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It's a consumer society. But that isn't really the problem.
The problem is in our relationship to stuff. Things that we believe we need if we are to make it in our particular community. I say "believe we need" because our stuff mostly does not fall in the air, food, and water category of need. Social needs are strong, but they are not the stuff required for life.
What is our relationship to stuff in the US? Well, we think stuff is forever. Oh, we know that nothing lasts and we bemoan planned obsolescence, but in our heart of hearts, we believe, like faith, that our stuff will not wear out or break.
We don't plan for it. Most people don't have a maintenance account for their own stuff.
In economics/logistics, a new thing begins a period of depreciation. A plan is created for replacement of that thing at the end of a given period of time. A clothes washer or refrigerator has a life expectancy of 15 years. But do we start putting money in the bank on a regular basis so that we can pay cash for that new appliance? For the most part, no.
And that is significant. Why? It means we are living beyond our stuff means. We don't have the money to put aside to replace the stuff we have as it fails. We are always at the edge of total system breakdown.
Micro-economists will tell you that you should have 6 months living expenses in liquid assets above and beyond your other investments and savings. If you really press them, they will tell you that amount isn't enough. It doesn't include the stuff account. The stuff account don't have to be liquid, but it can't be tied up in a long-term, untouchable investment.
If one owns a house ($800k) and a car ($20k), one should have an escrow account that cycles from a low of about $10k to a high of something like $50k. At another $10K to each end for each additional car, a swimming pool, and other high maintenance- or replacement-cost items.
Figure a 5-year life on the car (too long for most people) and routine maintenance (painting, plumbing, roof, and emergency repairs not covered by insurance) on the house and you see that the owner of that stuff should be making $1k a month payments to the stuff account. That isn't going to happen for most people in the middle-class.
It's not possible to get out from under debt payments long enough to establish the cash reserve. In an economic model I was recently introduced to, the middle class is busy accumulating more debt instead. It fits the observed pattern.
Instead, we hope the value of the house goes up so we can get an equity loan to pay for major repairs. And we just go for the 3- or 5-year car payments. We are used to paying someone else for the use of their money rather than have a stuff account.
When we are thinking about buying something, we ask ourselves if we can afford the extra monthly payment. That is a very bad way to get stuff. Very bad. It's too close to the edge of disaster.
I think we are fools.
I don't have a stuff account. I don't have much stuff, but I do have some that would be a real problem to replace (like this $2k computer). I know I'm a fool. I'm in a situation where I could save $200 a month without much of an issue, but my bank account isn't going up, it's going down.
Sigh.
Love.
The problem is in our relationship to stuff. Things that we believe we need if we are to make it in our particular community. I say "believe we need" because our stuff mostly does not fall in the air, food, and water category of need. Social needs are strong, but they are not the stuff required for life.
What is our relationship to stuff in the US? Well, we think stuff is forever. Oh, we know that nothing lasts and we bemoan planned obsolescence, but in our heart of hearts, we believe, like faith, that our stuff will not wear out or break.
We don't plan for it. Most people don't have a maintenance account for their own stuff.
In economics/logistics, a new thing begins a period of depreciation. A plan is created for replacement of that thing at the end of a given period of time. A clothes washer or refrigerator has a life expectancy of 15 years. But do we start putting money in the bank on a regular basis so that we can pay cash for that new appliance? For the most part, no.
And that is significant. Why? It means we are living beyond our stuff means. We don't have the money to put aside to replace the stuff we have as it fails. We are always at the edge of total system breakdown.
Micro-economists will tell you that you should have 6 months living expenses in liquid assets above and beyond your other investments and savings. If you really press them, they will tell you that amount isn't enough. It doesn't include the stuff account. The stuff account don't have to be liquid, but it can't be tied up in a long-term, untouchable investment.
If one owns a house ($800k) and a car ($20k), one should have an escrow account that cycles from a low of about $10k to a high of something like $50k. At another $10K to each end for each additional car, a swimming pool, and other high maintenance- or replacement-cost items.
Figure a 5-year life on the car (too long for most people) and routine maintenance (painting, plumbing, roof, and emergency repairs not covered by insurance) on the house and you see that the owner of that stuff should be making $1k a month payments to the stuff account. That isn't going to happen for most people in the middle-class.
It's not possible to get out from under debt payments long enough to establish the cash reserve. In an economic model I was recently introduced to, the middle class is busy accumulating more debt instead. It fits the observed pattern.
Instead, we hope the value of the house goes up so we can get an equity loan to pay for major repairs. And we just go for the 3- or 5-year car payments. We are used to paying someone else for the use of their money rather than have a stuff account.
When we are thinking about buying something, we ask ourselves if we can afford the extra monthly payment. That is a very bad way to get stuff. Very bad. It's too close to the edge of disaster.
I think we are fools.
I don't have a stuff account. I don't have much stuff, but I do have some that would be a real problem to replace (like this $2k computer). I know I'm a fool. I'm in a situation where I could save $200 a month without much of an issue, but my bank account isn't going up, it's going down.
Sigh.
Love.