Friday, March 06, 2009

Don't Buy Stuff

March 6, 2009, 7:45 a.m.

The Sure-Fire Solution to Economic Pain
(brought to you by* -- and Saturday Night Live, see below)

My Dad told the story of a Kansas farmer who was asked whether he believed in baptism. "Why of course I do," he said, "I've seen it done."

That's kind of how I am about credit. I've seen it done. And all about me I'm now watching the consequences of its having been done. And that's why I really don't believe in credit.

Mason Williams (the composer of "Classical Gas" and one-time head writer for the "Smothers Brothers Comedy Hour") once wrote the story of the automobiles in his life, which he called his

In a similar spirit here is how I would describe my own "Auto-biography" of Nicholas Johnson.

My first car was a 20-year-old Model A Ford I bought from a local farmer for $25.

I paid cash.

My second car required saving money for a year as a college student. It was a much fancier Model A, with four doors and a roof, and therefore cost $75.

I paid cash.

Over the years the cars got grander and more expensive. A two-door Chevy ($700), a Volvo ($600), and a couple others along the way.

I paid cash.

My current vehicle is a 1978 VW camper van, one of my most expensive ever at $2000.

But I still paid cash.

Is this because I'm wealthy? No; quite the opposite. When offered job choices I've never simply picked the one that paid the most. I've chosen the ones that would offer the most interesting new experience, the most fun, or the greatest opportunity for public service -- one of which was serving on the local school board, a job I once described as providing "no money, but at least you get a lot of grief."

(Don't get me wrong, this is not a "pitty poor me" blog entry. I've been blessed at every turn in a life that could not have been better: my parents, growing up in Iowa City, the University's schools, from the two-year-old group at the Iowa Child Welfare Station on through University High School, a top flight public university undergraduate and law school education when tuition was $50 and a couple part-time jobs plus managing an apartment house were enough to get you by (compared with today's near-$50 thousand at private colleges, with the accompanying student loan debt), the lucky accidents of the U.S. Court of Appeals and Supreme Court clerkships, and three presidential appointments, and being able to return in my later years to my home town, live in the house where I grew up (on which the mortgage has long since been paid -- if indeed it was not purchased for cash), and welcomed into the UI College of Law, a three-block walk from home, where I live with a former high school classmate who is, for me, the perfect wife -- in addition to our wonderful children, grandchildren and now great-grandchildren. No; all I am saying is that I have, by choice, purchased cars for which I could afford to pay cash, rather than paying interest to a bank on a newer, more expensive one.)

No; I've paid cash because, in attempting to control living costs, the elimination of interest payments always seemed to me to involve the greatest returns for the least effort -- with the least pain.

I don't confess this as a badge of honor. I'm fully aware most Americans will ridicule my choices and think me a fool.

I merely mention it to give you some insight as to why I might be questioning the behavior and choices of those who propelled us into this global economic collapse -- and who now propose that the way out of the pit we're in is to go back to making more credit available, to recreate the economic structure and behavior that got us into this mess.

Why should every small business, home and automobile be owned in largest measure by a bank's shareholders? And for what? So we can have our stuff a few months before we'd have it if we saved first and then paid cash? Rented a few more years before buying a home? Drove a little older car?

Why should one of our largest expenses -- as taxpayers as well as consumers -- be the transfer of our hard-earned dollars (in the form of interest payments) to bankers and investors who have contributed neither goods nor services to our economy? Banks were getting "bailouts" from the federal government -- that is, you and me as taxpayers -- long before they brought down our economy. Do you know what one of (if not the) largest expenses of the federal government is? That's right, interest payments from you and me to those wealthy enough to loan their money to our government -- some $412 billion in the FY2008 budget! Federal Budget Spending and the National Debt. I'd say that's a pretty nice income for what Senator Bob Dole once described as "indoor work with no heavy lifting."

And our payments to those folks are only going to increase as our government continues its present "solution," this glide path to economic hell: getting us out of a economic mess created by credit and debt by taking on more credit and debt.

[Credit: "Don't Buy Stuff: The sure-fire way to get out of debt," NBC Saturday Night Live, Season 31, Episode 12, aired February 4, 2006, available from]

I don't expect anyone to agree with me. But I think Saturday Night Live had it right: "The sure-fire way to get out of debt"? "Don't buy stuff you can't afford."

Related Blog Entries on Global Economy and Bailouts

Nicholas Johnson, "Who's The Reason?" September 5, 2008

Nicholas Johnson, "How Much Do You Owe the Chinese?" September 6, 2008

Nicholas Johnson, "Taxpayer Rescue," September 15, 2008

Nicholas Johnson, "Global Finance: The Great Fountain Pen Robbery," September 21, 2008

Nicholas Johnson, "Alternatives to 'The Plan,'" September 28, 2008

Nicholas Johnson, "Better Alternatives to Congress' Bailout Plan," October 2, 2008

Nicholas Johnson, "Can We Trust Our Bankers?" October 29, 2008

Nicholas Johnson, "It's the Economy," November 7, 2008

Nicholas Johnson, "Jobs, Not Unemployment, Key to Recovery," November 8, 2008

Nicholas Johnson, "Trust Your Instincts, Auto Bailout's Terrible Idea," November 14, 2008

Nicholas Johnson, "Auto Bailout: An Open Letter to Congress," November 19, 2008

Nicholas Johnson, "A Trillion Here, a Trillion There," November 20, 2008

Nicholas Johnson, "FromDC2Iowa's Weekend Edition," November 21, 2008 ("The Answer to Global Economic Collapse" and "Auto Bailout: 'Show Me the . . . Plan'")

Nicholas Johnson, "Citigroup Deal Stinks," November 25, 2008

Nicholas Johnson, "Only Select Few Are Thankful for Trillions," November 27, 2008

Nicholas Johnson, "Auto Loan Makes Too Few Dollars Even Less Sense," December 4, 2008

Nicholas Johnson,"Quick Fix for the Economy," December 12, 2008

Nicholas Johnson, "You Know It's Serious When We Start Laughing," December 15, 2008

Nicholas Johnson, "A Car in Every Garage," December 16, 2008

Nicholas Johnson, "Forget Madoff, Focus on Bernanke," December 17, 2008

Nicholas Johnson, "Of Theaters and Automobiles," December 20, 2008

Nicholas Johnson, "There's Bad News and . . . and . . .," December 21, 2008

Nicholas Johnson, "Et Tu, Toyota?" December 22, 2008

Nicholas Johnson, "Revolting Developments," December 23, 2008

Nicholas Johnson, "First Things First," January 8, 2009

Nicholas Johnson, "Why We Should 'Point Fingers' and 'Look Backwards,'" January 13, 2009

Nicholas Johnson, "Fool Me Twice," January 14, 2009

Nicholas Johnson, "Economic Sorrows and Solutions," January 27, 2009

Nicholas Johnson, "No More for Wall Street!" February 1, 2009

Nicholas Johnson, "Hang Onto Your Wallet," February 5, 2009

Nicholas Johnson, "Quick Fix: Support Jobless, Not Bankers," February 7, 2009

Nicholas Johnson, "Geithner's Same Old, Same Old," February 10, 2009

Nicholas Johnson, "Terrorist Bankers,"
February 13, 2009

Nicholas Johnson, "Financial Crises for Dummies," February 17, 2009

Nicholas Johnson, "They're Back!!" February 20, 2009

Nicholas Johnson, "The Burden We Ought to Bear," February 23, 2009

Nicholas Johnson, "Candid Conservatism," February 27, 2009

Nicholas Johnson, "Bankers as Arsonists," March 3, 2009

Nicholas Johnson, "Don't Buy Stuff," March 6, 2009


* Why do I put this blog ID at the top of the entry, when you know full well what blog you're reading? Because there are a number of Internet sites that, for whatever reason, simply take the blog entries of others and reproduce them as their own without crediting the source. I don't mind the flattering attention, but would appreciate acknowledgment as the source -- even if I have to embed it myself. -- Nicholas Johnson

# # #

No comments: