Earlier this year, I wrote a post about the economic recession suggesting that we’re asking the wrong question. In it I suggested that instead of asking when the recession should end and when will things get back to normal, we should instead be asking ourselves “What message is this crisis giving us about the need to change?” Many thanks to all of those who sent me messages of support about the post – this post explores the question further.
It’s extremely easy to point the finger at the bankers and financial industry and blame them for the economic downturn. In an interview in March, Mr Varley, the Chief Executive of Barclays Bank suggested that there was little that the government could do to make life “difficult” for bankers and he went on to say that it was ‘very unlikely’ that what he described as “the fundamental competitiveness of Barclays would ever be threatened by the decisions of the Government”. How arrogant and out of touch with public sentiment can one get?
But I wonder how much of our finger pointing is an attempt at some level to avoid having to look at our own behaviour. After all, the concept of supply and demand is a basic one that underpins economics. If there had been no demand for easy credit, if people hadn’t wanted to risk mortgages that they could barely afford when interest rates were low, there would have been no point in the financial sector offering them. Let’s be honest about this. The ‘80s, ‘90s and ‘00s have been an era of keeping up with the Joneses. Easy credit and mortgages we can ill afford have all fuelled our desire to meet our wants, confusing wants with needs.
I read recently about a rich guy who was quite despondent that his 100 ft yacht, that had been the biggest in the local marina, had just been outdone by a couple of larger models. It made no difference to the quality of the sailing offered by his yacht, or to the amount he had invested in it. What mattered was the symbol – it had been the biggest and the best in the marina; now it wasn’t, and that spoiled the experience for him! Did he need such a big yacht? Most people would agree that such a possession is a want and not a need.
And whilst we may not have yachts, we all have our own version of them. How much of what we have do we truly need, as opposed to want? How much of our rampant consumerism is just to satisfy wants? “When is enough, enough? ”And what sort of role model does it provide our children with? How do you respond when your 7 year old comes home from school and says (s)he wants an iPhone? Perhaps that’s when the penny should drop that we’ve gone down the wrong track!
There is a backlash starting in some areas – it’s interesting that one of the most popular self-development blogs on the web is at www.zenhabits.net where the message is about simplifying our lives and minimalism.
My wife and I live in a small appartment and we’ve accumulated a lot of stuff since we moved in. next week we’re going to do a huge de-cluttering exercise to reduce the contents to the essentials (plus a few luxuries, of course). What’s interesting when you do such an exercise is different people’s definition of needs vs wants!
There are lots of lessons to be learned from the economic downturn. As a start, I suggest the following:
- Care for the poor is essential for the common good. Some people are going to have to revise their opinion that the unemployed are just lazy. The downturn has led to many “middle-class” people losing their jobs and a realisation that in many cases, “job security” is a myth.
- Spending money we don’t have just to satisfy our “needs cravings” is an unhealthy foundation upon which to build a society or a family.
- A healthy society is a balanced society in which markets, the government, and our communities all play a role.
- The counterbalance to greed is to realise that there is enough for everyone if we share it.
- Just because something is legal, and we can do it, doesn’t mean that we should. I believe that our sense of what is right and wrong is more important than, and should always come before, our legal and economic system.
- It used to be that only God was seen as being all knowing, all present and all powerful. Somewhere during the last 50 years we have attributed those same qualities to The Market, and in particular the financial markets. Those who question this new deity, the great God Market, as seen as being as heretical as those who questioned the Will of God in days gone by.
- We need to find a way to regulate the banks so that they can make a profit for their investors but cannot operate based upon the greed of recent times. I was shocked to read earlier this week that the bankers still don’t think that anything that they have done is wrong and they don’t understand how angry people are.
We need to get relationships back into banking. It is interesting to note that in the USA, the banks that have survived and thrived during the downturn have been those that are smaller and where managers know the people they are lending to. Do you think it’s a coincidence that all of the bad lending decisions that have been made, and all of the financial irregularities in the financial sector have happened at the same time as the role of the bank manager and branch manager in the building societies has been reduced to little more than a clerical role? I don’t!
- Most important of all for me is that it’s time to stop keeping up with the Joneses and time to start ensuring that the Joneses are okay. We need to learn that our own good is entwined with the common good – government, business and the community need to work together and not in competition with each other. In that way we can create businesses that thrive and operate in a just manner.
Ask yourself the following questions:
- Who do you know that was in a “secure” job that has been a victim of the recession? In practical terms, how can you help them? In some of the poorest areas of America, people are using vacant areas of ground to grow vegetables that are then shared with the needy.
- How will you teach the young about the difference between wants and needs? What will you say when they feel left out because all of their friends have got a wii, a playstation, an X-Box, a laptop and an iPhone?
- What are you going to do to return your focus to what are genuine needs and to stop feeding this consumerism monster we have all created?