Load It Up

Remember this old song?

"You load sixteen tons and what do you get
Another day older and the deeper in debt"

Just substitute "spend" for "sixteen tons" and what you get is, well, an average American.

Let me clarify at the outset that my knowledge of economics is limited to balancing my check book – and I don’t do a very good job of that either. So perhaps it is naïve of me to wonder why, at a time when the United States is heading towards a recession, their government is asking its citizens to spend more. My simple mind has always imagined that the more you take away from a finite asset the less of it you have left. And money is a finite asset, isn’t it? Or is it that the lure of easy credit creates the illusion that the money supply is limitless? I am often amazed by those pop-up ads on my computer monitor that almost beg folks to take a loan, even if they have a lousy credit rating. It’s like they enjoy people going into debt. I haven’t quite figured out what’s in it for the lenders, but since they are not running a charity, the pickings must be pretty good.

In my opinion, one of the most dangerous inventions of the twentieth century was the credit card. It plays upon a person’s natural avarice and casts a cloak over his good sense. For sure, men and women have coveted the good things in life down the ages. However, upto the mid-twentieth century, if you didn’t have the cash, you had to do without – and learn to live with it. Impulse buying was almost unheard of.

That insidious piece of plastic changed all that. It has made ready cash almost obsolete. You see something you like, you flash the card and it’s yours. Westerners live in a disposal society where possessions become obsolete with alarming rapidity. A car is no longer a means of transport, but a fashion statement and we all know how quickly fashion changes. And the most disposable commodity seems to be one’s income. Americans can’t seem to wait to get rid of it, as soon as they get it. There may be that niggling feeling at the back of your mind that there is no free lunch, but you’ll cross that bridge when you come to it. And hopefully, you won’t come to it for a very long time. When you max out your credit limit on one card, you simply get another. Companies are practically throwing them at you, after all. And yet, if the US government is to be believed, a nation of debtors is good for the economy. Pardon me if I don’t get it.

Perhaps one reason I don’t get it is because I come from a different culture. In most countries of Asia, where social security is a fairly new fangled notion, the most common way to provide for your future, for your children’s welfare and education; and for emergencies is to save up for them. The older generation in Asia, in particular, has learnt to resist temptation. They see something they like, but cannot pay for; they give a sigh and move on. For the younger generation, who regard most things Western as highly desirable, the credit card culture is starting to catch on fast – but it is nowhere near the epidemic proportions it has attained in the West.

Another thing that has me confused is what defines prosperity. America is reckoned to be the richest country in the world; yet it has a staggering national debt. India is still defined as a Third World country, although it has one of the healthiest foreign exchange reserves in the region. Perhaps I need to go back to Economics 101.