Sunday, August 24, 2008

from Fortune Magazine: "The Next Credit Crunch"

I read this interesting article from CNN's Fortune Magazine called, "The Next Credit Crunch." (by Geoff Colvin) The subtitle reads, "Our easy access to plastic is about to dry up - and with it our ability to fake living the good life."

"For the past several years, the average inflation-adjusted total pay of American workers hasn't been increasing. That means we haven't been building a foundation for increases in our living standard. You might be tempted to say that by definition our living standard couldn't have increased, but that's not quite right. Even with stagnant real incomes, we can always live a little better every year through borrowing and pretending that our living standard is still rising, just as it was for decades"

The article goes on to talk about the current economy and how now, at last, things are in a position where people won't be able to pretend. Easy mortgages won't be available, banks won't be giving as much easy credit for people to at least appear to be keeping up with the Joneses.

Colvin concludes, "It may be that the standard-of-living bubble finally has to deflate. Sustainable increases in living standards have to be earned, not borrowed, and that means performing ever higher value work that can't be outsourced. We haven't been meeting that challenge very well; doing so will probably require much more and better education for millions of Americans, which takes time and money.

The result may feel like deprivation, but I don't see it that way. Who knows - we might even find that living within our means and saving a little money actually isn't so bad."

Colvin seems ultimately a bit stuck between arguing that we just have to work harder so we can earn more, and suggesting, quickly, at the end, that perhaps we might even be okay just living within our means.

I read somewhere that surveys show most of us think we would be happy if we had 20% more. (More of everything, I guess, but income, primarily.) The trouble is, if we get 20% more, we still seem to want 20% more. We'll even fake having 20% more if we can, because we like the way it looks, makes us feel, how we stand among our peers with all our stuff.

How much is enough? How much more do you need? I guess a benefit of a struggling economy can be the way it makes us live more simply, even if we do so kicking and screaming in protest. Of course, those who suffer most, though, are those who didn't have enough to begin with. It's a costly way for those of us with so much to learn our lesson of getting along with less.

What do you think is the church's role in a time of great economic stress? Certainly, I've had more people seeking out help from the church, and our centers like food banks and thrift shops are in increasing need as they have to serve more people. But beyond that, what does the church have to say?
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