I just finished watching I.O.U.S.A., a documentary describing the history and current status of the U.S. National Debt and fiscal policy. It is quite an eye-opening movie as it talks about the four greatest deficits we (as a nation and as individuals) face: Budget, Savings, Trade, and Leadership. Initially I was afraid this would be more right-wing propaganda lambasting “big government”, but I was pleasantly surprised at a pretty non-partisan approach. The movie does not seem to favor one political agenda over another (though it does seem to poke a little more at Reagan’s supply-side economics and the Bush Tax Cuts). Former U.S. Comptroller David Walker and Bob Bixby of the Concord Coalition play pretty big roles, and Alan Greenspan and Warren Buffett make appearances as well.
The main topic of the film is the National Debt (which is over 10 trillion dollars now) and how weour nation is saddling future generations with more debt than they can possibly hope to pay. It emphasizes the weight of the Social Security and Medicare programs and how they may continue to eat up larger and larger portions of GDP if we do not do something about it. It utilizes some pretty interesting charts and other graphics to show the history of the national debt, budget deficits, and savings rates throughout history. It also provides some education about how Monetary Policy attempts to create economic growth while trying to limit inflation. It also shows how government debt has changed over time. Whereas after World War II, 100% of the government debt was held by U.S. citizens, it is no longer the case; China, Japan, and other nations hold about 25% of our debt.
The movie is careful to point out that the creators do not favor one political or fiscal policy over another; the main purpose seems to be raising awareness of the crisis, presenting the facts, and motivating us to take action. While the film is nearly two years old, it is still worth watching. It is informative with facts and statistics as well as educational about how fiscal and monetary policies interact with inflation, savings, and economic growth. I wonder what they would say about the current situation with bail-outs and President Obama’s plans.
JP lent me The Dip by Seth Godin. It is a really quick read and Godin poses a pretty interesting idea. Far too often, we’re told we just need to keep pushing and “winners never quit”. But what if we’re trying to win at the wrong thing? What if the effort we’re putting in on the current project could be better used to really win big on a more important (and fruitful) one? Also, it turns out we are trying to do too many things at once. He points out that the ones who really wing big are those who focus and are in first place. There is a significant drop-off between #1 and #2. So the first point is to only take on projects where you can win.
His next idea introduces the concept of his ‘curves’ – the ‘Dip’, the ‘Cul du Sac’, and the ‘Cliff’ – mapping results vs. effort. The trick , it seems, is being able to recognize which curve you happen to be on. If you find yourself on the Dip, then it makes sense to keep pushing through. If you’re on a Cul du Sac, according to Godin, you need to get off it right away; it’s a dead end keeping you from doing something better. The Cliff is pretty rare where everything just falls apart one day.
Later, he talks about generalization vs. specialization. We grew up being told we had to do well in all areas of school. (I actually think that’s a good thing – give yourself the broadest base and most opportunities to choose from). But, as Godin points out, do you really care if your doctor did well in English Literature? Do you care if your auto mechanic or accountant are good tennis players? No, you care that your doctor is good at being a doctor, your mechanic can fix your car, and your accountant can manage finances. You are glad they specialized and are good at what they do. If they happen to be good at something else, great; you’re not going to pay them for that.
While the book is definitely an interesting read, I’ve had a tough time with a couple things. First, just because you can’t be #1 doesn’t mean you shouldn’t try at all. There is still value in being #2. Even though #1 reaps the most rewards, #2 still gets something. Of course, striving to take the #1 spot away is always good, and you can always create your own niche where you are #1. The second issue I have is that while Godin describes the curves, I never really quite got a feeling for how to tell if one is on Dip vs. a Cul du Sac vs. a Cliff. My job seems pretty tough right now and I want to quit. But is this feeling of wanting to quit merely a Dip (meaning I should redouble my effort), a Cul du Sac (I’m never going to be compensated appropriately) or a Cliff (the company decides to lay me off tomorrow)? It is pretty difficult to tell which curve you happen to be on when you are on it. You can only tell once you’ve passed the dip or cliff (if they happen to be there at all).
I ran across this post on saving water at lifehacker. The article itself only provides a link to a chart depicting how much water is required for typical things you do and eat during your day, I find the water usage comparison chart less interesting than the actual comments to the post. Most people talk about how ridiculous the examples are or mock the comparisons (“no bath? what about hygiene? low-flow toilets? Did they count how many times you actually have to flush one before it actually does a proper job?” to paraphrase a few). I think they are missing the point.
In fact, I’ve been seeing this more often (and admittedly, I am as guilty as the next guy). We crawl the internet looking for answers – “What can I do to save money? What should I invest in? What should I do to lose weight? How can I save the planet?” – we are often looking for the easy answers. One thing I learned from reading Your Money or Your Life (read my review) is that you will benefit more from being conscious of your behavior. Want to save money? Track your spending habits and be aware of what you are spending and why. Want to lose weight? Be more present when you eat – take mental note of why you are eating, when you feel satisfied (as opposed to full), and how you feel when you are done. Information is important; awareness is the key to making changes.
And so we return to the chart. Is the point to tell you to replace your old toilet with a low-flow one? To stop taking baths? Give up eating beef? Or could it be that it is merely trying to raise your awareness of how much water a few examples use, and that the choices you make can affect how much water you use (or is used on your behalf) in a typical day. Armed with that knowledge and hopefully more after you do some research, you can answer the question yourself; no need for spoon-feeding. And once you have the information, you can make conscious changes to your behavior.
It’s a video published by Bonfire of the Brands, a book and website dedicated to speaking out against consumption for consumption’s sake. The video is made in a propaganda style, telling the viewer to consumer more, buy things you want, don’t fix things; just replace them, follow fashion, and buying more means you can recycle more.
I’ve always had the nagging feeling that I’m a good consumer (not in a positive way) because I have acted on a lot of wants, even though nearly all of my needs are taken care of. I feel a little rush of endorphins when click the ‘Add to Shopping Cart’ button or when I buy a shiny new toy at the store. This also takes me back to the Story of Stuff which also focuses on the environmental impacts of our consumption-based culture.
The key here is understanding the psychology of consumption and realize when we are being manipulated. “Do I really need a new computer? Not likely, but I want it.” It’s a learning process, and I am getting better about it. I’m really looking more closely at whether something I want to buy is a need vs. a want and avoid buying something that is just a ‘want’.
Elizabeth Warren gave this riveting lecture about what has happened to the American Middle Class from the 1970s to the early 2000s. What is a family of four spending money on? What are they spending more on? Less? What risks do these families face in the 2000s? If you like economics or data analysis, you’ll love this lecture.