Thursday, July 9, 2015

The zeitgeist where anything is possible until it no longer is

A perplexing, or rather, perhaps, conflicting article, Falling by William McPherson. McPherson is an articulate, educated, accomplished person. And yet,
I have some personal experience here. Like a lot of other people, I started life comfortably middle-class, maybe upper-middle class; now, like a lot of other people walking the streets of America today, I am poor. To put it directly, I have no money. Does this embarrass me? Of course, it embarrasses me—and a lot of other things as well. It’s humiliating to be poor, to be dependent on the kindness of family and friends and government subsidies. But it sure is an education.

Social classes are relative and definitions vary, but if money defines class, the sociologists would say I was not among the wretched of the earth but probably at the higher end of the lower classes. I’m not working class because I don’t have what most people consider a job. I’m a writer, although I don’t grind out the words the way I once did. Which is one reason I’m poor.
We can all put ourselves in his shoes and feel sympathy for his plight.

But that's not all we might feel. During his working career, he made some decisions that many others might question.
My income consists of a Social Security check and a miserable pension from the Washington Post, where I worked intermittently for a total of about twenty-five years, interrupted by a stint at a publishing house in New York just before my profit-sharing would have taken effect. I returned to the Post, won a Pulitzer Prize, continued working for another eight years, with a leave of absence now and then. As the last leave rolled on, the Post suggested I come back to work or, alternatively, the company would allow me to take an early retirement. I was fifty-three at the time. I chose retirement because I was under the illusion—perhaps delusion is the more accurate word—that I could make a living as a writer and the Post offered to keep me on their medical insurance program, which at the time was very good and very cheap.
He abandoned his profit-sharing in order to take advantage of an opportunity at a different company. An opportunity that apparently didn't pan out. He took early retirement without any firm plans to replace his income from a job with another company.

Some issues are presented as effectively out of his hands, such as inflation.
Today, I pay more than twice as much for a month of medical insurance as I paid in 1987 for a year of better coverage. My pension is worth half what it was. And I’m one of the lucky ones.
It sounds like McPherson retired in 1986. That's just four years out from our last bout of painful interest rates and inflation. He certainly can't be held responsible for inflation per se but he must have been conscious of its potential catastrophic impact. Stagflation was still in common parlance. McPherson is devastatingly candid about the cause of his current circumstance. Himself.
But I look through my checkbooks from twenty-five and thirty years ago and I think, Wow! What happened? It was a long, slowly accelerating slide but the answer is simple. I was foolish, careless, and sometimes stupid. As my older brother, who to keep me off the streets invited me to live with him after his wife died, said, shaking his head in warning, “Don’t spend your capital.” His advice was right, but his timing was wrong. I’d already spent it. He sounded like the ghost of my father. Capital produces income. If you want to have an income, don’t dip into your capital. I’d always been a bit of a contrarian, even as a child.

My money wasn’t working hard enough to finance my adventures, which did, after all, come with a price. I wanted to explore and write about eastern Europe after the fall of the Wall, which I did for several years. It was truly a great adventure, it changed my life, and it was a lot more interesting than thinking about what it cost, which was a lot. There’d always been enough money. I assumed there always would be. (I think this is called denial.) So another dip into the well. In my checkbook, I listed these deposits as draws. That sounded very businesslike, almost as if I knew what I was doing. Sometimes I did. (It’s hard to resist a little self-justification.)

Against the advice of people who thought they knew better, I bought shares in AOL before it really took off and in Apple when it was near its bottom. I figured Apple’s real estate must be worth more than the value the market gave the company. I was right. Shares in both companies soared. If I’d shut up and stayed home…but I didn’t. On the advice of these same people who advised me against AOL and Apple, I turned my brokerage account into a margin account for someone else to handle, and I left the country again. A few more dips into the well, a few turns in the market, a few margin calls, and when I went back for another dip, the well was empty. The old proverb drifts back to me on a wisp of memory. A fool and his money are soon parted. My adventures were over.


I’d acted like one of those people who win the lottery and squander it on houses, cars, family, and Caribbean cruises. But I hadn’t won the lottery; I’d fallen under the spell of magical thinking.


I am ashamed to have gotten myself into this situation. Unlike many who are born, live, and die in poverty, I got where I am today through my own efforts. I can’t blame anyone else.
What to make of this? McPherson is not asking for anything. He is already receiving assistance in the form of housing subsidies and health subsidies. But there are a lot of people out there in this circumstance of having earned good money and having spent it on things they wanted until they had no more to spend.

It is certainly a cautionary tale. Stick with the tried and tested middle-class values of hard work, suitable risk aversion, saving, commitment to family, plan for the future, bird in the hand, etc. Avoid the zeitgeist where anything is possible until it no longer is.

It easy to be hard-hearted to those who have all along exploited the commonweal, seeking to game the system, never contributing, always taking. McPherson is not one of those.

It is easy to be generous to those who are victims of acts of God or of events beyond their control and beyond anticipation. McPherson is also not one of those.

You feel sorry for him. You wish his circumstances were better. But there is no moral need to do anything for him and there are many policy reasons why you shouldn't do much more for him. Perhaps the most that can be done is to appreciate him as the embodiment of a cautionary tale of which all ought to take heed. We are back to Aesop's fables. Even as a child, I understood that the grasshopper was the architect of his own tragedy but I always felt a little sorry for him anyway.

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