Archive for the ‘economics’ Category

ImageOffended by this picture?  Put God and money in the same headline, and you’ll get unwanted attention.  Of course, a chrome-domed financial guru like David Ramsey can take little flack.  Gurus like him assume a fundamental axiom: one’s habits/choices determine one’s financial well being.  Recently, Ramsey posted a list (not of his own making) of the habits of the poor versus the habits of the wealthy.

In reaction, a trio of Bloggers from Her.meneutics (Caryn Rivadeneira, Rachel Marie Stone, and Marlena Graves) denounced his list.  They implied that the list showed a contempt for the poor, did not apply to the third world, and rightly said that it is not easy (and maybe not possible) for the 1st world poor to follow the “rich” people habits.

Rachel Held Evans hit the nail on the head when she wrote:

One need not be a student of logic to observe that Corley and Ramsey have confused correlation with causation here by suggesting that these habits make people rich or poor.

Overall, the fair criticism raised important questions.  Marlena Graves acknowledged in her twitter feed that Ramsey helped people.  RHE did the same in her article.  By far, the best point made was that correlation does not imply causation.  What does mean?  It means that the first time you read that list, you might think that regular gym time will help you get rich.  But what if it’s the other way around?  What if it’s your 85k a year job that provides a nice gym? It’s the one of the building’s first floor.  The one you go to before you commute home elsewhere in Silicon Valley. Also, Marlena Graves is right that many of these habits will simply be impractical for the bus-riding, two-job working, members of society to follow.  Who can encourage their kids to read or volunteer if both parents are working 60+ hours in a week?  What is the point of networking when you have no skills?

But were these strong words as constructive as they could have been?  It’s true that nothing in this list applies outside of the first world.  But was it supposed to?  Ramsey’s niche audience in evangelicalism is the American Middle class.  He can’t be faulted for speaking primarily to their context.  Does the list show contempt for the poor?  Yes, someone who does show contempt for the poor can think these things.  But does everyone who think these things show contempt for the poor?  Finally, it’s a low blow to call Ramsey’s message part of the prosperity Gospel.  I’ll believe that Ramsey is one of them when he says that Jesus’ disciples were rich, sprinkles gold gust from his pulpit, or similar tripe.

Is Dave Ramsey’s fundamental axiom totally wrong?  I worked as teacher’s aide to an “at risk” community.  One day, I learned that many vocational programs at the school were cut.  This cut had a noble intention (“get them all to college!”), but it had the practical effect of denying those students opportunities that were available to their middle class counterparts.  So yes, there are plenty of when outside forces keep the poor, poor, in America.  At the same time (and there’s no delicate way to put this), I listened to 15-17 year old girls talk casually, candidly, and even enthusiastically about how they planned to have a baby -while still in their teens.  Can anyone really deny that this is a poor choice that is indicative of a poor lifestyle?

The most constructive approach is not to attack perceived contempt of the poor.  Neither is it to opine that such a list applies only first worlders.  It certainly is not helpful to hyperbolicly group Ramsey in with people like this:

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Did you budget for those shoes, or is that on your credit card? Stupid Tax! Stupid Tax!

The best thing to do, in my opinion, is to take the best of criticism from RHE and her.menuetics.  We should realize that correlation does not imply causation.  The habits can either help get your rich, or are things you can do when you’re already rich.  Second, take the criticism that some of these are going to be harder to do when your poor *and* that many of these can be done regardless of your net worth.

If we can find habits that people can do regardless of their net worth, than those are quite possibly the ones that should be endorsed.  I won’t go through them all, but here’s a few openers for everyone’s thoughts:

Habit 1: 1. 70% of wealthy eat less than 300 junk food calories per day. 97% of poor people eat more than 300 junk food calories per day. 23% of wealthy gamble. 52% of poor people gamble.

If we define “junk food” as sugary snacks, pre-packaged chips, and anything loaded with high-fructose corn syrup, than this is something that does not depend on your net worth.  No matter where you live, you can pass on soda and snickers.  Gambling is very much something that is anyone’s control.   Casinos are designed to separate fools from their money, regardless of the skill or talent of the fool (yes, I realize that poker and other games are exceptions, but these are exceptions); thus it is obvious that avoiding gambling will more likely bring financial success.

Habit 5: 81% of wealthy maintain a to-do list vs. 19% of poor.

Does anyone think you must be financially successful before you can make a to-do list?

Habit 13: 67% of wealthy watch one hour or less of TV every day vs. 23% of poor.

In the her.menutics article, TV was almost lauded as one of the few leisure’s of the poor, which is maybe why they can’t not watch a week long Honey Boo Boo marathon or other poverty porn.  I strongly disagree with this.

The list will go on.  Go ahead and read it and ask: which habits can you do, no matter how much money you have in the bank?

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>I recently watched the informative, yet scary, documentary I.O.U.S.A.. I don’t like sounding like I am appealing to fear, but this documentary bothered me quite a bit. Looks like I get to add one more reason to live abroad a few years: this country is going broke.

The film, which was based on a book entitled Empire of Debt, argues four basic points. The United States government does not balance a budget –ever; Americans as individuals do not save money, we consume more trade goods than we export, and our leadership does not do a whole lot about it. The documentary gets into details such as the difference between “monetary” and “fiscal” policy, the looting of social security, “financial warfare,” and the looming economic oblivion. Surprisingly, the movie does not thump stereo-typical “reaganomics” or other Republican planks.

It also had many relevant personalities in the movie. Alan Greenspan, Warren Buffet and many others had their own time. They even interviewed a Chinese businessman.

The thing that struck me most about the movie was the economic prospects of my generation. While hindsight is 20/20, many politicians back in 60s and 70s arguing that the policies enacted in their time would force the next generation to pay for it. Now, we’re starting to deal with some of those predictions coming true. There will be no social security for our generation, yet we will still be expected to pay for the boomers as they retire.

Our grandparent’s generation worked their knuckles dry to make the American dream for their children. Our parent’s generation decided to borrow from our piggy banks. (Thanks a lot, hippies. Get a job.) Many of the people in the documentary asserted again and again that is immoral.

Another thing that bothered me is that there were a few interviewees in the documentary who had to resign (or were fired from) government positions because of differences of opinion with the administrations. Such might be evident of the “leadership deficient” described in the movie. Many of friends feel like “political atheists” in the sense that we do not have faith in our political system. Maybe we are over the top, but I think more than a few twenty-somethings do not feel that they are represented.

Who is John Galt?

But watch the documentary. Those of you with Netflix have no excuse. It will either motivate you to work very, very hard, and/or emigrate. Either way, people will start thinking long term again.