Category Archives: Economy

Think – don’t feel – before you buy

Image credit: Roger Dodger: Everett Collection

(Sorry I couldn’t find this on video anywhere.  Instead, you get to read the transcript of a scene between awkward and innocent teenager Nick and his womanizing, clueless — but here, very insightful — uncle Roger, from the movie “Roger Dodger.”)

NICK: What do you do all day?

ROGER: What do I do all day?  What do I do all day?  I sit here and think of ways to make people feel bad.

NICK: I thought you wrote for commercials.

ROGER: I do, but you can’t sell a product without first making people feel bad.

NICK: Why not?

ROGER: Because it’s a substitution game.  You have to remind them that they’re missing something from their lives.  Everyone’s missing something, right?

NICK: Well, yeah.  I guess.

ROGER: Trust me.  And when they’re feeling sufficiently incomplete, you convince them that your product is the only thing that can fill the void.  So instead of taking steps to deal with their lives, instead of working to root out the real reason for their misery, they run out and buy a stupid-looking pair of cargo pants.

Nick looks down and shifts his hands inside the pockets of the pair of cargo pants he’s wearing.

NICK: So … is it fun?

ROGER: It can be.

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In the ultra-good bargain days between November 28, 2008, and January 31, 2009, I behaved badly.  I spent $283.62 on stuff I’m now sure I didn’t need.

A total of $156.34 went to stores in my neighborhood that were going out of business.  I don’t feel the least bit guilty for the $81.90 I spent on gospel CDs and bible study guides at a Christian bookstore that was closing, and I’ve made excellent use of the hand mixer and bed skirts that Linens n Things was practically giving away.  The DVDs from Circuit City have kept me entertained on my many nights spent inside, and they have assisted me in the film dissection and script analysis I’m supposed to use to improve my own screenplays, so I guess about 90 percent of the going out of business sale purchases were worth the money.  (The curtains from Linens n Things haven’t worked out so well.)

I spent the remaining $127.28 on a DVD from a store still doing great business, especially now that Circuit City is gone, a pair of sexy green suede boots, a related green purse, a comfy pair of loafers perfect for ushering, the biggest, warmest, most comfortable fleece sweatshirt in the world, a pair of yoga pants, and about $31 on some other clothing items I couldn’t point out in my closet today.

I can’t even recollect those items now, and yet they and the rest of the items in my shopping season shopping spree seemed so important at the time.  I think about them now because, while I don’t long to be among the throngs of shoppers in Black Friday lines or among those clicking a Cyber Monday mouse, I wish I could do more than what I currently can.  I wish my 20-dollar moisturizer hadn’t run out the same day my mom gave me $20 to do something enjoyable.  I wish I weren’t dipping into my savings account to cover the expense of overdue repairs on my car.  I wish I were finished paying Sallie Mae, or that I had the guts to default on my student loans like most people do.  I wish premiums for health insurance plans that don’t cover pre-existing conditions cost the same amount that they’re worth.

I don’t know why I had extra cash this time last year, and even if I hadn’t spent any of it, life probably would have happened and I would have spent the money in a different way.  Another “why” is more important: Why did I feel the need to purchase anything?

As I said, I can justify almost all of it.  But the sexy green boots and related purse bother me to this day.  (I’m sure it’s no coincidence that the boots were the most expensive single item that I bought this time last year, or perhaps even for the entire year – other than furniture.)  I remember waking up one morning obsessed with green boots.  I instinctively knew what store would have them.  I instinctively knew that they would be on sale.  But what makes a woman who doesn’t go out that often think that her life is incomplete without a pair of sexy green boots?

Now, I have nothing against enjoying material things or against supporting the people who have to endure this great season as retail employees.  It’s just that I think Time writer Barbara Kiviat made a good point in her recent critique of big bargains.  She “realizes that part of what got us [into recession] was overspending, and that that overspending was fostered by a shopping culture that uses cheap goods to hook people on feeling like they’re winning at something.”

Maybe if I had spent more time in the books and study guides I bought, I wouldn’t have felt the need for anything else that came after it.  Perhaps if everyone “took steps to deal with their lives” or “worked to root out the real reason for their misery,” fewer of us would (still) be living life laid off.

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© Mariam Williams, aka The Pink-Slipped Girl, and The Pink Slip Blog – Living Life Laid Off, 2009. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Mariam Williams and The Pink Slip Blog – Living Life Laid Off or http://livinglifelaidoff.com, with appropriate and specific direction to the original content.  Any use and/or duplication of any photo contained within this blog without express and written permission from Mariam Williams is strictly prohibited.

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More black college grads are living life laid off

By Mariam Williams

About one week after I published my last post debating the merits of a four-year degree in today’s economy, CNN’s “Black in America 2” debuted.  The program featured a story on The Capital Preparatory Magnet School in Hartford, Conn.  Although most of the students are black or Hispanic and come from disadvantaged homes, they defy statistics: every single student graduating from the school goes on to college.

The following day I saw this recap of the segment, written by Javacia Harris Bowser for the blog Georgia Mae:

“During the program the principal of the school said “education is the great equalizer” and this is a statement in which I truly believe. Most of the life experiences and opportunities I have had and the self-confidence I hold are all results of my education. …

But one of my buddies brought up a very valid point — today many college graduates are drowning in debt and unemployed thanks to our country’s economic downturn. So is education really the great equalizer or just a waste of money?”

I answered:

“I think my thoughts on the value/futility of education are well known, but I must add a couple of caveats to my usual rants: 1) … The current economic climate is a pretty unusual circumstance. 2) There is absolutely nothing else you can encourage children in poor or otherwise disadvantaged backgrounds to do to emerge from poverty other than to get an education …” (read my full comment here)

A few days later, I opened my July 2009 issue of Black Enterprise (I know I was late) and found this statistic: the jobless rate for African Americans with four-year degrees was 7.2% in March 2009, up 4.5 percentage points since March 2007, before the recession hit.  (My, that seems so long ago!)  Compare that to a jobless rate of 3.8% in March 2009 and 1.6% in March 2007 for white Americans with four-year degrees, and you have to ask (again), is education really the great equalizer or just a waste of money?

As we can see through the above statistics, it’s neither, at least not in this economy.  The jobless rates in March 2009, without regard to educational attainment, were 7.9% for whites and 13.3% for blacks.  (In March 2007, the numbers were 3.8% and 8.4%, respectively.  Jump to the table at the end if any of that was confusing.)  Evidently, higher education does make people of every race considerably less likely to be unemployed, but certainly not equally less likely to be unemployed.

Reasons these statistics are what they are will be or have been debated on another blog at another time.  The real question for me is, should we continue to hype education, especially to black youth, the way we do? To commodify it as the single, strongest, most assured pathway to professional and financial success?

For some perspective, I turned to Andrea Houston, president of the Education First Foundation and founder of its main educational program, the Showcase of HBCU.  The Showcase is a college and career fair geared mainly toward African American youth.  “Educating students about the need to make education their first priority” is among the program’s objectives.

Houston called the lack of job opportunities for college graduates in the current economy an American issue, not just a black one.  Having recently discussed the subject with other local members of the National Association of Women Business Owners, she said, “the ladies of NAWBO are still sending their children to college, so we have to still keep sending our socio-economically disadvantaged students to college—those who are college material.”

Houston recommended that those who are not college material “do the Booker T. Washington thing and get a skill” but warned that a degree could be “the weed-out process for the next blue-collar generation.”  She said, “We’re not going to have a blue-collar generation; it’s going to be green-collar, and they’ll want to know that you have some type of education.”

And although that type of education will probably be through an associates degree or certificate program at a community college and not a four-year school, Houston can still head the Showcase with confidence.  Referring to children from at-risk populations, she explained, “You can’t just tell them to work hard.  You have to still show them opportunities.”  As The Capital Preparatory Magnet School proves by sharing its campus with a community college and allowing all students to take college-level classes, when you expose kids to opportunities, it occurs to them to take advantage of the opportunities.

I can’t quite call education “the great equalizer.”  It’s not the end-all, be-all for professional and financial success.  And even though I’m among the 7.2 percent of college-educated blacks over 25 who are living life laid off, I don’t think education is a (complete) waste of money either.  I had higher expectations of my degree, but I’ve also had more opportunities—some I didn’t take advantage of—and I’ve been exposed to more positive influences than anyone from my lower-class neighborhood who didn’t go to college has been exposed to.  I’m certainly a better researcher and statistician for my time, and perhaps a better writer too.  But to be employed in a job that requires a college degree and more than pays for the outstanding loans I took on to obtain it?  At this point, only that will erase all my doubts.  Until then, I won’t hype education or commodify it, but I still won’t tell youth from disadvantaged backgrounds anything different.

(And as much as I would sometimes like to, I won’t follow this example and sue my alma mater either.)

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Unemployment rate by race and educational attainment, pre-recession and during

March 2007     March 2009

Black college educated                                   2.7                   7.2

White college educated                                  1.6                   3.8

Black general pop                                           8.4                   13.3

White general pop                                           3.8                   7.9

All numbers reflect the seasonally adjusted rates

General population is ages 16 and up

Jobless rate by educational attainment available for ages 25 and up from the Bureau of Labor Statistics

Black Enterprise cites the Economic Policy Institute for its statistics

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© Mariam Williams, aka The Pink-Slipped Girl, and The Pink Slip Blog – Living Life Laid Off, 2009. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Mariam Williams and The Pink Slip Blog – Living Life Laid Off or http://livinglifelaidoff.com, with appropriate and specific direction to the original content.  Any use and/or duplication of any photo contained within this blog without express and written permission from Mariam Williams is strictly prohibited.

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That old feeling of uselessness is back

By Mariam Williams

A few months ago I attended a business networking luncheon sponsored by an organization whose members were determined not to participate in the recession.  Each member even wore a button stating the sentiment.  Although I probably had an unemployment check stub in my purse, and I was neither the employee of a business that gives entrepreneurs loans nor of one that depends on referrals, I participated as actively in the meeting as I did (and still do) in the recession.

At some point, one of the officers of the group invited all members and guests to join him in a game.  He would throw out a scenario, and anyone whose business or skills applied to that scenario was to stand and explain how.  For example, if he said, “A family of four is relocating to this city,” the real estate agents in the room would stand and say they would help the family find a place to live; the contractors would fix or remodel the house; the interior decorators and furniture salespersons would help furnish it; the therapist would help the family adjust to the move; and the divorce attorney would be there if therapy failed.  (Seriously, someone stood up and said that.)

The final example – I don’t remember the second – was of a new restaurant opening.  I stood up among the commercial real estate agents, contractors, material suppliers, event planners, website designers, radio sales associates, and marketing specialists.  I could write, proofread or edit the content on the restaurateur’s website, come up with a slogan if he didn’t already have one, write the scripts for his radio commercials and write the press release about the grand opening event.  See.  Out of three scenarios, I could contribute something to one of them.

I could contribute something.

I’ve written about this before, about this feeling that I’m gifted in such a way that is useless to my present situation and quite possibly to the nation’s future.  The feeling came up again Wednesday morning as I heard CNN’s Roland Martin’s segment on the Tom Joyner Morning Show.  He interviewed Dr. Wayne Watson, Chancellor of the City Colleges of Chicago, about the importance of funding two-year and community colleges.  The Obama Administration recently unveiled a plan to pour $12 million into community colleges.  While four-year colleges still have their place, Watson explained, stimulus money is going to green jobs and to shovel-ready projects, jobs many laid-off workers can be certified to perform within nine months through the abundance of retraining programs offered at community colleges.  Jobs that may start at $16 to $28 per hour, but that can pay $55,000 to $75,000 annually.  Other job-seekers could sharpen their skills for the jobs of the future with an associate’s degree and earn even more.  You graduate from a four-year college, Watson pointed out, and it can be several years before you even get close to a yearly salary of $55,000.

Do I feel cheated?  For all the reasons I gave here, yeah, maybe a little.  But the heavier feeling is that of uselessness, of being one among many thousands of unemployed writers (or unemployed-something-elses-turned-writers) trying to believe there’s something I can write about new construction and solar panels besides website content and press releases.

You know, something clicked for me when Michael Jackson died, or more accurately, when I saw news coverage of the memorial service and reactions to his death from people in London.  The day he died, a spontaneous dance party broke out in a public square I couldn’t identify.  Brits of all colors sang “Billie Jean” together.  The camera zoomed in on the crowd enough for me to catch a man of Middle Eastern descent, his head covered in a blue turban, dancing and singing in the middle of the party.  When singers at the memorial service performed “Heal the World,” our neighbors across the Pond, who were watching the service on outdoor screens, left their huddles of friends to link arms with strangers watching the service, and sang along.  I thought, “That’s what it’s all about.  That’s what art is supposed to do.”  It really can enrich the human spirit.  It truly can unite us in spite of our differences.  It is inspiring.

My gifts aren’t worthless.  They’re just not worth any stimulus money.  And it’s damn hard to find an employer seeking someone with these skills.

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© Mariam Williams, aka The Pink-Slipped Girl, and The Pink Slip Blog – Living Life Laid Off, 2009. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Mariam Williams and The Pink Slip Blog – Living Life Laid Off or http://livinglifelaidoff.com, with appropriate and specific direction to the original content.  Any use and/or duplication of any photo contained within this blog without express and written permission from Mariam Williams is strictly prohibited.

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Keeping living life laid off in the headlines

Even after nearly eight months of living life laid off, I haven’t quite grown numb to the rejection letters or the lack of responses.  When the letters and silence come from employers or positions I think would especially fit me, it stings a little bit more than usual.  But what was really starting to bring me down recently was the feeling that no one, save my inner circle, still cared.

I have a bad habit of thinking that I’m more important than I really am.  I assume that people who know this blog exists but don’t subscribe check it maybe every other month or so, or that those who knew about October 13, 2008, the day that set it all off, know that I still don’t have a job, or that those who I’ve tagged in my notes on Facebook–notes that are copies of or links to posts in this blog–sometimes read them.  But more often than not, someone who I assumed knew otherwise will ask me where I work, what I’m doing these days, or how the job hunt is going.  And when I send mass emails that say something like, “Hey! Check out something new that I wrote,” about 95% of the recipients don’t click the link.  (I can tell when I look at the blog stats.)

So today, in addition to the faithful 5%, my inner circle, Tha Artavist, Javacia, and my other subscribers, I want to publicly thank Louisville Magazine.  Their June 2009 issue highlights three of the more than 36,000 people in Jefferson County, Kentucky who are unemployed.  No, I’m not one them, and that’s just as much a relief to me as it is to all of you who are tired of me.  It has begun to feel quite lonely here in the land of living life laid off.  But there are a lot of us still out there.

Click here to read Louisville Magazine, then click on “Faces of the Unemployed” in the upper left-hand corner.

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© Mariam Williams, aka The Pink-Slipped Girl, and The Pink Slip Blog – Living Life Laid Off, 2009. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Mariam Williams and The Pink Slip Blog – Living Life Laid Off or http://livinglifelaidoff.com, with appropriate and specific direction to the original content.  Any use and/or duplication of any photo contained within this blog without express and written permission from Mariam Williams is strictly prohibited.

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The end of consumerism? Part 4 – Let us cease the devaluation of humanity

by Mariam Williams

This morning, Good Morning America featured a piece about trends in teen sexuality as depicted in the documentary, Oral Sex is the New Goodnight Kiss. Pre-teen and teenage girls are engaging in everything from oral sex to prostitution.  Of the clips shown this morning, the footage of two particular girls has stayed in my mind: The girl who said she figured if she was going to have sex anyway, she “might as well get paid for it,” and the one who described offers of $20 for taking off her shirt or $100 for dancing on a table.

True, I can figure out how to make just about anything apply to this blog, the economy, and unemployment, but really, this topic fits.  At least, it goes well with my previous harps on consumerism and my over-reaching predictions about its end.  These young prostitutes apply to this blog because filmmaker Sharlene Azam said “the prettiest girls from the most successful families” are most at risk for this behavior.  Their parents aren’t those living life laid off; they’re just the people—or friends of the people—whose greed helped put our country in crisis.  (More on this after the definitions.)

After my dad read my post about the lure of an easy life through a sugar daddy relationship, he expressed interest in hearing my thoughts on what he calls “the psychologically programmed consumerist commercialism at the root of the whole phenom and the possible social consequence of its relentless, vapid, amoral, vampirish soul rape of bling-blinded youth.” (Does that sentence make so much about me make sense or what?)

About a month and a half ago, I read his comment again and focused on the word “consumerist.”  I looked up its root, “consume” (emphasis not mine):

transitive verb

1: to do away with completely : DESTROY

2 a: to spend wastefully : SQUANDER b: USE UP

3 a: to eat or drink especially in great quantity  b: to enjoy avidly : DEVOUR

4: to engage fully : ENGROSS

5: to utilize as a customer

intransitive verb

1: to waste or burn away : PERISH

2: to utilize economic goods”

I looked up “consumer”:

“: one that consumes: as

a: one that utilizes economic goods

b: an organism requiring complex organic compounds for food which it obtains by preying on other organisms or by eating particles of organic matter”

The cultural attitudes are manifesting themselves in 11-year-old prostitutes, but the bling blinded most of us.  Here’s what I think happened: a few brilliant people—owners of retail and real estate corporations for the most part—paid a few other brilliant people to convince us that we had to have it.  Our lives were incomplete without the car, house, pool, clothes, jewelry, handbags, gadgets, weave, beauty treatments, and gourmet food those few brilliant people were selling.  Things could fill voids in our lives.  Things could make us happy.  Not having enough money to get the things didn’t matter to most of us; happiness was attainable, even if it was only via loans and credit.  More brilliant people profited off our mismanagement and became people whose lives were incomplete without the money to get the things, and more money on top of that.  To those same people, the people using credit also became things.  They weren’t even customers anymore, just 9 or 16-digit numbers whose rates needed to be raised.  Ways to consume more.  Means to an end.  Prey to be devoured.  Pre-teen girls to use.  Teen boys and men to get cash from.  We might as well.

Many who opposed our President’s economic stimulus plan claimed they were horrified by the burden of debt and taxes that government spending would leave to future generations.  Seeing girls of any economic status or social class approach the removal of their clothes for $20 with nonchalance horrifies me, and not just because I hate to see women objectified.  It horrifies me because the STDs these girls may spread won’t help a healthcare system that’s already insufficient for a civilized nation.  It horrifies me because these girls won’t even notice that particular social consequence because they’ll probably marry affluent men who can afford the best healthcare.  It horrifies me because seeing people as a means to an end prevents you from seeing people’s needs.  It blinds you to the compassion needed to address the health and wealth disparities in our society and to radically change the consumerist economy that we have proven will crumble when any one element—wages, jobs, credit, responsible repayment of debt, or an insatiable craving for frivolity (consumer confidence)—is removed from the equation.

Equation.  That word indicates a call for balance.  Most viewers’ comments on the story faulted lackadaisical parenting, abstinence teaching, and generational immorality.  A few saw it as a cry for attention to parents who have been too busy working to watch their kids.  Others saw no difference between this and previous generations.  If girls whose parents already have money feel they might as well dance on tables for $100, I think it goes deeper than moral deficiency, and that it’s worse than lonely kids who just want love.  It’s a devaluation of humanity that will continue to perpetuate and is perpetuated by the idea that enough is always just a little bit more.

CONSUME

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© Mariam Williams, aka The Pink-Slipped Girl, and The Pink Slip Blog – Living Life Laid Off, 2009. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Mariam Williams and The Pink Slip Blog – Living Life Laid Off or http://livinglifelaidoff.com, with appropriate and specific direction to the original content.  Any use and/or duplication of any photo contained within this blog without express and written permission from Mariam Williams is strictly prohibited.

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The end of consumerism? Part 3 – If you only knew, you wouldn’t do it

By Mariam Williams

I watched the President’s town hall meeting about credit card regulation the day after I read this Time Magazine article as I took a break from revising my upcoming feature story on bankruptcy attorneys (read it in the July 10th issue of Business First, in the special section, The Business of Law).  President Obama and the Senate seem to think that if the dangers of credit cards—the freedom of the card companies to change interest rates at will for no reason at all; the length of time it would take to pay off a balance if you only paid the minimum payment each month; the fees and tricks that set you back just when you’re making a dent in your debt—were spelled out to consumers in plain English and large fonts, or abolished all together, people would use the powerful pieces of plastic more wisely, or not at all, and not have so much debt.

When I worked in retail, I accepted an extra discount as motivation to encourage irresponsible spending (especially on college students; it was ridiculously easy to get them approved for credit).  I often used this line when trying to push store credit cards on the wiser, more unwilling customers: “You don’t have to wait to pay it off.  You can open the card to get the savings and immediately pay off the whole balance with cash or check, while you’re still here at the register.  Why not save the 15% today?”  Some saw that the glittering “Get 15% off your purchase and double rewards points when you open a Store Card today!” signs strategically placed on fitting room doors and at the register weren’t gold.  Others “saved” 15% on that purchase and then paid almost double that amount in interest when something kept them from paying the balance off in full later in the month (just like people with adjustable rate mortgages couldn’t refinance because—oops—there was suddenly no credit available).

My own credit has NOT been damaged by my employment hiatus.  Around this time last year, I was blessed to encounter a good sales woman hocking a credit protection plan that would pay a nice of chunk of my credit card balance over a set period of time in the event of major life changes or unforeseen emergencies.  Due to my present misfortune, the card that still carried remnants from days when I had California dreams now shows such a healthier balance that I sometimes log into my account just to see the number and smile.  I chose to close the card that had a manageable but less attractive balance and that didn’t have the insurance after getting word from Bank of America that the interest rate on that card would be going up by 5% this month, because they felt like it.

And yet, as much I enjoy lifting my middle finger to Bank of America through my credit boycott—and even though lack of disposable income has forced me to sever my ties with retail anyway—I find myself tempted to use the plastic again, to treat myself to something pretty, to enjoy a break from Kentucky, to see a show I can’t manage to get free tickets to, to have a carefree weave again, to get some work done on my car, to get a massage, to eat a lavish dinner, to buy some new computer software, to enjoy Memorial Day sales, to do any number of things I don’t need to do to survive and probably shouldn’t do even when I have the cash to do them.

The sad part is, I know what credit companies are capable of.  I know the trappings of the minimum monthly payment.  I know shit happens that you don’t plan for and happens so quickly that your balance has gone from $100 to $10,000 (actually, I’ve never seen a credit card balance that high, but you get the idea) before you can even make a minimum payment.  I don’t need the fine print reworded, and I’m still tempted.

I fully support eliminating credit card issuers’ unfair practices.  People paying off their debts in full or repaying them steadily each month shouldn’t be punished so that banks can cover the difference left by those who are defaulting, nor should those faltering due to unemployment or other unforeseen circumstances be punished.  To suddenly have your interest rate doubled could easily make a manageable situation impossible.  To have your credit limit dramatically cut could damage your credit score, which is something potential employers check, which could make you end up in the unemployment line longer, which could lead you to default on your payments, which gives card issuers incentive to increase everyone’s rates …

Obviously, I see the need for regulation.  Our insatiable craving for stuff, however, and our economy’s dependence on it, needs to be reigned in as well, or at least rethought so that it doesn’t stand on the shaky ground of massive debt.

I’m tempted, but I haven’t done it, partly because I know better.  What percentage of the American population would resist the temptation if everyone knew?

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© Mariam Williams, aka The Pink-Slipped Girl, and The Pink Slip Blog – Living Life Laid Off, 2009. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Mariam Williams and The Pink Slip Blog – Living Life Laid Off or http://livinglifelaidoff.com, with appropriate and specific direction to the original content.  Any use and/or duplication of any photo contained within this blog without express and written permission from Mariam Williams is strictly prohibited.

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The end of consumerism? Part 2 – Frugality ends when living life laid off does. Pity

by Mariam Williams

“You see, when this recession began, many families sat around their kitchen table and tried to figure out where they could cut back. So do many businesses. That is a completely responsible and understandable reaction. But if every family in America cuts back, then no one is spending any money, which means there are more layoffs, and the economy gets even worse.” – President Obama, Speech on the economy at Georgetown University, April 14, 2009, about 10 minutes in.

Is frugality bad for the economy?

That’s the question author Amy Dacyzyn poses on page 61 of The Tightwad Gazette II. Here’s what’s crazy: The book was published in 1995 and references a 1992 book by Ross Perot entitled, United We Stand, for further reading on how rethinking spending can lead to a more stable economy.

The question remains relevant because we keep getting ourselves into recessions, and counting on spending to get ourselves out and to sustain our economy.  I attended a business webinar today in which speaker economic futurist Jeff Thredgold stressed that the tide has begun to turn in the economy.  He and other experts are now predicting that we will move out of the current recession, which officially began in December 2007, before the end of 2009.  Although this recession has lasted longer than those of 1980 and the early 1990s and unemployment may still increase to over 10%, the severity has begun to level off.  The stock market shows signs that consumer confidence is starting to build again, and that’s critical to our economy; seventy percent of our national income is determined by consumer spending.

Here’s the thing that’s really hitting us with a national unemployment rate of 8.5 percent: not all of that spending is from hard-earned money.  In 2008, 65% of our spending was dictated by wages and salaries, down from 80% from 1980 to 2007.  That means we rely on credit for 35% of our spending.  Those whose credit cards remain open during unemployment-because if a bank suspects you won’t be able to make your payments, they can cut you off at any time, or raise your interest rates, for any reason really, without notice-will likely continue to use them, but not on the vacations, appliances, clothing, and entertainment they did before.

If it lasts long enough, the forced frugality of the current recession could change American society as a whole from greedy, credit-burdened consumerists who work to get more stuff they can’t enjoy because they’re working too much to pay off the debt they borrowed to get the stuff, to a society that values the bare necessities, the earth, and interpersonal experiences.  As Marian Salzman, the chief marketing officer of Porter Novelli, a public-relations company, said in a story published last month in U.S. News & World Report, “[T]here is an anti-bling thing going on.”

I heard much of the same on the radio show State of Affairs last month.  People have shifted their dollars to maintenance, “do it yourself” projects, anything that will help them save money at a time when they fear they might not have a job forever, or when they know that a home equity loan is impossible on an upside down house.  The savings rate has gone from -1% to 5%.  People are tracking their spending, learning how to prioritize, and learning how to define what’s really important.  We’re learning lessons that can bring down a capitalist economy.

Greed has employed me.  I don’t understand why auto makers roll out a new version of every model of every make every year, or why most drivers get bored with their car after three years and feel the need to swap one vehicle they don’t own yet for another one they never will, but I made more money per month selling cars than I have per month at any other job.  I hated wrapping overpriced presents for ungrateful, rich snobs in Seven jeans and Juicy Couture jogging suits who routinely spent over $1000 a week in a southern California Bloomingdale’s and who threw tantrums over restrictions on the 20 percent savings cards that cost them a $5 charitable donation once a year, but without their obsession over obtaining the latest styles before everyone else and at regular price, I would not have been able to eat as I nurtured my showbiz habit.  I can’t tell you how many commercials I wrote as a radio copywriter advertising clothing sales, furniture with easy financing and guaranteed credit approval, or specials on custom wheels, sound systems, and rims.  Those same marketers’ holding back their ad dollars led to my current state and is presently sending newspapers and other publications into bankruptcy.  One of the comments in the pile Oprah’s website collected after Suze Orman’s last financial show was from an irate spa owner, appalled at Orman’s advice to cut your spending to the “bare bones,” or as the commenter saw it, put small business owners out of business.

Our country is at a crossroads right now.  The greed that unregulated free enterprise bred has screwed us, but a radically new system is still too hard for people not yet suffering to imagine.  I’m not even sure that the government should take charge of or be heavily involved in the overseeing of corporations, and I don’t know why I’m not sure.  Perhaps because I know and admire several smart, honest women who own their own businesses and feel like they deserve to revel in their success.  Perhaps because I know that money is a motivator and that it’s employed me.  Perhaps because I like paying low prices more than I care about the exploitation of workers.  (Of course, if I were earning enough money to only support local small businesses, I would.)  Perhaps because I think our government officials are just as fallible as everyone else, and if they don’t mess up a new system with their own disagreements or errors in judgment, a person with greater ingenuity will buy them out.

The Obama Administration could be on the right track anyway.  Keynesian economic theory suggests that we spent our way out of the Great Depression with federal stimulus packages that increased disposable income.  History also shows us that we tend to revert back to our old ways once the tough times are over.  Most of us were spending beyond our means, but at least we had some means, and once those means are restored to their previous levels-and for many industries, or people willing to learn new skills, they will be (even before the end of the year!)-most us will revert back to credit and debt.  Of course, massive debt isn’t entirely the consumer’s fault; when credit card companies and banks can change your interest rates on a whim, manageable debt becomes unbearable.  If corporate greed is somewhat regulated when the hard times are over this time, we might have even more confidence in our plastic cards.

Amy Dacyzyn believes that if we as a society were able to save more money, we would be a better society in three ways: 1) we would have more venture capital to start businesses; 2) we would have less federal debt and lower taxes because we wouldn’t be paying off our own bad decisions; and 3) we would be able to focus on real causes of economic problems, like the outsourcing of manufacturing jobs to foreign countries.

I’m hoping that the story from U.S. News & World Report is true and that our frugality may actually become so ingrained that we question every purchase and use more cash. I’m concerned about just how our economy will restructure itself if we’re not dependent on the sale and marketing of unnecessary stuff, but if the trend continues, or if we fall quickly into another recession after this one is over, we’ll have to find a new way.  And I don’t think that’s a bad thing.

What are YOUR plans for your money after you bounce back?

See a transcript of the president’s speech from last week here.

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© Mariam Williams, aka The Pink-Slipped Girl, and The Pink Slip Blog – Living Life Laid Off, 2009. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Mariam Williams and The Pink Slip Blog – Living Life Laid Off or http://livinglifelaidoff.com, with appropriate and specific direction to the original content.  Any use and/or duplication of any photo contained within this blog without express and written permission from Mariam Williams is strictly prohibited.

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Filed under Economy, Lifestyles, money, Recession, stimulus bill, Unemployment