approved.

Anonymous said...

I think we also need to think about where we are spending the money we can spend. Are we spending it locally, where it can recirculate at least through our local economy, or are we spending it at big box stores that are pumping most of that revenue out of our neighborhoods? I've been trying to figure out how these stimulus checks could be a good idea, and I believe this might be the answer. I need to take a better look at where I'm spending and the values, and locations, of those I'm supporting.