I hope this doesn't violate blog etiquette, but I'm going to repeat a conversation an anonymous Canadian and I have been having over at East of Eden, on the post I mentioned in Casting the Net, Vol. 6. I'm hoping she'll continue the discussion here, because (1) the blog owner is taking a break for Lent and I don't want to overwhelm her post while she is gone, and (2) I think several of my readers would enjoy the conversation and have something to contribute to it. If the best part of overseas travel is being with family and friends, the second best is the opportunity to meet other points of view. I'd welcome a Canadian viewpoint around here.
The original post is here, and I've excerpted below our conversation so far.
CA:
As a Canadian who's been online for 11 years (talking to Americans, watching America, visiting America) I'd like to make a few comments about what I see as the causes and effects of the current economic situation.
1. A major cause of the economic troubles now is a corporate culture that rewards short term thinking - bonuses based on quarterly returns for example - an action with a large short term benefit may not be in the company's best long term interests. Rev'ing an engine makes a really cool noise and makes you go fast for a while, but it burns out the engine. The economic engine is burnt out.
2. I realise that watching America through the Internet selects for a certain level of affluence, but "your" idea of comfort is very different than most of the rest of the world's - even a Canadian's! - idea of comfort! When a blogger posts, "We're struggling financially" then posts a picture of her house and neighbourhood, or talks about the great decorating find at the Pottery Barn or wherever, well, it's hard to be sympathetic. It's hard not to think that you don't actually understand what struggling is, and this inability to understand just how "rich" you are has led you into this mess.
3. The affluence gap. A "rich" Canadian may not be as "rich" as an American, but our "poor" aren't as poor either. I have traveled in the States, as has my dh on business and the evidence is very easy to spot from the window of a plane or the side of the highway. The gap between rich and poor in the US is extremely disturbing. Again, I think a great many Americans just don't understand and appreciate just how "rich" you are.
4. And may I say? This rev'ing of the economic engine to get more and have more, taking out mortgages for more than the house is worth in the expectation that you can sell it for more later, credit ratios of 30:1, and so on? Yes, this is what America did, and yes, you're taking the rest of the world down with you. I think that should be as much, if not more, of a moral concern as the workers in your company (I applaud your concern for them BTW) and your pondering the "deep dark hole that America has binged herself into"
Obviously, I'm going to post this as Anonymous, but I look forward to the comments on my comment.
LW:
It's a little odd, leaving a comment that the writer of the original article won't read for over a month, but since the Anonymous Canadian invited comments, I can't resist:
1. You are 100% right. It's not the only cause of the problems, but certainly a major factor. Rewarding short-term thinking is...well, short-term thinking. Rather than the engine analogy, though, I'd compare it to over-fishing the oyster beds, and hope we haven't taken the last oyster.
2. I agree that we are all, even the poorest American, much richer than we think. And we have, indeed, become accustomed to a ridiculous level of luxury. But in defense of the examples you mention, it is not impossible to have a large, beautiful house and struggle financially, even if you didn't overextend yourself in buying it. Very few people can buy any house and not be dependent on a job to provide income to pay the taxes, let alone a mortgage. You might say they could sell the house, but probably not without a tremendous loss, and maybe not even then in this market. And you can buy "great decorating" items at places like the Pottery Barn for less than a meal at McDonalds.
3. True again -- about problems with the large gap, I mean; I don't know enough about Canada, unfortunately, to compare. But I think there are too many causal factors to make a country-to-country comparison particularly meaningful.
4. Yes, there was a lot of stupidity and crime to go around, and I'm glad to see someone blaming the folks who knowingly bought more house than they could afford as well as the banks that financed them. But I don't buy the idea that "we" are bringing the whole world down. A former Canadian Prime Minister (sorry I don't remember which one, but I think the quote is reasonably close to what he said) once said that bordering the United States was like sleeping with an elephant: when the elephant rolls over, the whole bed shakes. With the world as interconnected as it is, Canada isn't the only country affected, and the U.S. economy -- whether up or down -- makes waves that are felt worldwide. But we have no monopoly on greed and stupidity -- even the careful Swiss were taken in by Bernie Madoff, and the desire to improve one's lot is a universal trait.
What strikes me most about the whole situation -- and here I'll show my age -- is that once upon a time we knew the value of frugality, thrift, savings, and living within our means. Many people still do, but clearly not enough. How did we fail to pass this on? I think it all goes back to point #1 -- the rewards for short-term thinking, not just corporately, but all over.
CA:
Yes, perhaps a little odd, but the first blog that I've come across that had a topic that seemed appropriate for the comments that I've wanted to make somewhere for a very long time. And blog-visitors can always have a conversation while blog-host is away.
PM Pierre Trudeau said that sharing a continent with the US is like living with an elephant, when the US sneezes, we get a cold. Perhaps I am generalizing, or single-cause blaming just a bit too much, but I think the US's prominence in the world (deserved or not) confers more responsibility than privilege, and a large part of the responsibility for this mess is US spending habits: governmental, corporate and personal.
It's hard to 'see' an acceptance of that global responsibility in stimulus bills requiring US-only purchasing (for example).
As for your example of a purchase from Pottery Barn costing less than a meal at MacDonald's - what is the cost of a meal at MacDonald's? What are you doing eating there anyway? when a sandwich from home takes as much time and costs so much less for more nutritional value?! (Just as an aside)
DH and I are self-employed,and have not yet financially recovered from the dot.com crash of 2001. There was some light at the end of that tunnel though, until this fall...it's all a little hard to take.
I'll show my age too - I was raised in the era when saving, frugality and living within our means meant something. When a budget meant 'not now', instead of 'we'll get it on credit.'
LW:
Sorry, Canadian Anonymous, I didn't mean to give the impression that we eat at McDonald's. I did eat a chicken sandwich there about a year ago when I had a coupon for a free one, and I was surprised that it was a pretty decent sandwich. But, as you point out, I can (and do) make better, cheaper, sandwiches at home. Why, I'm so old that our kids and my husband always took homemade lunches to school/work! I used McDonald's to make my point because, as far as I can tell, no one in the U.S. considers himself too poor to eat there. But my point may have been wrong, anyway, since I confused the Pottery Barn, which I do not know, with Old Time Pottery, which I think of as a place to buy cheap, though sometimes useful, junk.
Thanks for identifying, and correcting, the Trudeau quote. I was sure it had something to do with the elephant rolling over...but having already admitted my age I can admit a sometimes faulty memory. :)
You say this is "the first blog that I've come across that had a topic that seemed appropriate for the comments that I've wanted to make somewhere for a very long time." If it's not rude to hijack you, I'd love for you to come over to my blog and continue the conversation. My readership is not large (okay, it's very small), but includes differing nationalities as well as a range of ages, life situations, and political opinions. One thing they nearly all have in common, however, is that they value saving, frugality and living within their means, and agree that a budget means "not now" instead of "we'll get it on credit."
The floor is open. :)
Update: Please note that the comment section has spilled over onto a second page (hooray!), so to see the most recent comment you'll need to click the "Next" button.
