Earlier this year, I explained to the General Manager of a Toyota dealership how very pleased, in fact, overjoyed, I have been with a Toyota Tercel I bought from his dealership 13 years ago, on May 6, 1995. He was aghast. He exclaimed, "Don't you need a new car? You're just killing the economy driving that old thing!"
When I bought my little tank of a car, I never expected to keep it this long. My goal was ten years. But, when ten years arrived, I still loved the car. This was in 2005, before the gas crises of the last few years, and my favorite thing about it was the gas mileage it gets. Rated at 28 city and 32 highway when I bought it, the car actually gets an average of 42 miles per gallon, and always has since I drove it home. (It's a stick shift.)
Plus, I couldn't afford a new car 10 years into my investment. At that point, it had over 200,000 miles on it, and was still running strong. At least, that was, until I forgot to put oil in it for a few weeks.
When I killed the engine by letting it go too long without oil, I put a refurbished engine in it that had only 50,000 miles rather than buying a new car. The car has been running strong, and now has over 300,000 miles on it, with the original transmission.
Granted, I never planned to have my car this long. My original plan, like that of many Americans, was to keep it a few years, and then trade it in for a newer, sleeker model that better fit my income (which, of course, was only rising at the time). But, life intervened, and ten years passed quickly, And now that it's made it 13--a totally unexpected number of years--I plan to get at least another two years out of it, especially with the economy like it is now.
The General Manager of the dealership where I bought the car was so disgusted with me because by keeping this car, I have gone against the American grain: I haven't replaced it with a newer model or spent money on something different, and thus, I have been killing the economy.
If only he knew I've walked into a mall fewer times than I can count on one hand in the last five years, or that I haven't bought an RV, boat, motorcycle, or other vehicle ever. He'd probably keel over.
The American mentality is that we have to be constantly consuming to keep the economy strong. If we are spending money, we are creating jobs.
But, this practice is seductively deceptive. In fact, I think it's overconsumption, not underconsumption, that has gotten us where we are today.
Consider this: the housing crisis is supposedly a result of the sub prime market going belly-up. What are sub prime loans? Loans given to people who didn't have sufficient credit to buy a home with their existing credit. Who pushed these loans? The U.S. federal government. Why? One idea was that people who have homes will be able to participate more in the economy.
They would have the stability of their own place, and could then work and consume, and participate in the greater economy. Obviously, that strategy didn't work. Non-credit worthy people are not good risks specifically because they consume beyond their means.
As this bubble was growing, and before it burst, I knew many folks who got themselves into mortgages they could not really afford because of lower interest loans and creative financing. Fueled by over-exorbitant salaries, they bought cars, RV's, boats, motorcycles, paid for grandiose trips, and ate out virtually every night at expensive restaurants. What they couldn't pay cash for, they charged, always buying the latest gadgets and keeping up with the Joneses.
All of the people who participated in this system definitely consumed things. They spent and spent and spent. And, the economy grew. But, it grew well beyond its means. Jobs were created, but many of those jobs were surplus jobs that were not essential to business or manufacturing enterprise. Tons of my friends have worked at jobs that previously did not exist because they were "fat" on the bone of the business enterprise.
As these folks consumed, they wanted more and more things. We live in a society where we can buy virtually ANYTHING: from food to furniture to picnic sets to fake plastic wishbones so that everyone at the Thanksgiving table can snap a bone for good luck. Being that everything is readily available, folks just bought and bought and bought.
And, again, more jobs were created. Smart American business people started their own firms, and using cheap labor, farmed out their manufacturing to other countries where things could be provided to the consumer at cheaper and cheaper prices. As prices went down, buying went up.
American companies acted like consumers themselves: bloating up with more and more employees, paying out fat bonuses to all the top executives, and spending down all their reserves, buying up sister companies, competitors, expanding into larger and larger markets.
The problem is that unfettered spending can't last forever. At some point, you have to actually pay the piper. Americans began to realize their number was up when oil prices skyrocketed during the last year.
The oil crunch put a crunch on everyone's spending. Companies, now no longer able to supply products at the prices they had been, began to raise costs. Consumers bought less, and companies, to cut costs, began eliminating jobs. The service industries which piggybacked our manufacturing houses were then hit as well, and they began laying off folks, too. People who lost their jobs sadly could not make ends meet, and began losing houses, cars, and declaring bankruptcy.
Ultimately, the problem was one we chose: we chose to live beyond our means. We chose to live unsustainable lifestyles. We chose to spend more than we had. Now we are paying. It seems to me (in my own narcissistic mind) that my conservatism is NOT what is killing the economy. What has killed the economy is the very opposite: overspending, living beyond one's means, and unsustainable lifestyles.
Here's hoping that as we enter the new year other folks will think twice before buying a new car every two years. Here's hoping that everyone else will consider saving money, and here's hoping that all of America will opt for sustainable lifestyles.
If we all cut back and choose sustainability, we may be able to salvage our economy before we really go broke.
Changes Keep Coming…
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I know that I have been silent as of late. That has everything to do with
the wonderful new direction of my life. I love work, my wife and our new
baby. I ...
2 weeks ago